Paper title: Does Total Factor Productivity Be an Issue on Corporate Earnings? Evidence from the DSE Listed Pharmaceutical Companies in Bangladesh?
Abstract: This study explores whether total factor productivity matters to change the corporate earnings of manufacturing companies in an emerging economy, Bangladesh. To do this, researchers captured relevant data from the annual reports of 27 DSE-listed pharmaceutical and chemical companies over the period 2012–2021. The key variable, total factor productivity, is estimated by using the Cobb-Douglas production function, which takes into account the contribution of research, development, and technological improvement of pharmaceutical companies to total output rather than the benefit of the number of employees and the company’s asset size. The study uses return on assets (ROA) and return on equity (ROE) as the dependent variable to assess corporate earnings (CE). The panel analysis finds that total factor productivity has a significant positive influence on ROA and ROE in both the random effect model and the GMM analysis. The findings announce that pharmaceutical companies with more technological progress are generating a higher profit. In addition, we found that long-term debt ratio, growth, liquidity, firm age and firm size have a significant impact on corporate profitability. This evidence motivates the stakeholders to increase the amount of investment in research and technology, which ultimately develops the innovation of various medicines, vaccines, etc., thereby decreasing imports and finally heightening the economy of Bangladesh by saving valuable foreign currency. Keywords: Total factor productivity (TFP), Corporate Earnings (CE), Return on Assets (ROA), Return on Equity (ROE). DOI: https://www.doi.org/10.61607/JFB.V20N1-2.A8 Article Info: Submission Date: March 20, 2023; Acceptance Date: December 27, 2023.
