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Public Spending and Profitability: Analysis in Ecuadorian Public Companies

Abstract:

The General State Budget in Ecuador contemplates an allocation for public spending in the different entities, including the public companies studied, which operate in various sectors that, due to their competitiveness, are significant for the socioeconomic development of the country. In the investigation, an analysis was carried out between the relationship of public spending in the profitability of seven public companies in Ecuador during the period 2014–2017. To determine the relationship between variables, the Pearson, Spearman correlation coefficient was calculated and the regression analysis was performed based on the linear, logarithmic, inverse, quadratic and cubic model. Statistical processing was performed using STATA v.12 and SPSS v.23, to determine relationships between budget allocation and profitability indicators in companies during the study period. Low levels of profitability were identified in the companies during the period studied, which are not influenced by the state budget allocation. The above evidences the need for companies to focus on internal measures that generate sources of profitability, and in the same way the State promotes policies that tend to it, and not only consider budget allocation as the way to support public business development.