Persistent firm profitability in the US and EU food processing industry

This article analyzes profit persistence as well as the drivers of profitability in the US and EU food industry using GMM estimations. Due to different structures in firm size comparable samples of US and EU food processors are derived using Propensity Score Matching. The results indicate that the persistence of profitability in the food industry is lower compared to other manufacturing sectors. Firm specific drivers of profitability turn out to be firm size and growth as well as financial risk. Interestingly, while long-term risk has a negative impact on profit persistence in the EU, it has a positive one in the US. Regarding industry characteristics the growth rate measured by the growth in industry sales has a significant impact on profitability. While this impact is positive in the EU, it is negative in the US