Panel Data Analysis of Profitability Determinants: Evidence from Indian Telecom Companies

Abstract

The elements determining the profitability of companies have warranted special attention over time. The levels of rising debt, increased concerns for liquidity and risks of bankruptcy have impacted the revenue of manufacturing sector companies in general and service sector companies in particular. In this study, an attempt has been made to study the financial health of companies belonging to Indian telecom industry. For this purpose, a balanced panel dataset of five Indian telecom companies listed on National Stock Exchange (NSE) has been used to examine the determinants of profitability over the period of 2004-2017. Profitability has been taken as an explained variable whereas size, leverage, liquidity, non-debt tax shield (NDTS), tangibility, growth opportunities and bankruptcy probability (Altman Z-score) have been considered as explanatory variables. The findings of the study reveal that the size and growth have a direct relationship with profitability, whereas the leverage has an inverse relationship. Tangibility, NDTS, liquidity and Z-score indicate insignificant impact on profitability.

Liquidity and Firms’ Financial Performance Nexus: Panel Evidence From Non-Financial Firms Listed on the Ghana Stock Exchange

“…There was also no causal affiliation between lnGRO and lnROE. This finding was in tandem with Khan et al (2018) whose research on five listed telecommunication companies in India found no significant connection between growth and the firms' financial performance. The finding also supported Meseret and Getahun (2017) and Vuong (2017) whose studies uncovered no material association between growth and firms' viability.…”

An Inferential Study on the Profitability Determinants of the Cement Industry in Bangladesh

“…The firm size helps the firm to increase its profitability by expanding its capacity more efficiently. The findings of the study show positive impact on profitability supporting Prasetyantoko and Rachmadi (2008), Khan et al (2018), Ehi-Oshio et al 2013, Zaid et al (2014), and Al-Jafari and Samman (2015) but varying from Goddard, Tavakoli, and Wilson (2005) and Aparna (2015). The higher expense to revenue ratio of the firm indicates lower profitability.…”

“…Khan et al (2018),Aparna (2015),Prempeh et al (2018) but varying from Ehi-Oshio et al(2013),Maroa and Kioko (2016), andEgbunike and Okerekeoti (2018).Business firm learns how to minimize costs and maximize profits with time. Thus, the age of the firm creates an active impact on profitability.…”

Determinants of Profitability: A Study on Manufacturing Companies Listed on the Dhaka Stock Exchange

“…Many researchers used ROA and ROE as measures of profitability, including Rezina, Ashraf, and Khan (2020); Prasetyantoko and Rachmadi (2008); Khan, Shamim, and Goyal (2018); Pratheepan (2014); Zaid, Wan Muhd, and Zulqernain (2014); Ehi-Oshio, Adeyemi, and Enofe (2013); Nanda and Panda (2018); Chen and Tseng (2005); Aissa and Lefa (2016); Liuspita and Purwanto (2019); Ifeduni and Charles (2018) and Yazdanfar (2013).…”