Abstract
The present study examines the relationship of firm's size and profitability, taking into consideration major characteristics such as size and profitability of 20 Indian Automobile Companies for a period of 13 years that is, from 1996-97 to 2008-09, Hypothesis is developed taking into account both previous research and particular idiosyncrasies of the national context. The study employed three model specifications in order to test the hypothesis, using the short-term and long-term measures of profitability. The empirical findings suggest that firm's size emerges as an important factor affecting profitability. The results show mixed evidence; firm's size is positively significant in Commercial Vehicles and Passenger Cars & Multi-utility Vehicles sector and negatively significant in Two and Three Wheelers sector and the Whole Industry. The study concludes that the validity and the generalisation of the findings are pending future research in other industries or sectors that ratifies or refutes them.
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