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The Effects of Short-Term Liabilities on Profitability: The Case of Germany

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  • Christopher F. Baum
  • Dorothea Schäfer
  • Oleksandr Talavera

Abstract

Using data from Germany this paper examines the direct effect of non-financial firms' use of short-term versus long-term liabilities. We develop a structural model of a firm's value maximization problem that predicts that profitability of the firm will change if firms alter their use of short-term versus long-term liabilities. We find that firms that rely more heavily on short-term liabilities are likely to be more profitable.

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File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.44833.de/dp635.pdf
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Bibliographic Info

Paper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 635.

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Length: 17 p.
Date of creation: 2006
Date of revision:
Handle: RePEc:diw:diwwpp:dp635

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Keywords: profitability; short-term liabilities; maturity structure; capital structure;

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Citations

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Cited by:
  1. Kebewar, Mazen, 2012. "L’impact de l’endettement sur la profitabilité. Une étude empirique sur données françaises en panel," EconStor Preprints 73692, ZBW - German National Library of Economics.
  2. Mazen Kebewar, 2012. "La structure du capital et la profitabilité : Le cas des entreprises industrielles françaises," Working Papers halshs-00758410, HAL.
  3. Mazen Kebewar, 2012. "The effect of debt on corporate profitability : Evidence from French service sector," Working Papers halshs-00766758, HAL.
  4. Kebewar, Mazen, 2012. "L’endettement affecte-t-il la profitabilité? Le cas des firmes agro-alimentaires françaises," EconStor Preprints 73691, ZBW - German National Library of Economics.
  5. Kebewar, mazen & SHAH, Syed Muhammad Noaman Ahmed, 2012. "The effect of debt on corporate profitability: Evidence from French service sector," MPRA Paper 43304, University Library of Munich, Germany.
  6. Mazen Kebewar, 2012. "La structure du capital et la profitabilité : Une étude empirique sur données de panel françaises," Working Papers hal-00751212, HAL.
  7. Kebewar, Mazen & Shah, Syed Muhammad Noaman Ahmed, 2013. "The effect of debt on corporate profitability: Evidence from French service sector," EconStor Preprints 73556, ZBW - German National Library of Economics.

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