Faculty Scholarship 1994 - Present

The Financial Characteristics of US and EU Electronic and Electrical Equipment Manufacturing Firms and the Determinants of Asset and Equity Returns

In this study, we compare the financial characteristics of U.S. and EU electronic and electrical equipment manufacturing firms (SIC 36) by using the MANOVA (Multivariate Analysis of Variance) and Multiple Regression Analysis techniques with data for the December 31, 2001-December 31, 2005 period. The MANOVA test statistics indicate that the overall financial characteristics of U.S. firms and EU firms are significantly different. U.S. firms have higher liquidity and inventory turnover ratios and lower total assets turnover and equity ratios compared with EU firms. The U.S. and EU profitability ratios are not significantly different. The Multiple Regression Analysis results indicate that, both in the U.S. and in the EU, net profit margin has greater influence on asset returns compared with total assets turnover, and return on assets has greater influence on equity returns compared with financial leverage. Total assets turnover is more effective in boosting asset returns in EU firms than in U.S. firms, and financial leverage is more effective in boosting equity returns in EU firms than U.S. firms.