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The cash conversion cycle spread in China

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  • Chen, Xin
  • Zheng, Gaoping
  • Chai, Daniel

Abstract

We investigate the relation between the cash conversion cycle (CCC) and the cross section of stock returns in the US and Chinese markets. By replicating the main results of Wang (2019), we find no evidence of the CCC effect in the Chinese market over the sample period 2002–2019. The results remain robust when microcap stocks are excluded from the sample. We also find that the components of the CCC play different roles in stock returns between the two markets. Further analysis shows that the CCC effect mainly exists in periods before 2002 in the US market. This suggests that the results of Wang (2019) may be sample specific.

Suggested Citation

  • Chen, Xin & Zheng, Gaoping & Chai, Daniel, 2022. "The cash conversion cycle spread in China," Pacific-Basin Finance Journal, Elsevier, vol. 73(C).
    • Handle: RePEc:eee:pacfin:v:73:y:2022:i:c:s0927538x22000646
    DOI: 10.1016/j.pacfin.2022.101769
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    References listed on IDEAS

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    Cited by:

    1. Bilgehan TEKİN & Yusuf GÖR, 2022. "Cash conversion cycle and its relationship with profitability as a cash management tool in companies: An application on companies trading in Borsa Istanbul," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(3(632), A), pages 113-130, Autumn.

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    More about this item

    Keywords

    Cash conversion cycle; Stock returns; Asset pricing; Chinese market;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates

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