THE MODERATING ROLE OF MARKET STRUCTURE ON THE RELATIONSHIP BETWEEN FIRM OPERATIONAL PERFORMANCE AND DEGREE OF OPERATING LEVERAGE

Autores

  • Wesley Da Silva Lourenço Universidade Federal do Espírito Santo http://orcid.org/0000-0002-0760-7644
  • Luiz Cláudio Louzada Universidade Federal do Espírito Santo
  • Paulo Victor Gomes Novaes Universidade Federal do Espírito Santo

DOI:

https://doi.org/10.4270/ruc.2018432

Palavras-chave:

Degree of operating leverage, Return on invested capital, Market structure, Size Moderation.

Resumo

This article investigates the moderation role of market structure on the relationship between operational performance and firms’ costs composition. The Herfindahl-Hirschman Index (HHI) were adopted as proxy for market structure; for operational performance, Return on Invested Capital (ROIC); and for firms’ cost choices, the Degree of Operating Leverage (DOL). The database covers non-financial firms at Brazilian market from 1996 to 2016, third quarter. The output points toward to market structure moderation of the relationship between ROIC and DOL with an increase of the effect when markets move to a monopolistic structure. Overall results suggest the existence of a relation between firms’ operational performance and cost behavior, indicated by a negative relationship between ROIC and DOL. Furthermore, we notice a moderating role of Size on market structure (HHI) moderation role on the relationship between ROIC and DOL, in the extent that market structure moves towards a higher concentration level configuration, the moderating effect of HHI becomes more latent.

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Publicado

2019-05-13

Como Citar

Lourenço, W. D. S., Louzada, L. C., & Novaes, P. V. G. (2019). THE MODERATING ROLE OF MARKET STRUCTURE ON THE RELATIONSHIP BETWEEN FIRM OPERATIONAL PERFORMANCE AND DEGREE OF OPERATING LEVERAGE. Revista Universo Contábil, 14(4), 160–181. https://doi.org/10.4270/ruc.2018432

Edição

v. 14 n. 4 (2018)

Seção

Seção Internacional

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