Sales and profit growth and the effects of crises: comparative evidence from the recent crisis
by Celeste Amorim Varum; Susana Silva; Abigail Ferreira
Global Business and Economics Review (GBER), Vol. 16, No. 2, 2014

Abstract: The global crisis has called to further reflection on the role of multinationals in host economies during crisis. The evidence on this matter is scarce. Using panel data analysis, this paper examines the link between foreign ownership, firm profit and turnover growth over 1996-2009 covering two economic downturns in particular. The empirical analysis covers not only previous periods of recession, of the early 2000s in Portugal, but also analyses the most recent recession. To our knowledge the paper is unique in this regard. We analyse the determinants of firm profit and turnover growth and investigate whether there are significant differences between domestic and foreign firms during and after two different economic downturns. After controlling for several firm and industry characteristics, we find no significant differences between domestic and foreign firms. However, foreign firms' profit growth seems to have been more severely affected in the second crises. Indeed, during the first crisis period, and for the group of foreign firms, the impact is negative but not significant.

Online publication date: Mon, 16-Jun-2014

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