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U.K. Companies' Short-Term Financial Decisions: Evidence from Company Accounts Data

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  • Chowdhury, Gopa
  • Green, Christopher
  • Miles, David

Abstract

Short-term financial decisions of companies are modeled with data from the published accounts of a sample of U.K. companies. The total short-term financing requirement is modeled as a buffer, absorbing deficits and surpluses elsewhere in the company's accounts. The focus is on the allocation of this total across four financial instruments: short-term bank borrowing, liquid assets, trade credit given and received. The major determinants of the allocation are found to be the company's mainstream operations (investment, profits, etc), its balance-sheet position, and economy-wide factors (interest rates, tax rates, statutory controls). There is evidence of systematic differences in behavior across companies related to size and profitability. Copyright 1994 by Blackwell Publishers Ltd and The Victoria University of Manchester

Suggested Citation

  • Chowdhury, Gopa & Green, Christopher & Miles, David, 1994. "U.K. Companies' Short-Term Financial Decisions: Evidence from Company Accounts Data," The Manchester School of Economic & Social Studies, University of Manchester, vol. 62(4), pages 395-411, December.
    • Handle: RePEc:bla:manch2:v:62:y:1994:i:4:p:395-411
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    Cited by:

    1. Balla, Andrea, 2006. "Tőkeszerkezeti döntések - empirikus elemzés a magyar feldolgozóipari vállalatokról 1992-2001 között [Decisions affecting capital structure - an empirical analysis of Hungarian manufacturing firms i," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(7), pages 681-700.
    2. Barbara Summers & Nicholas Wilson, 2002. "An Empirical Investigation of Trade Credit Demand," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 9(2), pages 257-270.
    3. Goodhart, Charles, 1989. "The Conduct of Monetary Policy," Economic Journal, Royal Economic Society, vol. 99(396), pages 293-346, June.
    4. Ono, Masanori, 2001. "Determinants of Trade Credit in the Japanese Manufacturing Sector," Journal of the Japanese and International Economies, Elsevier, vol. 15(2), pages 160-177, June.
    5. Sanjiva Prasad & Christopher J. Green & Victor Murinde, 2001. "Company Financing, Captial Structure, and Ownership: A Survey, and Implications for Developing Economies," SUERF Studies, SUERF - The European Money and Finance Forum, number 12 edited by Morten Balling, May.
    6. Sanjiva Prasad & Christopher J. Green & Victor Murinde, 2005. "Company Financial Structure: A Survey and Implications for Developing Economies," Chapters, in: Christopher J. Green & Colin Kirkpatrick & Victor Murinde (ed.), Finance and Development, chapter 12, Edward Elgar Publishing.
    7. Julia KORALUN-BEREŹNICKA & Dorota CIOŁEK, 2018. "Industry and Size Effect in Profitability-Capital Structure Relation: Empirical Evidence from Poland," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(1), pages 93-107, December.

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