The Impact of Different Industrial Classification Schemes on Firm Performance: An IVs Analysis

Yong, S.L. and Ingham, H. (2012) The Impact of Different Industrial Classification Schemes on Firm Performance: An IVs Analysis. International Journal of Business and Social Science, 3 (9). pp. 120-132. ISSN 2219-1933

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Official URL: http://ijbssnet.com/journals/Vol_3_No_9_May_2012/1...

Abstract

Market concentration ratio is argued to be an important driver of the firm performance. The measurement of its influence, however, is difficult since it is considered to be an endogenous variable. This paper applied the instrumental variables (IVs) approach using the SCP paradigm to model company performance. A panel analysis is carried out against a sample of 641 companies listed on the Main Board of Bursa Malaysia, over the period 2001 to 2006. The Durbin-Wu-Hausman (DWH) test results provide some support for the contention that the market concentration ratio variables are endogenous for SIC and Bursa classifications. After the market concentration ratio variables have been instrumented, it has a positive impact on firm performance. In addition, firm performance was found to be positively related to leverage, but negatively affected by firm capital intensity and openness.

Item Type: Article
Uncontrolled Keywords: Instrumental variables; Endogeneity; Market concentration; Firm performance; Industrial classification; Panel
Subjects: H Social Sciences > HF Commerce
Divisions: Faculty of Economics & Administration
Depositing User: Ms. Juhaida Abd Rahim
Date Deposited: 26 Jan 2015 13:24
Last Modified: 26 Jan 2015 13:24
URI: http://eprints.um.edu.my/id/eprint/12391

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