Does firm size influence on firm’s Profitability? Evidence from listed firms of Sri Lankan Hotels and Travels sector

Abstract

The aim of this research study is to examine the influence of firm’s size on firm’s profitability in listed firms of Sri Lankan hotels and travels sector firms. For this purposes, this study performed fixed and random effect econometric estimation models and used the data for the time period from 2008 to 2012.

The study results indicate that between the two econometric estimation models, Hausman specification test recommended the estimation of the fixed effects model. According to the fixed effect model result firm’s size is positively related to profitability measure of return on assets. Further this study reveals those total debt ratio has a negative relationship with firm’s profitability.

This research explores the influence of firm’s size on firm’s profitability in listed firms of Sri Lankan hotels and travels sector firms and laid some contribution to the existing literature as Sri Lankan firms’ context. Moreover that observed findings could assist the corporate sector management as well as policy makers to take appropriate decisions in their fields.

Based on the knowledge of authors, this is the first study that reveals the influence of firm’s size on firm’s profitability in listed firms of Sri Lankan hotels and travels sector firms. Moreover, influence of firm’s size on firm’s profitability is misty; hence this study continues that search by the help of Sri Lankan hotels and travels sector firm’s data.

Keywords: Firm’s size; Firm’s profitability; Sri Lanka