Ammar, A; Hanna, A S; Nordheim, E V and Russell, J S (2003) Indicator variables model of firm's size-profitability relationship of electrical contractors using financial and economic data. Journal of Construction Engineering and Management, 129(2), pp. 192-197. ISSN 0733-9364
Abstract
According to some electrical contractors who are members of the Federated Electrical Contractors, electrical contractor firms may experience a lack of profitability as the firm grows in size. Under these conditions, statistical models were developed to study the firm's size-profitability relationship. Economic data were obtained from the National Bureau of Economic Research, Bureau of Economic Analysis, and Mortgage Information Service. Financial data for 1985-1996 were obtained from the FEC group. Statistical analysis reveals that small, medium, and large firms are significantly different from each other in terms of their profit rate; profitability drops as firms grow larger than $50 million in sales. An indicator variables model with a first-order autoregressive model built into the error term was developed using backward elimination regression. Data from the year 1996 were used to validate the model, which predicted 76% of the year 1996 response variable, profitability, correctly.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | contractors; data analysis; models; profits |
| Index terms: | statistical model, profitability, statistical analysis, mortgage, contractor firm, economic analysis, profit, data analysis |
| Subjects: | data analysis and analytics, data science, economic analysis, design analysis, organization |
| Topics: | Organizational Design, Design Practice, Business Strategy, Research Practice |
| Descriptive scope: | 3 PCA |
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