Drivers of ROE and ROA in the Czech Food Processing Industry in the Context of Market Concentration

Ivana BlažkováOndřej Dvouletý

DOI 10.7160/aol.2017.090301
No 3/2017, September
pp. 3-13

Blažková, I. and Dvouletý, O. (2017) “Drivers of ROE and ROA in the Czech Food Processing Industry in the Context of Market Concentration", AGRIS on-line Papers in Economics and Informatics, Vol. 9, No. 3, pp. 3 - 14. ISSN 1804-1930. DOI 10.7160/aol.2017.090301.

Abstract

The paper investigates the effects of sectoral determinants on profitability of the Czech food processing industry over the period of years 2003-2014. Large micro-level sample (N = 10,509) for 12 years and across 9 food subsectors in the Czech Republic was utilized to create a sectoral panel dataset, which was used the empirical analysis. As for the methods, regression models with fixed effects were employed. Sectoral profitability served as the dependent variable in regressions and it was operationalized by two variables, i.e. ROA and ROE. Both profitability indicators revealed the same influence of investigated determinants. Obtained results reported positive influence of higher market concentration on sectoral profitability, and also the increase of productivity was associated with the increase of ROA and ROE. It was confirmed that high indebtedness affects the profitability negatively. Contrary to the expectations, the effect of the import penetration on the profitability was not proved.

Keywords

Industry profitability, return on assets (ROA), return on equity (ROE), market concentration, regression analysis, the Czech food industry.

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