Financial Distress, Corporate Borrowing and Industrial Decline: The Lancashire Cotton Spinning Industry, 1918-1938

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The analysis presented is based on a case study of Lancashire cotton textile firms. It traces their financial history through the sharp boom of 1919-20, and the sudden crisis that followed. Using a sample of representative companies it is shown that firms unwittingly adopted inappropriate financial structures that acted as the decisive constraint on the adoption of recovery strategies in the subsequent slump. The paper explains how the relationship between indebtedness and asset values prevented subsequent internal financial retrenchment, restructuring and re-equipment, and dictated the competitive processes within the industry. It is demonstrated that financial constraints were the decisive factor determining the feasibility of competitive strategies available to the industry's leaders.
Original languageEnglish
Pages (from-to)207-232
Number of pages25
JournalAccounting, Business and Financial History
Issue number12
Publication statusPublished - Jul 2003

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