How Financial Slack Affects Corporate Performance

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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. ContentsConceptualization and Measurement of Financial SlackRelationship between Financial Slack and Corporate PerformanceImpact of Environmental Uncertainty and Munificence on Financial Slack Target GroupsResearchers, students, and managers in the fields of financial management and accounting The AuthorBernadette Gral studied Controlling, Business Accountancy, and Financial Management at the University of Applied Sciences Upper Austria/Steyr. She works as a consultant in the fields of finance and accounting.