Economic sectors and country effects on the return on equity of European firms: a look at tourism and the electronic sectors of the South Mediterranean countries Online publication date: Thu, 21-Jan-2010
by Mario Gomes Augusto, Joao Verissimo Lisboa, Elisio Fernando Brandao
International Journal of Decision Sciences, Risk and Management (IJDSRM), Vol. 1, No. 3/4, 2009
Abstract: This work studies the leverage effect on the return on equity in 17 European Union countries, in 14 economic sectors and in greater detail in five Southern European countries which are operating in the tourism and electrical and electronic sectors. The return on equity was used as a measure of the financial leverage effect. The main results indicated significant differences in the average return on equity among firms from different sectors and in the different countries studied. The detailed analysis further showed that in the tourism sector, the return on equity is higher in firms in Iberia, compared with the other Southern European countries. The results of this study are useful for investors, business leaders, and policy makers. From the perspective of potential investors, investment opportunities can be evaluated based on the return on equity of the sectors and countries studied.
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