Annals of the University of Oradea: Economic Science (Jul 2016)
DOES SIZE INFLUENCE FIRM PERFORMANCE? EVIDENCE FROM ROMANIAN LISTED COMPANIES
Abstract
The paper investigates if size has any influence on firm performance for all non-financial companies listed at Bucharest Stock Exchange over 12 years period. The proxies for firm size were total assets, sales and number of employees. Control variables were tangibles, leverage, labour intensity, sales growth and company value added. Using a fixed effects panel data estimation model in order to account for individual firm heterogeneity, the paper finds a negative effect of firm size on corporate performance, when size is expressed in total assets and sales and no effect at all when number of employees is used as a proxy for size. Also, tangibles, leverage and labour intensity display a negative sign, the only positive determinants being sales growth and company value added. The findings suggest that the asset mix Romanian listed is not performance driving oriented, but is under the influence of the large amount of real-estate assets which are not directly involved in producing goods (as oppose to machine and equipments) and therefore do not directly generate profits.
