Effect of working capital management and financial constraints on corporate performance

The aim of this paper is to contribute to the previous studies by given an empirical evidence of the impact of working capital management on corporate performance and the influence of financial constraints on the relationship between corporate performance and working capital management of Malaysian...

Full description

Saved in:

Bibliographic Details
Main Author:	Adebowale, Nurein Saheed
Format:	Thesis
Language:	eng eng
Published:	2014
Subjects:	HD28-70 Management Industrial Management HG Finance
Online Access:	https://etd.uum.edu.my/4151/1/s814283.pdf https://etd.uum.edu.my/4151/7/s814283_abstract.pdf
Tags:	Add Tag No Tags, Be the first to tag this record!

id	my-uum-etd.4151
record_format	uketd_dc
institution	Universiti Utara Malaysia
collection	UUM ETD
language	eng eng
advisor	Md. Rus, Rohani
topic	HD28-70 Management Industrial Management HG Finance
spellingShingle	HD28-70 Management Industrial Management HG Finance Adebowale, Nurein Saheed Effect of working capital management and financial constraints on corporate performance
description	The aim of this paper is to contribute to the previous studies by given an empirical evidence of the impact of working capital management on corporate performance and the influence of financial constraints on the relationship between corporate performance and working capital management of Malaysian listed firms in Bursa Malaysia. The data for this study was retrieved from the DataStream, consisting of 215 firms for the period 2008-2012. Tobin’s Q is used as a proxy for corporate performance, while net trade cycle (NTC) and current ratio (CR) are used as proxies for working capital management. Other independent variables are firm size (SIZE), leverage (LEVERAGE), growth opportunity (GROWTH) and return on assets (ROA), while dividend (DDIV) is used as a proxy for financial constraints. By applying correlation, Ordinary Least Square (OLS), Fixed-Effect and Random-Effect regression analyses, the results show that corporate performance is related and positively significant to net trade cycle. This study also finds that firms’ financial constraint is significant and positively related to working capital management and corporate performance. These findings indicate that managing an efficient and effective working capital as impact on corporate performance and firms with less financial constraints achieve better corporate performance than firms with high financial constraints. This study suggests that for a firm to achieve a better performance cum maximizing shareholder’s value, it must achieve a better working capital with a longer net trade cycle (NTC) as well as meeting its short-term obligations.
format	Thesis
qualification_name	masters
qualification_level	Master's degree
author	Adebowale, Nurein Saheed
author_facet	Adebowale, Nurein Saheed
author_sort	Adebowale, Nurein Saheed
title	Effect of working capital management and financial constraints on corporate performance
title_short	Effect of working capital management and financial constraints on corporate performance
title_full	Effect of working capital management and financial constraints on corporate performance
title_fullStr	Effect of working capital management and financial constraints on corporate performance
title_full_unstemmed	Effect of working capital management and financial constraints on corporate performance
title_sort	effect of working capital management and financial constraints on corporate performance
granting_institution	Univeristi Utara Malaysia
granting_department	Othman Yeop Abdullah Graduate School of Business
publishDate	2014
url	https://etd.uum.edu.my/4151/1/s814283.pdf https://etd.uum.edu.my/4151/7/s814283_abstract.pdf
_version_	1747827689419440128
spelling	my-uum-etd.41512022-04-09T23:12:53Z Effect of working capital management and financial constraints on corporate performance 2014 Adebowale, Nurein Saheed Md. Rus, Rohani Othman Yeop Abdullah Graduate School of Business Othman Yeop Abdullah Graduate School of Business HD28-70 Management. Industrial Management HG Finance The aim of this paper is to contribute to the previous studies by given an empirical evidence of the impact of working capital management on corporate performance and the influence of financial constraints on the relationship between corporate performance and working capital management of Malaysian listed firms in Bursa Malaysia. The data for this study was retrieved from the DataStream, consisting of 215 firms for the period 2008-2012. Tobin’s Q is used as a proxy for corporate performance, while net trade cycle (NTC) and current ratio (CR) are used as proxies for working capital management. Other independent variables are firm size (SIZE), leverage (LEVERAGE), growth opportunity (GROWTH) and return on assets (ROA), while dividend (DDIV) is used as a proxy for financial constraints. By applying correlation, Ordinary Least Square (OLS), Fixed-Effect and Random-Effect regression analyses, the results show that corporate performance is related and positively significant to net trade cycle. This study also finds that firms’ financial constraint is significant and positively related to working capital management and corporate performance. These findings indicate that managing an efficient and effective working capital as impact on corporate performance and firms with less financial constraints achieve better corporate performance than firms with high financial constraints. This study suggests that for a firm to achieve a better performance cum maximizing shareholder’s value, it must achieve a better working capital with a longer net trade cycle (NTC) as well as meeting its short-term obligations. 2014 Thesis https://etd.uum.edu.my/4151/ https://etd.uum.edu.my/4151/1/s814283.pdf text eng public https://etd.uum.edu.my/4151/7/s814283_abstract.pdf text eng public masters masters Univeristi Utara Malaysia Abuzayed, B. (2011). Working capital management and firms’ performance in emerging markets: the case of Jordan. International Journal of Managerial Finance, Vol. 8 No. 2. Afeef, M. (2011). Analyzing the Impact of Working Capital Management on the Profitability of SME’s in Pakistan. International Journal of Business and Social Science, 2(22), 173–183. Afza T., & Nazir, M.S. (2007). Is it better to be aggressive or conservative in managing working capital?, Paper presented at Singapore Economic Review Conference (SERC) on August 02-04, Singapore Agrawal, A., & Knoeber, C. R. (1996). Firm performance and mechanisms to control agency problems between managers and shareholders. Journal of Financial and Quantitative Analysis, 31, 377–397. Agung, J. (2000) Financial Constraints, Firms’ Investments and the Channels of Monetary Policy in Indonesia, Applied Economics, 32, 1637–1646. Ahmed, H., & Hamid, N. (2011). Financing Constraints : Determinants and Implications for Firm Growth in Pakistan. The Lahore Journal of Economics, (September), 317–346. Ali, A., & Ali, S. A. (2012). Working Capital Management: Is It Really Affects the Profitability? Evidence from Pakistan. Global Journal of Business & Management, 12(17). Ali, S. (2011). Working Capital Management and the Profitability of the Manufacturing Sector: A Case Study of Pakistan’s Textile Industry. Lahore Journal of Economics, 2(Winter), 141–178. Almeida, H., Campello, M., & Weisbach, M. S. (2004). The cash flow sensitivity of cash. Journal of Finance, 59, 1777–1804. Altman, E. (1968). Financial ratios, discriminant analysis and the prediction of the corporate bankruptcy. Journal of Finance, 23, 589–609. Anand, M., & Malhotra, K. (2007). Working capital performance of corporate India: An empirical study. ICFAI Journal of Applied Finance, 13(1), 46–81. Arellano, M., & Bond, S. (1991). Some test of specification for panel data: Monte Carlo evidence and an application to employment equations. Review of Economic Studies,58, 277–297.Ashraf, C. K. (2012). The relationship between working capital efficiency and profitability. Journal of Accounting and Management, 2(3). Azam, M., & Haider, S. I. (2011). Impact of Working Capital Management on Firms ’ Performance : Evidence from Non-Financial Institutions of KSE-30 index. Interdisciplinary Journal of Contemporary Research In Business, (2005), 481–492. Azam, M., & Shah, S. (2011). Internal financial constraints, external financial constraints and investment choice: evidence from Pakistani firms. Australian Journal of Business and Management Research, 1(8), 18–22. Bagchi, B., & Khamrui, B. (2012). Relationship between Working Capital Management and Profitability : A Study of Selected FMCG Companies in India. Business and Economics Journal, BEJ-60. Bagchi, B., Chakrabarti, J., & Basu Roy, P. (2012). Influence of Working Capital Management on Profitability: A Study on Indian FMCG Companies. International Journal of Business and Management, 7(22), 1–10. Baños-Caballero, S., García-Teruel, P. J., & Martínez-Solano, P. (2013). Working capital management, corporate performance, and financial constraints. Journal of Business Research, 67(3), 332–338. Barran, F., & Peeters, M. (1998). Internal finance and corporate investment: Belgian evidence with panel data. Economic Modelling, (15), 67–89. Bieniasz, A. B., & Gołaś, Z. G. (2011). The Influence of Working Capital Management on the Food Industry Enterprises Profitability. Contemporary Economics, 5(4), 68. Blinder, A. S., & Maccini, L. J. (1991). The resurgence of inventory research: What have we learned? Journal of Economic Surveys, 5, 291–328. Boermans, M., & Willebrands, D. (2012). Financial constraints, risk taking and firm performance: Recent evidence from microfinance clients in Tanzania. DNB Working Paper, (358). Bond, S., Elston, J., Mairesse, J., and B. Mulkay (2003). “Financial Factors and Investment in Belgium, France, Germany, and the United Kingdom: A Comparison Using Company Panel Data.” Review of Economics and Statistics, 85, 153-65.Bond, S., Klemm, A., Newton-Smith, R., Syed, Z., and Vlieghe, G. (2004). The roles of expected profitability, Tobin’s Q and cash flow in econometric models of company investment’, Bank of England Working Paper Series No 222. Bougheas, S., Görg, H. and E. Strobl (2003), Is R&D Financially Constrained? Theory and Evidence from Irish Manufacturing, Review of Industrial Organization 22(2), 159-174. Brennan, M., Maksimovic, V., & Zechner, J. (1988). Vendor financing. Journal of Finance, 43, 1127–1141. Burton, M. B., Lonie, A. A., & Power, D.M. (1999). The stock market reaction to Investment announcements: The case of individual capital expenditure projects. Journal of Business Finance & Accounting, 26, 681–708. Cagle, C. S., Campbell, S. N. & Jones, K. T. (2013). Analyzing liquidity: Using the cash conversion cycle. planoaccountant.wordpress.com. Carpenter, R. E., Fazzari, S. M., & Petersen, B. C. (1994). Inventory investment, internal finance fluctuations, and the business cycle. Brookings Papers on Economic Activity, 2, 75–138. Chan, C. (1993), “The study on working capital management of manufacturing business”, unpublished master’s dissertation, Department of Management Science, Tam Kang University, Taiwan. Chan, R. (2008). Financial Constraints , Working Capital and the Dynamic Behavior of the Firm, 1–33. Charitou, M. S., Elfani, M., & Lois, P. (2010). The Effect Of Working Capital Management. Journal of Business & Economic Research, 8(12), 63–68. Chatterjee, S. (2010). The impact of working capital management on the profitability of the listed companies in the London stock exchange. Available at SSRN 1587249. Chen, M. (2007), Financial Constraints and the Investment of Chinese Listed Firms, mimeo, School of Economics, University of Nottingham. Ching, H., Novazzi, A., & Gerab, F. (2011). Relationship between working capital management and profitability in Brazilian listed companies. Journal of Global Business and Economics, 3(1), 74–86. Chowdhury, A., & Amin, M. 2007. Working Capital Management Practiced in Pharmaceutical Companies listed in Dhaka Stock Exchange. BRAC university Journal ,4(2), 75 -86.Christopher, S. B., and Kamalavalli, A. L. (2009). Sensitivity of profitability to working capital management in Indian corporate hospitals. [Online] Available: http://ssrn.com/abstract=1331500 Chung, K. E.,Wright, P., & Charoenwong, C. (1998). Investment opportunities and Market reaction to capital expenditure decisions. Journal of Banking & Finance, 22, 41–60. Cleary, S. (2006), `International corporate investment and the relationships between financial constraint measures', Journal of Banking & Finance 30(5), 1559-80. Crisóstomo, V., López-Iturriaga, F., & Vallelado, E. (2012). Firm Size Matters for Financial Constraints: Evidence from Brazil. Sistemas & Gestão, 7(3), 490–501. Cuñat, V. (2007). Trade credit: Suppliers as debt collectors and insurance providers. Review of Financial Studies, 20, 491–527. Danuletiu, A. E. (2010). Working capital management and profitability: a case of Alba county companies. Annales Universitatis Apulensis-Series Oeconomica, 12(1). Deloof, M. (2003). Does working capital management affect profitability of Belgian firms? Journal of Business Finance & Accounting, 30, 573–587. Deloof, M., & Jegers, M. (1996). Trade credit, product quality, and intragroup trade: Some European evidence. Financial Management, 25, 33–43. Ding, S., Guariglia, A., & Knight, J. (2013). Investment and financing constraints in China: does working capital management make a difference? Journal of Banking & Finance, (September 2010), 1–38. Dong, H., & Su, J. (2010). The relationship between working capital management and profitability: a Vietnam case. International Research Journal of Finance and 1. Eljelly, A. (2004). Liquidity-profitability tradeoff: an empirical investigation in an emerging market. International Journal of Commerce and Management, Vol.14 (2), pp. 48- 61. Emery, G. (1984). A pure financial explanation for trade credit. Journal of Financial and Quantitative Analysis, 19, 271–285. Emery, G. W. (1987). An optimal financial response to variable demand. Journal of Financial and Quantitative Analysis, 22, 209–225.Fatemeh Baghiyan. (2013). Working Capital Management, Investment and Financing Constraints in Companies Listed on the Tehran, Iran Stock Exchange. International Journal of Business and Economics Research, 2(6), 130. Faulkender, M., & Wang, R. (2006). Corporate financial policy and the value of cash. Journal of Finance, 61, 1957–1990. Fazzari, S. M., Hubbard, R. G., & Petersen, B. C. (1988). Financing constraints and corporate investment. Brookings Papers on Economic Activity, 1, 141–195. Fazzari, S. M., & Petersen, B. (1993). Working capital and fixed investment: New evidence on financing constraints. The Rand Journal of Economics, 24, 328–342. Florackis, C., Kostakis, A., & Ozkan, A. (2009). Managerial ownership and performance. Journal of Business Research, 62, 1350–1357. Gakure, R., Cheluget, J. K., Onyango, J. A., & Keraro, V. (2012). Working capital management and profitability of manufacturing firms listed at the Nairobi stock exchange. Prime Journal of Business Administration and Management, 2(9), 680–685. Ganesan, V. (2007). An analysis of working capital management efficiency in telecommunication equipment. Industryrivier Academic Journal, 3, No. 2, Fall. Garcia, F. L. G. (2011). The Impact of Working Capital Management upon Companies’ Profitability: Evidence from European Companies. Fep Working Paper. Faculdade de Economia, Universidade do Porto (p. 438). García-Teruel, P. J., & Martínez-Solano, P. (2007). Effects of working capital management on SME profitability. International Journal of Managerial Finance, 3(2), 164–177. Gill, A., Biger, N., & Mathur, N. (2010). The relationship between working capital management and profitability: Evidence from the United States. Business and Economics Journal, 2010, 1-9. Golas, Z., Bieniasz, A., & Czerwinska-Kayzer, D. (2013). The relationship between working capital and profitability in food industry firms in Poland. Journal of Central European Agriculture, 14(1), 52–63. Greenwald, B., Stiglitz, J. E., &Weiss, A. (1984). Informational imperfections in the capital market and macroeconomic fluctuations. American Economic Review, 74, 194–199.Guariglia, A. (2007). Internal financial constraints, external financial constraints, and investment choice: Evidence from a panel of UK firms. Centre For Finance and Credit Markets, 44(0), 0–39. Hall, B. (1992), Investment and Research and Development at the Firm Level: Does the Source of Financing Matter?, NBER Working Paper 4096. Hao, K.Y., Jaffe, A.B. (1993), Effect of Liquidity on Firms’ R&D Spending. Economics of Innovation and New Technology 2, 275-282. Hill, M. D., Kelly, G., & Highfield, M. J. (2010). Net operating working capital behaviour:A first look. Financial Management, 39, 783–805. Himmelberg, C., Hubbard, R., & Palia, D. (1999). Understanding the determinants of managerial ownership and the link between ownership and performance. Journal of Financial Economics, 53, 353–384. Himmelberg, C.P., Peterson, B.C. (1994), R&D and Internal Finance. A Panel Study of Small Firms in High-Tech Industries. Review of Economics and Statistics 76, 38-51. Hubbard, R. (1998). Capital-market imperfections and investment. Journal of Economic Literature, 36, 193–225. Hutchison, P., Farris, I. and Anders, S. (2007), “Cash-to-cash analysis and management”, The CPA Journal, Vol. 77 No. 8, pp. 42-7. Ismail, M. A., Ibrahim, M. H., Yusoff, M., & Zainal, M.-P. (2010). Financial Constraints and Firm Investment in Malaysia : An Investigation of Investment- Cash Flow Relationship. Int. Journal of Economics and Management (2010), 4(1), 29–44. Jensen, M. C., & Meckling,W. H. (1976). Theory of the firm: Managerial behavior, Agency cost and ownership structure. Journal of Financial Economics, 3, 305–360. Kadapakkam, P.-R., Kumar, P. and Riddick, L. (1998), `The impact of cash flows and firm size on investment: The international evidence', Journal of Banking & Finance 22(3), 293-320. Karadagli, E. C. (2012). The effect of working capital management on the profitability of Turkish SMEs. British Journal of Economics, Finance and Management Sciences, 5(2), 36– 44. Khan, S., Shah, A. M., & Hijazi, S. T. (2006). Impact of working capital management on the profitability of firms: Case of listed Pakistani companies. Journal of Social Sciences, 13, 41–50.Kieschnick, R., LaPlante, M., & Moussawi, R. (2011). Working capital management and shareholder wealth. Working paper (SSRN: http://ssrn.com/abstract=1431165) Kim, C., Mauer, D. and Sherman, A. (1998), “The determinants of corporate liquidity: theory and evidence”, Journal of Financial and Quantitative Analysis, Vol. 33 No. 3, pp. 335-59. Kim, Y. H., & Chung, K. H. (1990). An integrated evaluation of investment in inventory and credit: A cash flow approach. Journal of Business Finance & Accounting, 17, 381–390. Kocherlakota, N. R. (2000). Creating Business Cycles Through Credit Constraints. Federal Reserve Bank of Minneapolis Quarterly Review, 24(3). La Cava, G. (2005). Financial Constraints, the User Cost of Capital and Corporate Investment in Australia. Retrieved from http://www\dr.rba.gov.au/publications/rdp/2005/pdf/rdp2005-12.pdf Lamberson M (1995), “Changes in Working Capital of Small Firms in Relation to Changes in Economic Activity”, Mid-American Journal of Business, Vol. 10, No. 2, pp. 45-50. Lee, Y. W., & Stowe, J. D. (1993). Product risk, asymmetric information, and trade credit. Journal of Financial and Quantitative Analysis, 28, 285–300. Lewellen, W., McConnel, J., & Scott, J. (1980). Capital market influences on trade credit policies. Journal of Financial Research, 3, 105–113. Lazaridis I & Tryfonidis, D. (2006), Relationship between working capital management and profitability of listed companies in the Athens stock exchange, Journal of Financial Management and Analysis, Vol.19 (1), pp 26 – 35. Lyroudi, K. and Lazaridis, Y. (2000), “The cash conversion cycle and liquidity analysis of the food industry in Greece”, working paper, available at: http://ssrn.com/paper¼236175 (accessed September 7, 2010). Martínez-Solano, Pedro & García-Teruel, Pedro J. (2006). Effects of working capital management on sme profitability. [Online] Available: http://ssrn.com/abstract=894865 Mathuva, D. (2009). The Influence of Working Capital Management Components on Corporate Profitability: A Survey on Kenyan Listed Firms. Research Journal of Business Management, 4, 1–11. McConnell, J. J., & Muscarella, C. J. (1985). Corporate capital expenditure decisions and the market value of the firm. Journal of Financial Economics, 14, 399–422.Michalski, G. (2010). Planning optimal from the firm value creation perspective. Levels of operating cash investments. JEL Classification, 198–214. Modigliani, F., & Miller, M. H. (1958). The cost of capital, corporation finance and the theory of investment. American Economic Review, 48, 261–297. Mohamad, N., & Saad, N. (2010). Working Capital Management: The Effect of Market Valuation and Profitability in Malaysia. International Journal of Business and Management, 5(11), 140–147. Mohammed, N. (2011). The effect of working capital policies management on firms’profitability (Doctoral dissertation, Addis Ababa University). Moyen, N. (2004). Investment–cash flow sensitivities: Constrained versus unconstrained firms. Journal of Finance, 59, 2061–2092. Myers, S. (1984), “The capital structure puzzle”, Journal of Finance, Vol. 39 No. 3, pp. 575-92. Myers, S., & Majluf, N. (1984). Corporate financing and investment decisions when firms have information that investors do not have. Journal of Financial Economics, 13, 187–221. Napompech, K. (2012). Effects of Working Capital Management on the Profitability of Thai Listed Firms. International Journal of Trade, Economics and Finance., 3(3). Narware P. C. (2004). “Working capital and profitability- an empirical analysis”. The Management Accountant, Vol, 39 (6), pp 120-127. Nazir, M.S. (2009). Impact of working capital aggressiveness on firms’ profitability. IABR & TLC Conference Proceedings, San Antonio, Texas, USA. Nazir, M. S., & Afza, T. (2009). Working Capital Requirements and the Determining Factors in Pakistan. IUP Journal of Applied Finance, 15(4), 28-38. Nimalathasan, B. (2010). Working capital management and its impact on profitability : A study of selected listed manufacturing companies in Sri Lanka. Information Management, 12, 76–83. Nobanee, H. (2010) “Working Capital Management and Firm’s Profitability: An Optimal Cash Conversion Cycle” available at http://ssrn.c/abstract=1471230 accessed at 11 April 2012. Nobanee, H., & Alhajjar, M. (2009). Optimizing Working Capital Management. JEL Classification, 1–21.Oladipupo, A., & Okafor, C. (2013). Relative contribution of working capital management to corporate profitability and dividend payout ratio: Evidence from Nigeria. International Journal of Business and Finance Management Research, 1, 11–20. Opler, T., Pinkowitz, L., Stulz, R. and Williamson, R. (1999), “The determinants and Implications of corporate cash holdings”, Journal of Financial Economics, Vol. 52 No. 1, pp. 3-46. Padachi, K. (2006). Trends in working capital management and its impact on firms’ performance: an analysis of Mauritian small manufacturing firms. International Review of Business Research Papers, Vol. 2 (2),pp. 45 - 58. Peel, M. andWilson, N. (1996), “Working capital and financial management practices in the small firm sector”, International Small Business Journal, Vol. 14 No. 2, pp. 52-68. Perfect, S., & Wiles, K. (1994). Alternative construction of Tobin's q: An empirical comparison. Journal of Empirical Finance, 1, 313–341. Raheman & Nasr. (2007). Working capital management and profitability – case of Pakistani firms. International Review of Business Research Papers, Vol.3 (2), pp. 275 – 296. Ramachandran, A., & Janakiraman, M. (2006). Management Efficiency and ebit. Managing Global Transitions, 7(1), 61–74. Ray, D. (2012). Evaluating the Impact of Working Capital Management Components on Corporate Profitability: Evidence from Indian Manufacturing Firms. International Journal of Economic Practices and Theories, 2(3), 127-136. Rimo, A., & Panbunyuen, P. (2010). The effect of company characteristics on working capital management: A quantitative study of Swedish listed companies. Saghir, A., Hashmi, F. M., & Hussein, M. N. (2011). Working capital management and profitability : evidence from pakistan firms. Interdisciplinary Journal of Contemporary Research In Business, 3(8), 1092–1105. Samiloglu, F., & Demirgunes, K. (2008). The Effect of Working Capital Management on Firm Profitability: Evidence from Turkey. The International Journal of Applied Economics and Finance, 2(1), 44–50. Sanger, J. S. (2001). Working Capital: a modern approach. Financial Executive, 69. Sartoris, W., & Hill, N. (1983). Cash and working capital management. Journal ofFinance, 38, 349–360. Sayuddzaman, Md. (2006). Working capital management: A study on British American Tobacco Bangladesh Company Ltd’. The Journal of Nepalese Business Studies, III, No. 1. Schaller, H. (1993). “Asymmetric Information, Liquidity Constraints and Canadian Investment.” Canadian Journal of Economics, 26, 552–74. Schiff, M., & Lieber, Z. (1974). A model for the integration of credit and inventory management. Journal of Finance, 29, 133–140. Schmidt, R., & Tyrell, M. (1997). Financial systems, corporate finance and corporate governance. European Financial Management, 3, 333–361. Sen, M., & Oruç, E. (2009). Relationship between Efficiency Level of Working Capital Management and Return on Total Assets in Ise. International Journal of Business and Management, 4(10), 109–114. Shah, S. M. A., & Sana, A. (2006). Impact of Working Capital Management on the Pofitability of Oil and Gas Sector of Pakistan. European Journal of Scientific Research, 15(3). Sharma, a. K., & Kumar, S. (2010). Effect of Working Capital Management on Firm Profitability: Empirical Evidence from India. Global Business Review, 12(1), 159–173. Shin, H. H., & Soenen, L. (1998). Efficiency of working capital and corporate profitability. Financial Practice & Education, 8, 37–45. Singh, D. (2011). Net Working Capital Level and Return on Capital Employed In Firms of Cement Industries in India. VSRD International Journal of Business and Management Research, 1(4), 269–280. Smirlock, M., Gilligan, T., &Marshall,W. (1984). Tobin's q and the structure– performance relationship. American Economic Review, 74, 1051–1060. Smith, K. (1980). Profitability versus liquidity tradeoffs in working capital management. In K. V. Smith (Ed.), Readings on the management of working capital (pp. 549 562). West Publishing Company. Smith, J. K. (1987). Trade credit and informational asymmetry. Journal of Finance, 42. Smith M B and Begemann E (1997), “Measuring Association Between Working Capital and Return on Investment”, South Africa Journal of Business Management, Vol. 28, No. 1, pp. 1-5.Stiglitz, J., & Weiss, A. (1981). Credit rationing in markets with imperfect information. American Economic Review, 71, 393–410. Studenmund, A. H. (1997). Using econometrics: A practical guide. New York Addison- Wesley. Su, F. (2001), “The impact of the change of business cycle in manufacturing industry”, unpublished master’s dissertation, Department of Accounting, National Cheng Chi University, Taiwan. Summers, B., & Wilson, N. (2000). Trade credit management and the decision to use factoring: An empirical study. Journal of Business Finance & Accounting, 27, 37– 68. Teruel P J G and Solano P M (2005), “Effects of Working Capital Management on SME Profitability”, International Journal of Managerial Finance, Vol. 3, No. 2, pp. 164- 177. Thomsen, S., Pedersen, T., & Kvist, H. (2006). Blockholder ownership: Effects on firm value in market and control based governance systems. Journal of Corporate Finance, 12, 246–269. Tobin, J. (1969), “A general equilibrium approach to monetary theory”, Journal of Money, Credit and Banking, Vol. 1 No. 1, pp. 15-29. Tufail, S., Sidra, B., & Amjad. (2013). Impact of Working Capital Management on Profitability of Textile Sector of Pakistan. Elixir International Journal, 14387 - 14397. Uyar, Ali. (2009). The relationship of cash conversion cycle with firm size and profitability: an empirical investigation in Turkey. International Research Journal of Finance and Economics, ISSN 1450-2887 Issue 24, EuroJournals Publishing, Inc. Van Horne, J. C. & Wachowicz, J. M. 2000. Fundamentals of Financial Management, 11th Ed. Prentice Hall Inc. Vural, G., Sokmen, A. G., & Cetenak, E. H. (2012). Affects of Working Capital Management on Firm ’ s Performance : Evidence from Turkey. International Journal of Economics and Financial Issues, 2(4), 488–495. Wang, Y. J. (2002). Liquidity management, operating performance, and corporate value: Evidence from Japan and Taiwan. Journal of Multinational Financial Management, 12, 159–169. Wasiuzzaman, S., & Arumugam, V. (2013). Determinants of Working CapitalInvestment: A Study of Malaysian Public Listed Firms. Australasian Accounting Business & Finance Journal, 7(2), 49–70. Weinraub, H. J., & VIsscher, S. (1998). Industry practice relating to aggressive conservative working capital policies. Journal of Financial and Strategic Decisions, 11(2), 11–18. Wilner, B. S. (2000). The exploitation of relationship in financial distress: The case of trade credit. Journal of Finance, 55, 153–178. Wu, H. L. (2011). Can minority state ownership influence firm value? Universal and contingency views of its governance effects. Journal of Business Research, 64, 839–845. Zariyawati, M., Annuar, H. and Abdul Rahim, S. (2009), “Working capital management and corporate performance: case of Malaysia”, Journal of Modern Accounting and Auditing, Vol. 5 No. 11, pp. 47-54.

Effect of working capital management and financial constraints on corporate performance

Similar Items