IDEAS home Printed from https://ideas.repec.org/a/jfr/afr111/v2y2013i1p32.html

A Comparison of the Financial Characteristics of German and French Manufacturing Firms

Author

Listed:
  • Ilhan Meric
  • Kathleen Dunne
  • Wayne Smeltz
  • Gulser Meric

Abstract

Comparing the financial characteristics of different groups of firms with financial ratios has been a popular methodology in finance. In this paper, we compare the financial characteristics of German and French manufacturing firms with the MANOVA (multivariate analysis of variance) statistical technique. Germany and France are members of the European Union and they have fully integrated economies with a common currency and yet, we find that financial characteristics of German and French manufacturing firms are significantly different. German manufacturing firms have significantly higher liquidity, asset turnover, and equity ratios compared with French manufacturing firms. Despite a high level of economic integration, German and French manufacturing firms appear to preserve their deep-rooted country business traditions. German manufacturing firms lower their technical insolvency risk by maintaining a significantly higher level of liquidity compared with French manufacturing firms. German manufacturing firms also reduce their bankruptcy risk by using more equity financing and less debt financing compared with their French counterparts. The profitability and sales growth ratios of manufacturing firms in the two countries are not significantly different. Although asset turnover ratios are higher in German manufacturing firms than in French manufacturing firms, French firms are able to boost their return on equity to the level in German manufacturing firms by using more debt financing and financial leverage.    Â

Suggested Citation

  • Ilhan Meric & Kathleen Dunne & Wayne Smeltz & Gulser Meric, 2013. "A Comparison of the Financial Characteristics of German and French Manufacturing Firms," Accounting and Finance Research, Sciedu Press, vol. 2(1), pages 1-32, February.
    • Handle: RePEc:jfr:afr111:v:2:y:2013:i:1:p:32
    as

    Download full text from publisher

    File URL: https://www.sciedupress.com/journal/index.php/afr/article/download/1995/1193
    Download Restriction: no
    File URL: https://www.sciedupress.com/journal/index.php/afr/article/view/1995
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Edward I. Altman, 1968. "Financial Ratios, Discriminant Analysis And The Prediction Of Corporate Bankruptcy," Journal of Finance, American Finance Association, vol. 23(4), pages 589-609, September.
    2. Meric, Ilhan & Meric, Gulser, 1994. "A comparison of the financial characteristics of U.S. and Japanese manufacturing firms," Global Finance Journal, Elsevier, vol. 5(2), pages 205-218.
    3. Edward I. Altman, 1968. "The Prediction Of Corporate Bankruptcy: A Discriminant Analysis," Journal of Finance, American Finance Association, vol. 23(1), pages 193-194, March.
    4. Stevens, Donald L., 1973. "Financial Characteristics of Merged Firms: A Multivariate Analysis," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 8(2), pages 149-158, March.
    5. Meric, Gulser & Leveen, Serpil S & Meric, Ilhan, 1991. "The Financial Characteristics of Commercial Banks Involved in Interstate Acquisitions," The Financial Review, Eastern Finance Association, vol. 26(1), pages 75-90, February.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ozge Uygur & Gulser Meric & Ilhan Meric, 2013. "The Financial Characteristics Of U.S. Companies Acquired By Foreign Companies," Global Journal of Business Research, The Institute for Business and Finance Research, vol. 7(1), pages 1-8.
    2. MERIC Gulser & BENTLEY T. Jerome & McCALL W.Charles & MERIC Ilhan, 2016. "A Comparison Of The Financial Characteristics Of U.S. And European Manufacturing Firms," Studies in Business and Economics, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 11(2), pages 58-67, August.
    3. MERIC Gulser & GUNER Berrin & CHUNG Shifei & MERIC Ilhan, 2019. "A Comparison Of Business Management Characteristics In U.S., German, And Japanese Manufacturing Corporations," Studies in Business and Economics, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 14(1), pages 141-153, April.
    4. Daniel Folkinshteyn & Ozge Uygur & Gulser Meric, 2014. "A Comparison of the Financial Characteristics of U.S. and German Manufacturing Firms," The International Journal of Business and Finance Research, The Institute for Business and Finance Research, vol. 8(5), pages 9-22.
    5. MERIC Gulser & WELSH Carol & SCARPA Robert & MERIC Ilhan, 2017. "A Comparison Of The Financial Characteristics Of European And Asian Manufacturing Firms," Studies in Business and Economics, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 12(3), pages 112-125, December.
    6. Eisdorfer, Assaf, 2008. "Delisted firms and momentum profits," Journal of Financial Markets, Elsevier, vol. 11(2), pages 160-179, May.
    7. Gulser MERIC & Stephanie WEIDMAN & Carol WELSH & Ilhan MERIC, 2017. "A Comparison of the Financial Management Characteristics of UK vs. EU Manufacturing Firms," REVISTA DE MANAGEMENT COMPARAT INTERNATIONAL/REVIEW OF INTERNATIONAL COMPARATIVE MANAGEMENT, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 18(2), pages 138-147, May.
    8. Mai, Nhat Chi, 2015. "Efficiency of the banking system in Vietnam under financial liberalization," OSF Preprints qsf6d, Center for Open Science.
    9. Barbara Su, 2023. "Banking practices and borrowing firms’ financial reporting quality: evidence from bank cross-selling," Review of Accounting Studies, Springer, vol. 28(1), pages 201-236, March.
    10. Matthew Smith & Francisco Alvarez, 2022. "Predicting Firm-Level Bankruptcy in the Spanish Economy Using Extreme Gradient Boosting," Computational Economics, Springer;Society for Computational Economics, vol. 59(1), pages 263-295, January.
    11. Premachandra, I.M. & Bhabra, Gurmeet Singh & Sueyoshi, Toshiyuki, 2009. "DEA as a tool for bankruptcy assessment: A comparative study with logistic regression technique," European Journal of Operational Research, Elsevier, vol. 193(2), pages 412-424, March.
    12. José Carlos Trejo García & Humberto R�os Bol�var & Francisco Almagro V�zquez, 2016. "Actualización del modelo de riesgo crediticio, una necesidad para la banca revolvente en México," Revista Finanzas y Politica Economica, Universidad Católica de Colombia, vol. 8(1), pages 17-30.
    13. Shaikh, Ibrahim A. & O'Brien, Jonathan Paul & Peters, Lois, 2018. "Inside directors and the underinvestment of financial slack towards R&D-intensity in high-technology firms," Journal of Business Research, Elsevier, vol. 82(C), pages 192-201.
    14. José-Luis Peydró [AP BACKUP – NOW EXTERNAL] & Mikel Bedayo & Raquel Vegas & Gabriel Jiménez & José-Luis Peydró, 2020. "Screening and Loan Origination Time: Lending Standards, Loan Defaults and Bank Failures," Working Papers 1215, Barcelona School of Economics.
    15. repec:ags:aolpei:309925 is not listed on IDEAS
    16. Ruey-Ching Hwang & Jhao-Siang Siao & Huimin Chung & C. Chu, 2011. "Assessing bankruptcy prediction models via information content of technical inefficiency," Journal of Productivity Analysis, Springer, vol. 36(3), pages 263-273, December.
    17. Ruey-Ching Hwang, 2013. "Forecasting credit ratings with the varying-coefficient model," Quantitative Finance, Taylor & Francis Journals, vol. 13(12), pages 1947-1965, December.
    18. Beck, Thorsten & Laeven, Luc, 2006. "Resolution of failed banks by deposit insurers : cross-country evidence," Policy Research Working Paper Series 3920, The World Bank.
    19. Antonio Davila & George Foster & Xiaobin He & Carlos Shimizu, 2015. "The rise and fall of startups: Creation and destruction of revenue and jobs by young companies," Australian Journal of Management, Australian School of Business, vol. 40(1), pages 6-35, February.
    20. Jonas Heese, 2017. "The Role of Overbilling in Hospitals’ Earnings Management Decisions," Harvard Business School Working Papers 18-026, Harvard Business School.
    21. Masahiro Enomoto, 2018. "Effects of Corporate Governance on the Relationship between Accounting Quality and Trade Credit: Evidence from Japan," Discussion Paper Series DP2018-12, Research Institute for Economics & Business Administration, Kobe University, revised Dec 2023.

    More about this item

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:jfr:afr111:v:2:y:2013:i:1:p:32. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sciedu Press (email available below). General contact details of provider: https://edirc.repec.org/data/cepflch.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.