Risk and profitability of the Slovenian industries
by Igor Stubelj; Suzana Laporšek
International Journal of Sustainable Economy (IJSE), Vol. 13, No. 3, 2021

Abstract: The paper aims to measure the relative and the market risk of Slovenian industries and to assess the potential effect of firms' projects diversification between industries and within industries. The empirical analysis uses ROE data for all capital firms in Slovenia, aggregated both at the country level and at the industry level, for the period of 2008-2018. The empirical findings show big differences and heterogeneity in the median and volatility of the ROE among industries in Slovenia and, interestingly, a negative correlation between risk and return. The latter could be explained by the substantial negative effect of the 2008 crisis on the profitability of the riskiest industries in Slovenia. Moreover, the results suggest a possible diversification effect between industries. In addition, the accounting beta results show that in the majority of studied industries the diversification effect within the industry eliminated most of the specific risk.

Online publication date: Wed, 28-Jul-2021

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