Abstract
Canonical correlation analysis is used to investigate the cross-balance sheet relationships for a sample of Mexican firms. The results are compared to a similar analysis of large and small United States firms. Like US companies, Mexican firms tend to match the maturities of short- and long-term assets with their liability/equity accounts. Unlike their US counterparts, however, Mexican firms appear to employ short-term debt, primarily accounts payable, to manage risk. Also, in the 1982 through 1988 period, the use of accounts payable to finance current assets declines, as does the importance of accounts receivable. It is suggested that these changes were the result of the hyperinflation in Mexico in the 1980s and, to a lesser degree, the Stabilization Plan implemented in the early part of the decade.
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