How Financial Slack Affects Corporate Performance

Download or read book How Financial Slack Affects Corporate Performance written by Bernadette Gral and published by Springer Science & Business Media. This book was released on 2013-12-30 with total page 128 pages. Available in PDF, EPUB and Kindle. Book excerpt: Bernadette Gral examines the relationship between financial slack and corporate performance in the European pharmaceutical industry during the financial crisis of 2007 to 2010. Her investigation includes correlational and regression analyses as well as the qualitative content analysis of newspaper articles. The results show that financial slack influences corporate performance measured as ROA based on net income, thus implying that firms use slack resources to enhance performance during crises. The findings support the arguments for a beneficial effect of financial slack on performance according to the resource based view and behavioral theory of the firm.