DOES PUBLIC OWNERSHIP OF EQUITY AFFECT PROFITABILITY?  THE CASE OF SALMON INDUSTRY

In this paper we evaluated how equity ownership affects profitability of the Norwegian salmon farming companies. The increasing consolidation and globalization of salmon industry have stimulated the investment in this industry and consequently the publicly traded securities. This process was specially evidenced in 2007, which was the first operating year of the biggest producer, Marine Harvest, after its huge expansion through merge and acquisition. In addition another two salmon producers, Salmar and Grieg Seafood, went public in 2007. The public ownership of equity may improve corporate governance and productivity, which further contribute to profitability. We estimated two models, one for all companies with the sample period 2006-2014 and a dummy variable set for private companies, and the other for the public companies with the sample period 2001-2014 and a dummy variable set for the sub-period 2001-2006. The profitability is represented by Return on Sales (Figure). Following the literature on profitability, the control variables include operating leverage, financial leverage, and liquidity ratio. As the public companies have become large after 2007 and are relatively larger than the private companies through time, the firm size variables are incorporated in the models. The empirical results show that, holding other factors constant, the private companies have a 5.22% lower profitability than the public companies. For the public companies as a whole, the huge expansion after 2007 has not enhanced their profitability.