Beyond the Hype: What Drives the Profitability of S&P 500 Technology Firms?

The corporate finance field is inherently engaging, with a strong focus on factors influencing various performance indicators. This study analyzes 66 companies from the Information and Technology sector, all part of the Standard and Poor’s 500 index, over a 22-year period from 2003 to 2024. I applied linear, nonlinear, and interaction-variable models to identify the causal relationship between profitability and key influencing factors. The results reveal that firm size, sales growth rate, current ratio, long-term debt to total capital, free cash flow, asset turnover, receivable turnover, number of board meetings, percentage of women on the board, CEO age, audit committee independence, the presence of compensation and nomination committees, and a pandemic dummy variable all had positive effects on performance. In contrast, firm age, dividend payout ratio, effective tax rate, board size, CEO duality, and the presence of a corporate social responsibility committee negatively impacted firm performance. This research also explores corporate governance by evaluating the role of regulations and internal policies designed to promote financial transparency and protect shareholders’ interests. Additionally, it highlights the importance of board independence, the effectiveness of specialized committees, and the role of ethical leadership in driving long-term corporate success.

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Publication Details

Journal
Journal of risk and financial management
Published
2025-11-13
DOI
https://doi.org/10.3390/jrfm18110641
Primary Topic
Corporate Finance and Governance
Type
article
Field-Weighted Citation Impact
0.00
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article

Beyond the Hype: What Drives the Profitability of S&P 500 Technology Firms?

Georgiana Danilov
Journal of risk and financial management
Corporate Finance and Governance
article

Beyond the Hype: What Drives the Profitability of S&P 500 Technology Firms?

Georgiana Danilov
article en

Abstract

The corporate finance field is inherently engaging, with a strong focus on factors influencing various performance indicators. This study analyzes 66 companies from the Information and Technology sector, all part of the Standard and Poor’s 500 index, over a 22-year period from 2003 to 2024. I applied linear, nonlinear, and interaction-variable models to identify the causal relationship between profitability and key influencing factors. The results reveal that firm size, sales growth rate, current ratio, long-term debt to total capital, free cash flow, asset turnover, receivable turnover, number of board meetings, percentage of women on the board, CEO age, audit committee independence, the presence of compensation and nomination committees, and a pandemic dummy variable all had positive effects on performance. In contrast, firm age, dividend payout ratio, effective tax rate, board size, CEO duality, and the presence of a corporate social responsibility committee negatively impacted firm performance. This research also explores corporate governance by evaluating the role of regulations and internal policies designed to promote financial transparency and protect shareholders’ interests. Additionally, it highlights the importance of board independence, the effectiveness of specialized committees, and the role of ethical leadership in driving long-term corporate success.

Journal of risk and financial managementVol. 18(11)
Bucharest University of Economic Studies (RO)
Openalex Percentile: Top 51%
Corporate Finance and Governance
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