A Comparison of the Financial Characteristics of NAFTA and Latin American Manufacturing Firms.

Meric, Gulser; Haksever, Cengiz; Procaccino, J. Drew; Meric, Ilhan

Comparing the financial characteristics of firms in different countries and different regions has been a popular research topic in finance. However, NAFTA and Latin American manufacturing firms have never been compared. In this paper, we undertake such a study with the MANOVA (Multivariate Analysis of Variance) method with data drawn from the Research Insight/Global Vintage database in October 2015. Our findings indicate that NAFTA manufacturing firms have less liquidity risk, but more financial risk, compared with Latin American manufacturing firms. NAFTA manufacturing firms have significantly higher returns on equity due to achieving higher returns on assets and using more financial leverage. Latin American manufacturing firms have more efficient inventory management. However, NAFTA manufacturing firms have more efficient accounts receivable management and total assets management.

LATIN America; MANUFACTURING industries; BUSINESS finance; MULTIVARIATE analysis; FINANCIAL research; NORTH American Free Trade Agreement

EMAJ: Emerging Markets Journal, 2016, Vol 6, Issue 2, p22

2159-242X

Academic Journal

10.5195/emaj.2016.102