Towards Economic Variables and Firm Characteristics: An Examination of the Impact on Profitability of Ghanaian Production Firms

Abstract

This study examines the combined effects of firm characteristics and economic factors on the profitability of Ghanaian production firms. The goal of the study therefore is to ascertain how firm-specific characteristics and economic factors interact to influence the profitability of production firms in Ghana. Ghana's production companies are vital to the country's economy, but these production companies face intense competition from imported goods, and high taxes and levies, which the study links to unfavorable economic conditions, policies, and regulations resulting in lower firm profitability. In Sub-Saharan Africa, there hasn't been much empirical research on how firm characteristics and economic factors interact to affect corporate profitability. Therefore, in harnessing the potentials of African intellectuals for rapid economic growth, the examination becomes crucial amidst the fluctuations of economic growth, especially in Ghana. The study looks at the relationship between profitability metrics like Profit Margin (PM) and Return on Assets (ROA), and Gross Domestic Product (GDP), Inflation (I), and Firm Age (FA). Between 2017 and 2022, data from five listed production companies were extracted. Quantile and OLS regression models were used for analysis. The results revealed that, none of the economic factors as well as firm age affect profitability of production firms in Ghana. It shows therefore that certain internal factors in firms, as well as opportunities from the external environment among others, can make firms increase profitability irrespective of economic factors.

Keywords: economic factors, firm profitability, firm characteristics, gross domestic product, inflation.

DOI: 10.7176/EJBM/17-10-01

Publication date: December 30th 2025