Firm financial performance in Sub-Saharan Africa: the role of ethnic diversity

Firm financial performance in Sub-Saharan Africa: the role of ethnic diversity Empir Econ https://doi.org/10.1007/s00181-018-1463-2 Firm financial performance in Sub-Saharan Africa: the role of ethnic diversity Sefa Awaworyi Churchill Received: 13 October 2016 / Accepted: 25 April 2018 © Springer-Verlag GmbH Germany, part of Springer Nature 2018 Abstract Using data from Sub-Saharan Africa, this research note examines the effect of ethnic and linguistic diversity on firms’ financial performance. We measure diver- sity using indices of fractionalization based on the Herfindahl-type formula and find evidence of a strong positive effect of diversity on firm performance indicators such as total revenue, dividends, earnings before interest and tax, net sales/turnover and return on assets and total factor productivity. We argue that the positive effect is driven by the influence of ethnic diversity on important channels such as innovation and entrepreneurship. Our results are robust to alternative measures of fractionalization and endogeneity. Keywords Ethnic diversity · Firm performance · Profits · Africa JEL Classification J15 · M13 · L25 1 Introduction The existing literature on the determinants of firm performance primarily focuses on determinants such as firm-level, ownership and managerial factors (see, e.g., Hawaw- inietal. 2003; Huselid et al. 1997), macroeconomic and institutional factors (see, e.g., Kangasharju 2000), market and industry structures (see, e.g., Bass http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Empirical Economics Springer Journals

Firm financial performance in Sub-Saharan Africa: the role of ethnic diversity

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Publisher
Springer Journals
Copyright
Copyright © 2018 by Springer-Verlag GmbH Germany, part of Springer Nature
Subject
Economics; Econometrics; Statistics for Business/Economics/Mathematical Finance/Insurance; Economic Theory/Quantitative Economics/Mathematical Methods
ISSN
0377-7332
eISSN
1435-8921
D.O.I.
10.1007/s00181-018-1463-2
Publisher site
See Article on Publisher Site

Abstract

Empir Econ https://doi.org/10.1007/s00181-018-1463-2 Firm financial performance in Sub-Saharan Africa: the role of ethnic diversity Sefa Awaworyi Churchill Received: 13 October 2016 / Accepted: 25 April 2018 © Springer-Verlag GmbH Germany, part of Springer Nature 2018 Abstract Using data from Sub-Saharan Africa, this research note examines the effect of ethnic and linguistic diversity on firms’ financial performance. We measure diver- sity using indices of fractionalization based on the Herfindahl-type formula and find evidence of a strong positive effect of diversity on firm performance indicators such as total revenue, dividends, earnings before interest and tax, net sales/turnover and return on assets and total factor productivity. We argue that the positive effect is driven by the influence of ethnic diversity on important channels such as innovation and entrepreneurship. Our results are robust to alternative measures of fractionalization and endogeneity. Keywords Ethnic diversity · Firm performance · Profits · Africa JEL Classification J15 · M13 · L25 1 Introduction The existing literature on the determinants of firm performance primarily focuses on determinants such as firm-level, ownership and managerial factors (see, e.g., Hawaw- inietal. 2003; Huselid et al. 1997), macroeconomic and institutional factors (see, e.g., Kangasharju 2000), market and industry structures (see, e.g., Bass

Journal

Empirical EconomicsSpringer Journals

Published: May 30, 2018

References

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