Profitability and its leading determinants of listed construction firms in Hong Kong

Abstract

It is well recognized that construction business is sensitive to the fluctuation of its business environment. Measurement of financial performance of a firm serves the basis of monitoring and evaluating its corporate competence in reacting to environmental change. This research involved applications of quantitative modeling by using various statistical techniques. The financial performance expressed in terms profitability was approximated by factor analysis based on the published financial data of publicly listed construction contractors in Hong Kong between 1992 and 2010. A number of leading socio-economic and sectoral indicators of the general profitability performance of these construction contractors were further identified by means of cross-correction analysis. The empirical result reaffirmed that both macroeconomic condition and construction market demand have a positive leading effect on the Profitability of the construction contractors in Hong Kong.