Determinants of assets profitability: differences due to activity sector and company size
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abstract
Knowing the determinants of the profitability of a company is crucial for management
but also for policy-makers at regional and national level to adopt measures to
promote regional development. The interior region of a mainland Portugal is facing
some problems related to aging population, lack of opportunities for young people,
depressed and weak economy, where it is necessary to take measures to strengthen
the business environment and gain power of attractiveness.
In this paper we use a unique, privately database with financial data (and some nonfinancial
variables)of 1,024 enterprises headquartered in the interior north and center
of mainland Portugal for the time period of 2006 to 2009 to answer to the research
question: “The return on total net assets (ROA) is influenced by the size, location and
the corporate activity sector?”.
Applying a positivist quantitative approach by a descriptive analysis and inferential
analysis through the Kruskal Wallis test, we tested three main hypotheses. Our
results seem to indicate that the profitability of companies (as measured by ROA) is
influenced by economic activity sector and localizations of the company (geographic
region) but not by company size.
