Iskenderoglu, OmerOzturk, Ilhan2019-08-012019-08-0120161331-677X1848-9664https://dx.doi.org/10.1080/1331677X.2016.1163948https://hdl.handle.net/11480/3728The competitive environment hypothesis is one of the basic ideas in mainstream economic theory. It states that the competitive process eliminates all economic profits and losses in the long-run so profits do not persist. This article studies the competitive environment hypothesis of 125 Istanbul Stock Exchange (ISE) quoted manufacturing firms that survived during the period of 2009:1-2010:4, which can be considered as the short-run. Net income after tax to total assets (return on assets [ROA]) and net income after tax to total equity (return on equity [ROE]) are both used as profit measures. Starting with Levin et al. and Im et al.'s panel unit root tests, pooled Ordinary Least Squares (OLS), panel fixed effects and cross-sectional analysis are employed. The results indicate that competitive environment hypothesis is viable and profits do not persist in the short-run.eninfo:eu-repo/semantics/openAccessCompetitive environment hypothesispersistencereturn on assets (ROA)return on equity (ROE)Article29114014710.1080/1331677X.2016.11639482-s2.0-85009971846Q2WOS:000374898400010Q3