The Effects of Short-Term Liabilities on Profitability: A Comparison of German and US Firms

Christopher Baum (), Dorothea Schäfer and Oleksandr Talavera

No 636, Boston College Working Papers in Economics from Boston College Department of Economics

Abstract: The paper adopts the methodology of the empirical finance literature to analyze a common question that liability maturity structure has an impact on firm performance. A comparison is made between two countries, the US and Germany, with different types of financial systems. We find that German firms that rely more heavily on short-term liabilities are likely to be more profitable. The link between liability maturity structure and profitability does not appear in the results from the US sample, which reflects the importance of institutional factors.

Keywords: profitability; short-term liabilities; maturity structure; capital structure. (search for similar items in EconPapers)
JEL-codes: G32 G30 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-cfn and nep-fin
Date: 2006-02-13, Revised 2007-04-14
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Persistent link: http://EconPapers.repec.org/RePEc:boc:bocoec:636

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