Profit persistence examination in the Hungarian agriculture

Global Advanced Research Journal of Agricultural Science (GARJAS) ISSN: 2315-5094
April 2019 Vol. 8(4): pp. 151-158
Copyright © 2019 Global Advanced Research Journals

Full Length Research Paper

Profit persistence examination in the Hungarian agriculture

Tibor Bareith

Assistant lecturer at Department of Finance and Economics, Kaposvár University, Kaposvár, Hungary and

PhD Student at Pallas Athene Domus Education is Foundation, Budapest, Hungary H-7400, Kaposvár, Guba Sándor str. 40.

.*Corresponding Author's Email: mbareith.tibor@ke.hu

Accepted 26 February, 2019

Abstract

In this study I examine the profit persistence of the entire Hungarian agriculture with dynamic panel GMM estimation. The estimated profit persistence is low (close to zero) but is significant. There are many small farmers in Hungary; this market structure is closest to the perfect competition where the abnormal profit is zero. Based on the model, companies with a fast growth rate can gain abnormal profits. Persistence is mostly reduced by the share of subsidies received, i.e. non-refundable subsidies compensate for market competition and direct economies towards equilibrium profit. Taking short and long-term risk has a negative impact on profit persistence.

Keywords: abnormal profit, profit persistence, firm performance, agriculture

REFERENCES

Andersen TJ, Jerker D, Richard AB (2017). "Strategic responsiveness and Bowman's risk–return paradox." Strategic Management Journal 28.4 (2007): 407-429.

Bowman EH (2017). "A risk/return paradox for strategic management." (1980).

Diána S (2017). "Magyarország mezőgazdaságának történelmi áttekintése." Tanulmánykötet-Vállalkozásfejlesztés a XXI. században VII. (2017): 580-601.

Dorsey S, Michael B (2009). "The impact of integration strategies on food business firm value." Journal of Agricultural and Applied Economics 41.3 (2009): 585-598.

Goddard J, Manouche T, John OSW (2005). "Determinants of profitability in European manufacturing and services: evidence from a dynamic panel model." Applied Financial Economics 15.18 (2005): 1269-1282.

Gschwandtner A (2005). "Profit persistence in the ‘very’long run: evidence from survivors and exiters." Applied Economics 37.7 (2005): 793-806.

Gschwandtner A (2012). "Evolution of profit persistence in the USA: Evidence from three periods." The Manchester School80.2 (2012): 172-209.

Hirsch S (2018). "Successful in the Long Run: A Meta‐Regression Analysis of Persistent Firm Profits." Journal of Economic Surveys 32.1 (2018): 23-49.

Hirsch S, Adelina G (2013). "Profit persistence in the food industry: evidence from five European countries." European Review of Agricultural Economics 40.5 (2013): 741-759.

Hirsch S, Monika H (2014). "Persistence of firm‐level profitability in the European dairy processing industry." Agricultural economics 45.S1 (2014): 53-63.

Keszthelyi S (2017). A tesztüzemi rendszer eredményei 2015”, Agrárgazdasági Kutató Intézet (2017)

Kozlenko I (2015). "Analysis of profit persistence in the Spanish Food Industry." (2015).

KSH A (2016). mezőgazdaság szerepe a nemzetgazdaságban, 2016. https://www.ksh.hu/docs/hun/xftp/idoszaki/mezo/mezoszerepe16.pdf (2017).

McMillan DG, Mark EW (2011). "Profit persistence revisited: the case of the UK." The Manchester School 79.3 (2011): 510-527.

Mueller DC (1977). "The persistence of profits above the norm." Economica 44.176 (1977): 369-380.

Mueller DC (1986). Profits in the long run. Cambridge University Press, 1986.

Rajczi A, Irén W (2018). "A magyar agrárgazdaság jövedelmezősége az Európai Unió tükrében." Acta Scientiarum Socialium 18.44 (2018).

Resende M (2006). "Profit persistence in Brazil: a panel data study." Estudos Econômicos (São Paulo) 36.1 (2006): 115-126.

Schumacher SK, Michael AB (2005). "The persistence of profitability among firms in the food economy." American Journal of Agricultural Economics 87.1 (2005): 103-115.

Schwalbach J, Ulrike G, Talat M (1089). "The dynamics of corporate profits." European Economic Review33.8 (1989): 1625-1639.

Original Research Articles

Shimaa A. Badawy

Evaluation of WARM model for simulating some rice varieties in Northern Delta

Glo. Adv. Res. J. Agric. Sci. October 2019 Vol: 8(9): - [Abstract] [Full Text - PDF] (725 KB)

Alamu, E. Oladeji, Maziya-Dixon Bussie, Menkir Abebe, Olaofe Olorunfemi, Irondi, Emmanuel A

Effect of Maturity Stages and Roasting Method on the Proximate Composition of orange Maize Hybrids

Glo. Adv. Res. J. Agric. Sci. August 2015 Vol: 4(8): - [Abstract] [Full Text - PDF] (148 KB)

Hind A. A. Al-Zahrani

Solid state fermentation using agro industrial residues for alpha amylase production by an actinomycete isolate from red sea soil

Glo. Adv. Res. J. Agric. Sci. June 2018 Vol: 7(4): - [Abstract] [Full Text - PDF] (458 KB)

Charles O Ondoro, Patrick B Ojera and Moses N Oginda

Role of strategic purchasing and supply management practices in firm performance: A lesson from public bus transport firms in Kenya

Glo. Adv. Res. J. Agric. Sci. August 2013 Vol: 2(8): - [Abstract] [Full Text - PDF] (278 KB)

Girma Zeleke and Beyene Dobo

The Diversity of Arbuscular Mycorrhizal Fungi Associated With Plants in Ethiopia and Its Role in Agro-Ecosystem

Glo. Adv. Res. J. Agric. Sci. March 2019 Vol: 2(8): - [Abstract] [Full Text - PDF] (234 KB)

Jesse Jay O. Villanueva, Leonilo B. Abella, Paolo L. Aragones, Rhona Nińa R. Reyes, Maria Theresa M. Escosia, Ruth Berry O. Magpantay, Rhea dC. Mallari, Hervin Errol T. Mendoza, Jevalyne S. Vienes, Adonis A. Yanos, Richard B. Rapisura, and Jose S. Valmorida

Grain Quality Evaluation of Selected Rice Varieties in the Philippines

Glo. Adv. Res. J. Agric. Sci. November 2018 Vol: 7(11): - [Abstract] [Full Text - PDF] (163 KB)