Country and industry factors as determinants of corporate financial liquidity in the European Union countries

Julia Koralun-Bereźnicka ()
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Julia Koralun-Bereźnicka: University of Gdansk, Faculty of Management, Department of the Corporate Finance

Bank i Kredyt, 2011, vol. 42, issue 1, 19-48

Abstract: Financial liquidity is considered as one of the most important features of corporate performance. This study is meant to verify whether the short-term solvency depends more on the specific features of the country, where an enterprise operates, or whether it is more heavily influenced by the industrial factors. The relative importance of the industry and country effect in financial liquidity ratios is evaluated with the use of multivariate statistical methods, involving mainly cluster analysis. The study involves 13 industries in 10 European Union countries, including Poland in the period 1999–2005. The study is based on the harmonised and aggregated financial reports from the European Commission BACH database. Findings provide empirical evidence that industrial factors constitute a more important determinant of corporate financial liquidity than country-specific factors. The results of the analysis may be useful for optimising investment diversification strategies.

Keywords: industry effect; country effect; financial liquidity (search for similar items in EconPapers)
JEL-codes: G32 L25 O52 (search for similar items in EconPapers)
Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:nbp:nbpbik:v:42:y:2011:i:1:p:19-48

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