Explaining the persistence of profits: A time-varying approach

Jesus Crespo Cuaresma, Adelina Gschwandtner

Publication: Working/Discussion Paper

Abstract

The present paper analyzes the determinants of profit persistence
using a newly developed methodology that allows for the persistence
parameter to vary with time. It therefore addresses a significant limitation of previous persistence models, which have assumed unrealistically that persistence is fixed over relatively long period of 20 years upwards. The concentration and the size of the industry are found to have a significant
positive impact on profit persistence. However, at firm level,
market share and risk have surprisingly a negative impact on profit persistence.
Original languageEnglish
Publication statusPublished - 2008

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