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The Impact Of Business Conditions On Retailers And Wholesalers: Does Leverage Matter?

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  • HALIL D. KAYA

    (NORTHEASTERN STATE UNIVERSITY)

Abstract

In this study, I examine the impact of business conditions on high-leverage and low-leverage U.S. retailers and wholesalers during the 2000-2005 period. I focus on firms’ profitability and liquidity values. My objective here is to see if business conditions affect high-leverage and low-leverage firms’ profitability and liquidity values in a similar fashion. In terms of profitability, I find that leverage is an important factor for both retailers and wholesalers. My results show that while business conditions significantly affect high-leverage retailers’ profitability, they do not affect low-leverage retailers’ profitability. The opposite is true for wholesalers: while business conditions do not significantly affect high-leverage wholesalers’ profitability, they do affect low-leverage wholesalers’ profitability. In other words, the profits of high-leverage retailers and low-leverage wholesalers are significantly affected by business conditions. In terms of liquidity, I find that leverage is an important factor for wholesalers, but not for retailers. While favorable business conditions affect high-leverage wholesalers’ liquidity values positively, the impact on low-leverage wholesalers’ liquidity value is negative.

Suggested Citation

  • Halil D. Kaya, 2021. "The Impact Of Business Conditions On Retailers And Wholesalers: Does Leverage Matter?," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 4, pages 72-83, August.
    • Handle: RePEc:cbu:jrnlec:y:2021:v:4:p:72-83
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