A Comparison of the Financial Characteristics of European and Asian Manufacturing Firms

Open access

Abstract

Comparing the financial characteristics of firms in different countries has been a popular research topic in finance. However, general financial characteristics of European and Asian manufacturing firms have never been compared. In this paper, we undertake such a study with the MANOVA (Multivariate Analysis of Variance) technique. Our research uses all European and Asian manufacturing firms included in the Research Insight/Global Vintage database at the end of 2015. Our findings may provide valuable insights for financial managers and global investors. We find that Asian firms tend to have less liquidity risk but more bankruptcy risk compared with European firms. European firms have more efficient accounts receivable management and higher fixed and total assets turnover rates. However, Asian firms have higher inventory turnover and sales growth rates. Return on equity is not significantly different in European and Asian firms. However, Asian firms have significantly higher net profit margin and return on assets compared with European firms.

Altman, E. I. 1968. Financial Ratios, Discriminant Analysis, and the Prediction of Corporate Bankruptcy. Journal of Finance, 23 (4): 589-609.

Beaver, W. H. 1968. Alternative Financial Ratios as Predictors of Failure. Accounting Review, 43 (1): 113-122.

Belkaoui, A. 1978. Financial Ratios as Predictors of Canadian Takeovers. Journal of Business Finance and Accounting, 5 (1): 93-108.

CIA, World Fact Book. 2016. https://www.cia.gov/library/publications/resources/the-world-factbook/geos/ee.html

Dambolena, I. G., and S. J. Khoury. 1980. Ratio Stability and Corporate Failure. Journal of Finance, 35 (4): 1017-1026.

Deakin, E. B. 1972. A Discriminant Analysis of Predictors of Business failure. Journal of Accounting Research, 10 (1): 167-179.

Edmister, R. O. 1972. An Empirical Test of Financial Ratio Analysis for Small Business Failure Prediction. Journal of Financial and Quantitative Analysis, 7 (2): 1477-1493.

Hutchinson, P., I. Meric, and G. Meric. 1988. The Financial Characteristics of Small Firms which Achieve Quotation on the UK Unlisted Securities Market. Journal of Business Finance and Accounting, 15 (1): 9-19.

Johnson, R. D., and D. W. Wichern. 2007. Applied Multivariate Statistical Analysis, 6th ed. Englewood Cliffs, NJ: Prentice Hall.

Kester, W. C. 1986. Capital and Ownership Structure: A Comparison of United States and Japanese Manufacturing Firms. Financial Management, 15 (1): 5-16.

Marascuilo, L. A., and J. R. Levin. 1983. Multivariate Statistics in the Social Sciences. Monterey, California: Brooks/Cole Publishing Company.

Meric, G., J. T. Bentley, W. C. Mccall, and I. Meric. 2016. A Comparison of the Financial Characteristics of U.S. and European Manufacturing Firms. Studies in Business and Economics, 11 (2): 58-67.

Meric, G., L. Kyj, C. Welch, and I. Meric. 2000. A Comparison of the Financial Characteristics of Japanese Kieretsu-Affiliated and Independent Firms. Multinational Business Review, 8 (2): 26-30.

Meric, G., S. S. Leveen, and I. Meric. 1991. The Financial Characteristics of Commercial Banks Involved in Interstate Acquisitions. Financial Review, 26 (1): 75-90.

Meric, G., and I. Meric. 1992. A Comparison of the Financial Characteristics of Listed and Unlisted Companies. Mid-Western Journal of Business and Economics, 7 (1): 19-31.

Meric, I., H. E. Gishlick, C. W. McCall, and G. Meric. 2003. A Comparison of the Financial Characteristics of U.S. and Canadian Manufacturing Firms. Midwestern Business and Economic Review, 31 (1): 25-33.

Meric, I., and G. Meric. 1989. A Comparison of the Financial Characteristics of U.S. and Japanese Manufacturing Firms. Financial Management-FM Letters-, 18 (4): 9-10.

Meric, I., and G. Meric. 1994. A Comparison of the Financial Characteristics of United States and Japanese Manufacturing Firms. Global Finance Journal, 5 (1): 205-218.

Moyer, R. C. 1977. Forecasting Financial Failure: A Re-examination. Financial Management, 6 (1): 11-17.

Rege, U. P. 1984. Accounting Ratios to Locate Take-over Targets. Journal of Business Finance and Accounting, 11 (3): 301-311.

Stevens, D. L. 1973. Financial Characteristics of Merged Firms: A Multivariate Analysis. Journal of Financial and Quantitative Analysis, 8 (2): 149-158.

Wald, J. K. 1999. How Firm Characteristics Affect Capital Structure: An International Comparison. Journal of Financial Research, 22 (2): 161-187.

Journal Information

Metrics

All Time Past Year Past 30 Days
Abstract Views 0 0 0
Full Text Views 137 137 17
PDF Downloads 63 63 7