Persistence of Firm-Level Profitability in Turkey

The paper studies the dynamics of company profits for 172 of the largest manufacturing firms in Turkey. A time-series analysis is used to estimate the long-run projected profits and firm-specific speed of adjustment parameters that measures the rate at which short-run rents are eroded. While we observe persistent profitability differences across firms, there is also a moderately quick erosion of rents except for the most highly profitable firms. Firm characteristics rather than industry effects account for the differences in permanent profits