FINANCIAL STRATEGIES OF HONG KONG FIRMS : A COMPARATIVE ANALYSIS WITH TAIWANESE AND KOREAN FIRMS

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalpeer-review

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Original languageEnglish
Pages (from-to)75-89
Journal / PublicationJournal of Small Business and Entrepreneurship
Volume13
Issue number4
Publication statusPublished - 1 Jan 1996

Abstract

Much financial theory has relied on the traditional assumption of independence between the two sides of the balance sheet. Research has appeared that demonstrates that this assumption is not always valid. This study uses canonical correlation analysis to analyze the financial strategies employed by firms in Hong Kong. The financial strategies of firms in Hong Kong are compared with the financial strategies of firms in Korea and Taiwan. The results indicate that firms in each country use similar financial strategies. Specifically, the results demonstrate that the firms use hedging, use of short-term liabilities to finance current assets, use of equity to finance fixed assets and concurrent use of cash and equity to manage the risk of insolvency. The results contribute to the growing body of literature on the financial strategies employed by firms in different countries.

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