A Panel Data Analysis of Profitability Determinants : Empirical Results from Sri Lankan Manufacturing Companies

The study of factors determining the profitability of companies has warranted special attention over time by different fields of scientific knowledge. In this study, a balanced panel data set of Sri Lankan listed manufacturing companies was used for examining the determinants of profitability of manufacturing companies using the static panel models. For this purpose, 550 observations of 55 listed manufacturing companies over the period of 2003-2012 were included. Return on assets considered as a measure for profitability is a dependent variable whereas size, leverage, liquidity and tangibility are considered as independent variables. According to the findings, size is statistically significant of positive relationship with profitability whereas tangibility shows statistically significant of inverse relationship with profitability for selected listed manufacturing companies in Sri Lanka. Leverage and liquidity indicate insignificant impacts on profitability. Further research on impact on financial companies' profitability with Management Quality, Corporate Governance, and Risk Management will not only add value in explaining profitability of companies and but also add value to the academic literature