A comparison of the financial characteristics of French German and UK firms in the electronic and electrical equipment manufacturing industry: 2001-2005

Empirical studies find that firms in the same industry in different countries tend to have similar financial characteristics with increased integration. France, Germany, and the UK have been members of the EU for over thirty years and they have integrated economies. In this study, we test the hypothesis that French, German, and UK firms have similar financial characteristics in the Electronic and Electrical Equipment Manufacturing Industry (SIC 36). In our empirical test, we use the Multivariate Analysis of Variance (MANOVA) technique and nine well-known financial ratio averages computed with data from the DISCLOSURE database for the December 2001-December 2005 period. Our findings indicate that the overall financial characteristics of German firms are significantly different from those of UK firms at the five-percent significant level and from those of French firms, at the ten-percent level. German firms have significantly higher liquidity ratios and significantly lower inventory turnover ratios compared with French and UK firms. French firms, have significantly lower equity ratios (i.e., significantly higher financial leverage) compared with German firms. The profitability ratios and sales growth rates of firms in the three countries are not significantly different.