BRM STL
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Transcript of BRM STL
THE EFFECTS OF SHORT-TERM LIABILITIES ON PROFITABILITY
A COMPARISON OF GERMAN AND US FIRMS
Presenters:M. Zubair (21)Shadab Mustafa (11)Haroon adil (24)
Scheme of Presentation:
Part-I : The Article (introduction) (Presenter: Zubair)
Part-II : Hypothesis (Presenter: Shadab)
Part-III : Results (Presenter: Haroon)
Part-IV : Question/ Answer Session (The Group)
Christopher F Baumi. US citizenii. Boston college and DIW Berliniii. Specialty in STATAiv. 80 Articles and 02 books
Dorothea Schaferi. German citizenii. DIW Berliniii. Research director financial marketiv. 51 Articles and 02 books
• Oleksandr Talaverav. German citizenvi. DIW Berlinvii. Specialty in Econometricsviii. 80 Articles
Authors:
PART 1: INTRODUCTION
INTRODUCTIONThe Topic Provides Information about:Capital structure
Debt maturity structure
Short term liabilities and profitability
Liability maturity structure has an impact of firm’s performance.
The Topic Provides Information about:
Firm’s rely more on short term debt are more profitable. Financial Systems : bank-based and market-based.
Data used -- Manufacturing firm’s only.
INTRODUCTION
Hypothesis and their relationship
Hypothesis Presented By:
Relationship
Depend. Variable
In –depend. Variable
Contracting-costHypothesis
Myers (1977) NEGETIVE
ROA STL
Signalling hypothesis
Diamond(1991)
NEGETIVE
ROA STL
Tax hypothesis
Brick and Ravid (1985)
POSITIVE
ROA STL
Data and SampleGerman data:
Taken from BUNDESBANK.(State bank) 125000 manufacturing firms. From 1988 to 2000
US data: Taken from COMPUSTAT. (research firm) 15000 manufacturing firms. From 1984 to 2004.
VARIABLESProfitability (ROA)- Dependent variable.Liquidity (cash/TA)- Independent variable.Sales-to-assets ratio- Independent variable.ST/TL- key variable.Size of the firm- Log(labor)
OUTLIERS:Below 1% and above 99%
SIZE OF FIRMSSmall – Below 25%Large – Above 75% and 99%
Model Information
Model Used: Multivariate Linear Regression DPD, PAM.Data Type: SecondaryData Source:
External(Documentary)/SecondaryTime Horizon: Longitudinal
Model
Reviewers Notes:
An international research
New concept introduced in the field
No information is provided about data source in the article.
Unbiased and convincing
No information about sample period of data.
Question/ Answer Session ( The Group)
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