FIRM SPECIFIC PROFITABILITY DETERMINANTS OF THE TRANSPORTATION INDUSTRY: EVIDENCE FROM SERBIA

This research paper provides an empirical approach to internal profitability determinants in the transportation industry in Serbia. The purpose of this work is to examine the main determinants of profitability of 637 medium-sized and large companies for the period 2012-2016 in Serbia. When it comes to the contribution of the firm specific, industry specific or country specific determinants to the profitability level of the company, several studies have proved that the firm specific determinants have the most important role in explaining the levels of firms' profitability. The basic objective of this paper is to explore how internal factors such as company size, sales growth, leverage, fixed assets ratio, lagged profitability, stock levels affect the return on asset (ROA) ratio of the analyzed companies in the given period. Methodology framework includes diagnostics tests to clear the potential problem of multicollinearity, heteroscedasticity, autocorrelation, as well as specification and validation of the model. Results of multivariate test of variance show that there are significant differences in the profitability levels of medium-sized and large companies in the transportation industry in the period from 2012 to 2016. Using OLS model, we show that these factors have a significant impact on profitability except sales growth. The findings reflect that company size and lagged profitability have a positive impact on return on asset ratio, while sales growth, leverage, fixed assets ratio, stock levels and dummy variable have a negative effect on profitability in observed period. This article is contributing to a better understanding of the internal profitability determinants of the transportation industry, since there are no studies which directly examine the considered sector as a whole.