Impact of the macroeconomic determinants on the corporate profitability of companies from accommodation and food service industry in selected European countries

Proceedings of ‏The 12th International Conference on Modern Research in Management, Economics and Accounting

Year: 2021

DOI:

[Fulltext PDF]

Impact of the macroeconomic determinants on the corporate profitability of companies from accommodation and food service industry in selected European countries

Nicole Škuláňová

 

ABSTRACT: 

Every entrepreneur decides on all business matters in connection with profit. All entrepreneurs want to make a profit, and therefore profitability indicators are among the most important indicators of economic activity of the selected business unit. Profitability can be measured in many ways. The return on equity was chosen for this research, considering a number of statistically significant results. The profitability level is influenced by a number of factors that can come from both the internal and external environments of the company. This research deals with six determinants of the external environment – GDP growth rate, inflation rate, reference interest rate, unemployment rate, gross fixed capital formation and exchange rate against the euro. The impact of these factors on profitability is analyzed in eight European economies. The subject of research is the profitability of companies belonging to the accommodation and food service industry. The profitability analysis is performed at the level of seven subsectors and using the Generalized Method of Moment. The aim of the research is to find out whether selected factors influence the company’s profitability or not. The research period is the period 2010 to 2018 and the researched sample contains about 24,000 companies. It is impossible to summarize the results in one sentence for the sample size, but the main conclusion is that the profitability of most subsectors is negatively affected by the reference interest rate of the economy.

Keywords: corporate profitability, GDP, inflation, interest rate, unemployment, gross fixed capital formation.