The financial performance of large and small firms: evidence from Greece

Abstract

Greece, being the only country of south-eastern Europe with a long history within the European Union, is considered as a useful benchmark to draw conclusions about the process of adaptation of an economy to the EU environment. This paper attempts to specify possible differences in the main factors that determine firm profitability, using data from Greek manufacturing for 1995–1999. The analysis uses regression models and is performed on a longitudinal sample of 3035 firms, classified by size of employment. The econometric results indicate that size, managerial efficiency, debt structure, investment in fixed assets and sales growth affect significantly firm profitability. By discriminating firms according to size classes, it is possible to identify how the determinants of financial performance differentiate by firm size.