دانلود رایگان مقاله چرخه تبدیل نقدی و عملکرد شرکت

Abstract

Previous studies have seldom explored issues regarding liquidity management; hence, we conduct a global empirical analysis of the relationship between the cash conversion cycle (CCC) and corporate performance by adopting enterprises from different countries as samples. We observe a negative relationship between the CCC and firm’s profitability and value, supporting that an aggressive working capital policy can enhance corporate performance; however, this effect reduces or reverses when firms exist at the lower CCC level. Results remain identical after considering endogenous problems, changes in macroeconomic environments, economic development status, financial crises, corporate governance, and financial constraints.

6. Conclusions

Working capital management is crucial to a firm’s operating performance and corporate value. However, most existing literature on corporate finance has discussed issues regarding the relationship between long-term financial decisions, such as capital structure and capital expenditure, and corporate performance. Previous studies have seldom explored issues regarding liquidity management; hence, we conduct a global empirical analysis of the relationship between the cash conversion cycle (CCC) and corporate performance by adopting enterprises from different countries as samples.

Our sample consists of 46 countries, 31,612 companies, and 266,547 firm-year observations for the period of 1994–2011. The results indicate that industry-adjusted CCCs exhibit significantly negative relationships with industry-adjusted ROAs and industry-adjusted Tobin’s Q, and that the negative relationships diminish or reverse when industry-adjusted CCC is below 0. This finding indicates that firms can shorten their CCC to increase profitability and value; however, this effect reduces or reverses when firms exist at the lower CCC level. Furthermore, the results remain unchanged after accounting for endogeneity and controlling for changes in macroeconomic environments, economic development status, financial crises, corporate governance, and financial constraints. Our study contributes to the understanding of the relationship between CCCs and firm performance, which consequently help companies to establish financial policies. The results can help multinational companies to determine allocation proportions for short-term assets and capital.