Determinants of wine firms’ performance: the Iberian case using panel data

Abstract

Purpose In the macroeconomic environment of the Iberian Peninsula, this paper aims to understand which factors, intrinsic to management, affect the performance of wine companies. Design/methodology/approach The sample comprises 3,113 wine Iberian companies between 2011 and 2018. This study has used the panel data methodology, specifically the generalized method of moments system estimation method of Arellano and Bond (1991); Arellano and Bover (1995); and Blundell and Bond (1998) to test the hypotheses proposed. Findings Using return on assets (ROA) and sales growth as measures of corporate performance, this study’s results suggest that sales growth is the variable that has the most significant determining factors, both specific to the company and given the macroeconomic environment. Investors and civil society well understand the meaning of sales growth, namely, in a sector close to the final consumer. When using ROA as a dependent variable, the results suggest that because it is a pure management variable, the manager tends to be more concerned with maintaining adequate levels of economic profitability to ensure sustainability and future solvency, without giving prominence to the macroeconomic environment. Originality/value To the best of the authors’ knowledge, this is the first time that a study has been carried out in the Iberian Peninsula on the wine industry using ROA and sales growth as measures of corporate performance. This study shows that sales growth is a measure traditionally known to external stakeholders, and to that extent, its determining factors are the variables that these players most value in the market.

Performance drivers in Iberian companies in different economic cycles: new evidence using panel data

“…In Model 1, taxes have a positive relationship with corporate performance (significance of 1%), demonstrating that the application of more taxes implies more economic development, resulting in better business performance. This result is in line with authors, such as Lee and Gordon (2004), or Neves et al (2022b), also corroborating H3 . Additionally, this result suggested that ROA may be a variable, that, although operational, has a clear interest for several stakeholders.…”

“…If the GDP increases, in principle there is more purchasing power on the part of consumers, but companies will also have more competition, having to seek to reduce margins to be able to sell. This result in under Neves et al (2022b) or Proença and Neves (2022).…”

“…According to the classical literature, the greater the tax burden of a company, the lower its financial performance and, eventually, lower levels of growth will be verified, as there will be more resources to be used to pay taxes (Becker et al , 2012; Lasfer, 1995). Also, Vătavu (2015) concluded that when there is a tax increase for companies, it is due to business growth and, consequently, higher performance (Neves et al , 2022b). In this sense, there are still authors who argue that the application of more taxes implies more economic development, which, in turn, will result in more business growth (Lee and Gordon, 2004).…”

Determinants of Iberian companies’ performance: corporate boards and the nonlinearity of gender diversity

“…In this line, GDP has a negative effect on managers’ view (ROA) and a positive influence on shareholders’ perspective (ROE), following other studies (Issah and Antwi, 2017; Ndlovu and Alagidede, 2018). Thus, for managers, an increase in the GDP can lead to more aggressive competitiveness (for example, reduced margins), which decreases results and, consequently, performance (Neves et al , 2022). However, shareholders have a broader vision, and for them, GDP will positively influence performance because economic growth will bring about company growth through more investment and consumption (Garcia and Guerreiro, 2016).…”

“…However, in the literature, some studies have discovered a negative impact between GDP and corporate performance (Issah and Antwi, 2017; Neves et al , 2022; Terjesen et al , 2016); indeed, GDP can lead to more aggressive competitiveness (for example, reduced margins) and decreasing performance (Neves et al , 2022). Moreover, the low-average rate of GDP growth of the countries’ economies in study period could explain this negative relationship (Garcia and Guerreiro, 2016).…”