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Evidence of cash conservative and low-leverage firms in UK and Germany
Finance & Accounting
Pages 27 (6777 words)
Evidence of cash conservative and low-leverage firms in UK and Germany Student Name Student and exam number; Queen Mary School of Economics and Finance July 2013 7009 Words Professor David Carafo Abstract The purpose of this study is to define the theory of financial conservatism and to research the characteristics of financially conservative United Kingdom and German firms relative to economic recessions.
The financials of the firms are extracted from the fiscal years 2005 to 2012 and statistically analyzed to establish and prove a hypothesis that the agencies practice cash conservatism and low leverage financial policy; particularly in times of economic recession. CONTENTS COVER PAGE________________________________________________________________1 ABSTRACT 2 TABLE OF CONTENTS 3 CHAPTER 1 INTRODUCTION 4 1.1 The United Kingdom and germany_________________________________5 1.2 FINANCIAL Conservatism AND DISTRESS______________________________8 1.3 Agency and Stewardship theory..._________________________________11 CHAPTER 2 review of literature_________________________________________12 CHAPTER 3 RESEARCH METHOD 14 3.1 Empirical Framework 19 3.2 Data Sample 20 3.3 Results 24 CHAPTER 4 CONCLUSION _________________________________________________26 WORKS CITED_____________________________________________________________29 Appendices _______________________________________________________________31 Chapter 1 INTRODUCTION The foundations of a firm’s financial theory can be found in the firm’s organizational culture and structure, the national financial policies, investors, and economic factors. ...
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