How do neighboring peer companies influence SMEs’ financial behavior?
Fernando López-Hernandez and
Economic Modelling, 2017, vol. 63, issue C, 104-114
Recent research into corporate finances has found that the financial decisions of peer companies are related. Companies tend to “kept an eye” on the decisions of other peer companies, among other things, trying to overcome the limitations caused by the lack of information. This paper further examines these interactions including geographical proximity among companies. With this aim, we use a heterogeneous Partial Adjustment Model on a sample of 12,444 small and medium Spanish manufacturing industrial companies. We find strong nonlinearities in the adjustment processes of liquidity, indebtedness and profitability ratios associated with basic characteristics of the companies such as size, technology, age or financial imbalances. Our results indicate that the influence of the environment on the financial behavior of each company, and its responsiveness, vary in function of neighbor firms’ characteristics.
Keywords: G30; M21; R12; Financial ratios; Partial adjustment model; Geographical proximity; Spatial interactions; Manufacturing companies (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations View citations in EconPapers (1) Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:63:y:2017:i:c:p:104-114
Access Statistics for this article
Economic Modelling is currently edited by S. Hall and P. Pauly
More articles in Economic Modelling from Elsevier
Series data maintained by Dana Niculescu ().