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A Comparison of the Financial Management Characteristics of UK vs. EU Manufacturing Firms

Author

Listed:
  • Gulser MERIC

    (Rowan University, Rohrer College of Business, United States)

  • Stephanie WEIDMAN

    (Rowan University, Rohrer College of Business, United States)

  • Carol WELSH

    (Rowan University, Rohrer College of Business, United States)

  • Ilhan MERIC

    (Rider University, College of Business Administration, United States)

Abstract

When two economies are integrated, the financial management characteristics of firms in the two economies tend to become similar. Germany and France are two original members of the EU since 1957 and they have fully integrated economies. The UK joined the EU in 1973. In a recent national referendum, British people voted to leave EU membership. It is often argued that, although the UK was a member of the EU, it was not a part of the European Monetary System and UK economy has never fully integrated with the EU economy. In this paper, we test this hypothesis by comparing the financial management characteristics of UK manufacturing firms with the financial management characteristics of EU manufacturing firms (as represented by a combined sample of German and French Manufacturing firms). Our MANOVA test statistics indicate that the financial management characteristics of UK and EU manufacturing firms are significantly different. Accounts receivable collection period is significantly shorter and inventory turnover is significantly higher in UK firms than in EU firms. However, EU firms have significantly higher total assets turnover compared with UK manufacturing firms. UK manufacturing firms use more debt financing (i.e., they have more bankruptcy risk), and they have higher profitability ratios, compared with EU manufacturing firms.

Suggested Citation

  • 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.
    • Handle: RePEc:rom:rmcimn:v:18:y:2017:i:2:p:138-147
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Financial Ratios; UK; German; and French manufacturing firms; MANOVA (Multivariate Analysis of Variance).;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation

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