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Does Firm Age Affect Profitability? Evidence from Turkey

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  • Elif Akben-Selcuk

    (Kadir Has University)

Abstract

The objective of this study is to investigate the impact of firm age on the profitability of Turkish firms listed on Borsa Istanbul. Using a dataset covering the years between 2005 and 2014 and consisting of 302 non-financial firms per year on the average, a fixed effects model with robust standard errors is estimated. Results reveal that there is a negative and convex relationship between firm age and profitability measured by return on assets, return on equity or gross profit margin. This suggests that younger firms start to see a decline in their profitability from the beginning but they may become profitable again at an old age. Implications are provided.

Suggested Citation

  • Elif Akben-Selcuk, 2016. "Does Firm Age Affect Profitability? Evidence from Turkey," International Journal of Economic Sciences, International Institute of Social and Economic Sciences, vol. 5(3), pages 1-9, September.
    • Handle: RePEc:sek:jijoes:v:5:y:2016:i:3:p:1-9
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    References listed on IDEAS

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    More about this item

    Keywords

    Firm age; firm life cycle; financial performance; profitability; fixed effects model; emerging markets; Turkey;
    All these keywords.

    JEL classification:

    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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