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| Author: | Gallizo, J. L. Jimenez, F. Salvador, M. |
| Title: | Evaluating the effects of financial ratio adjustment in European financial statements |
| Journal: | European Accounting Review
2003 : VOL. 12:2, p. 357-378 |
| Index terms: | EVALUATION BUSINESS RATIOS EUROPE FINANCIAL STATEMENTS |
| Language: | eng |
| Abstract: | This paper is devoted to an analysis of financial ratio adjustment in European financial statements. To that end, the authors use an hierarchical model based on the partial adjustment model. This model allows us to distinguish between adjustments that are due to external shocks and which affect all countries, on the one hand, and those resulting from internal shocks which affect the relative position of one country with respect to the rest, on the other. In addition to estimating the average adjustment coefficients of each ratio, the authors locate those countries that have a behaviour which is significantly different from the rest. The authors find that, in general, the evolution of the ratios analysed is mainly determined by their adjustments to external shocks. |
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