LIQUIDITY CHARACTERISTICS OF SMALL AND LARGE MANUFACTURING FIRMS

Many studies have compared various characteristics of large and small business firms. For example, recent studies have documented the “small firm effect”. These articles have indicated a tendency for small companies to exhibit greater risk‐adjusted stock returns than large companies. Other research has focused on comparing the financial aspects of small and large firms. These previous studies found a positive relationship between size and liquidity as measured by the current and quick ratios. Little, however, has been written in recent years that compares the liquidity characteristics of small and large firms.