Accounting and Non-Financial Information on Firms’ Profitability: Evidence from Greece and Cyprus

This paper develops an evaluation of profitability for firms in Greece and Cyprus from 2005 to 2020. More specifically, it contains an investigation of comparative relevance and dominance of accounting versus non-financial variables, which affect the daily operations of firms, on the firms’ level of profitability. Moreover, this research examines the impact of corruption, unemployment, part-time employment and Research and Development (R&D) on the performance of companies, in order to help managers by giving them more information and assisting in long-term strategic planning. The results indicate that these variables do not have a large effect on the firm-level profitability of these two countries, which is largely influenced by profit margin and other interaction variables, such as profit margin on asset turnover ratio and equity multiplier. The findings underline that internal operational efficiency acts as the primary driver of short-term profitability, whereas macro-level indicators display weaker immediate associations. However, managing these structural elements remains strategically relevant for long-term springiness.