Analyzing long-term average adjustment of financial ratios with spatial interactions
AbstractThe aim of this paper is to put forward a beta convergence model using spatial interaction to evaluate the dynamics of financial ratios. We overcome some of the limitations that come from the traditional partial adjustment model by relating both models. We show that the parameters of the two models may be connected. As an example, we discuss the case of a large sample of medium to high-tech industrial small and medium enterprises (SMEs) located along the Spanish Mediterranean coast. Our findings support the existence of a long-term average adjustment process in the financial ratios of this set of companies which depends on the characteristics of the firms in their neighborhood.
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Bibliographic InfoArticle provided by Elsevier in its journal Economic Modelling.
Volume (Year): 29 (2012)
Issue (Month): 4 ()
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Web page: http://www.elsevier.com/locate/inca/30411
Financial ratios; Dynamic adjustment; Spatial interactions; Partial adjustment model; Beta convergence;
Find related papers by JEL classification:
- C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
- C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
- L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
- M41 - Business Administration and Business Economics; Marketing; Accounting - - Accounting - - - Accounting
- R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
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