Rent‑Seeking in Sugar Industry: Evidence from Financial Accounting Data

We examine the impact of inefficiency at company and country level on the profitability of sugar companies. This study offers a fresh approach to the rent seeking literature by examining the financial accounting data. The rent seeking hypothesis posits positive relationship between inefficiency and profitability. To verify the hypotheses, we employed a linear regression model that links profitability with inefficiency measurement (company level and country level) with firm size; liquidity; leverage and country dummy variables as control variables. The regression model was estimated using a panel dataset of 158 companies, annual frequency from 2013 to 2022. Two-Step Difference GMM is employed as main estimator to cope with persistence and endogeneity feature inherently in our model and data. As expected, we find that inefficiency (of both company and country level) has a positive association with profitability. Our results are robust after an array of checking.