subject: Wp636
The Effects of Short-Term Liabilities on Profitability: The Case of Germany
description- – Using data from Germany this paper examines the direct effect of non-financial firms' use of short-term versus long-term liabilities. We develop a structural model of a firm's value maximization problem that predicts that profitability of the firm will change if firms alter their use of short-term versus long-term liabilities. We find that firms that rely more heavily on short-term liabilities are likely to be more profitable.
- – WP636
- – 2006-03-22
- – application/pdf
