The Effect of Firm Size on Profitability: Evidence From Turkish Manufacturing Sector

Abstract

Purpose -This study investigates whether size of 112 publicly listed firms in manufacturing sector affects their profitability in Turkey during the period 2005-2013. Methodology -Dynamic panel data approach (i.e. two-step system GMM estimator) taking into account potential endogeneity of firm-level variables is employed to estimate the effect of alternative firm size indicators on firm profitability. Findings-Estimation results suggest that after controlling for financial risk, liquidity level, growth opportunities, unsystematic risk, firm age, and the other factors, the indicators of firm size measured by firm's assets, sales and number of employees tend to have a positive influence on the profitability of firm measured by operating return on assets. Conclusion-There is enough statistical evidence to support a linear relation between firm size measures and profitability of firms in the period analyzed. However, our empirical results do not support the quadratic or cubic association between size measures and profitability.

Investigating the Role of Issuing Corporate Islamic Bond and Selected Determinants on Firm's Profitability

“…The third result suggests that firm size has no significant impact on a firm's profitability which supports the finding of John and Adebayo (2013). This result, however, contradicts with the finding of Isık et al (2017) where the difference might arise because of the measurement on firm size, sample characteristics, and observation periods. The previous studies examined the firm size using measurements of total assets, net sales, and a number of employees.…”

“…Firm size is an indicator classifying the firms according to their characteristics of scale. Moreover, it is the scale representing how big a firm is by utilizing its total assets, total sales, market capitalization, or a number of workers (Isık et al, 2017). The firm size of this study simply is a classification of the firms based on total assets by the end of the year.…”

“…Moreover, Isık et al (2017) analyze the effect of firm size on profitability observing 112 publicly listed firms in the manufacturing sector. They find that firm size measured by total assets, net sales, and a number of employees has a positive impact on a firm's profitability measured by return on assets.…”

Study of Investment at the Capital Market in the Firm Sector Performs Well

“…Therefore, the provisional conjecture is that size has a positive effect on ROA. This assumption is reinforced by the results of Kusmayadi, Badruzaman, & Firmansyah [3] research that conducted research in the banking sector and showed that size affects profitability, as well as Isik, Unal, and Unal [4] research which researched manufacturing sector companies in Turkey showed that size has a positive effect on profitability. So the consistency of the results of research on different objects convinced the writer that size can determine the height of ROA.…”

The impact of enterprise size on the profitability of agricultural enterprises in the Republic of Serbia

“…Slično istraživanje sproveli su Isik i saradnici na primeru 112 proizvodnih preduzeća, koja su se kotirala na Istambulskoj berzi tokom perioda od 2005. do 2013. godine. Autori su zaključili da postoji statistički značajna pozitivna veza između veličine i profitabilnosti posmatranih preduzeća, odnosno da velika preduzeća imaju značajne prednosti u ovom pogledu u odnosu na manja preduzeća (Isik et al, 2017).…”