Are there international differences in firms’ financial leverage? Explain.

Here is a tip:

Different countries have different accounting policies.

Explanation

Due to the differences in accounting policies such as the reporting of assets in historical-cost versus replacement-cost basis, treating of leased assets, reporting of pension liabilities, and capitalization versus expensing R&D costs, there are international differences in financial leverage.

Verified Answer

Yes, the differences exist.

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