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

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  • Christopher F. Baum

    (Boston College)

  • Dorothea Schaefer

    (DIW Berlin)

  • Oleksandr Talavera

    (DIW Berlin)

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://repec.org/mmf2006/up.25583.1145029704.pdf
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Bibliographic Info

Paper provided by Money Macro and Finance Research Group in its series Money Macro and Finance (MMF) Research Group Conference 2006 with number 61.

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Date of creation: 02 Feb 2007
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Handle: RePEc:mmf:mmfc06:61

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Web page: http://www.essex.ac.uk/afm/mmf/index.html

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

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References

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  1. Allen N. Berger & Marco A. Espinosa-Vega & W. Scott Frame & Nathan H. Miller, 2004. "Debt maturity, risk, and asymmetric information," Working Paper 2004-32, Federal Reserve Bank of Atlanta.
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  9. Audretsch, David B & Elston, Julie Ann, 1994. "Does Firm Size Matter? Evidence on the Impacts of Liquidity Constraints on Firm Investment Behaviour in Germany," CEPR Discussion Papers 1072, C.E.P.R. Discussion Papers.
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Citations

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Cited by:
  1. Mazen Kebewar, 2013. "La structure du capital et la profitabilité : Une étude empirique sur données de panel françaises," Working Papers hal-00751211, HAL.
  2. Kebewar, mazen, 2012. "L’impact de l’endettement sur la profitabilité: Une étude empirique sur données françaises en panel
    [The impact of debt on profitability: An empirical study on French data panel]
    ," MPRA Paper 42579, University Library of Munich, Germany.
  3. Mazen Kebewar, 2012. "La structure du capital et la profitabilité : Le cas des entreprises industrielles françaises," Working Papers halshs-00758410, HAL.
  4. Mazen Kebewar, 2012. "The effect of debt on corporate profitability : Evidence from French service sector," Working Papers halshs-00766758, HAL.
  5. Kebewar, mazen, 2012. "L’Endettement Affecte-T-Il La Profitabilité? Le Cas Des Firmes Agro-Alimentaires Françaises
    [Does Debt Affect Profitability? The Case Of French Agro-Food Firms]
    ," MPRA Paper 42834, University Library of Munich, Germany.
  6. 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.
  7. 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.

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