The Effects of Short-Term Liabilities on Profitability: A Comparison of German and US Firms
Christopher F. Baum
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.
profitability, short-term liabilities, maturity structure, capital structure.
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