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Affects of Working Capital Management on Firm's Performance: Evidence from Turkey

Author

Listed:
  • Gamze VURAL

    (ukurova University, Faculty of Economics and Administrative Sciences,)

  • Ahmet G khan S KMEN

    (a Univeristy, Faculty of Economics and Administrative Sciences,)

  • Emin H seyin CETENAK

    (ukurova University, Faculty of Economics and Administrative Sciences,)

Abstract

The working capital management has an important role for the firm?s success or failure because of it?s? effect on firm?s performance and liquidity. The study is based on secondary data collected from 75 manufacturing firms listed on Istanbul Stock Exchange Market for the period 2002- 2009 with an attempt to investigate the relationship between working capital management components and performance of the firms by using dynamic panel data analysis. The results demonstrate that firms can increase profitability measured by gross operating profit by shortening collection period of accounts receivable and cash conversion cycle. Leverage as a control variable has a significant negative relationship with firm value and profitability of firms. This means, increase in the level of leverage will lead to decline in the profitability of the firm and the value of the firm.

Suggested Citation

  • Gamze VURAL & Ahmet G khan S KMEN & Emin H seyin CETENAK, 2012. "Affects of Working Capital Management on Firm's Performance: Evidence from Turkey," International Journal of Economics and Financial Issues, International Journal of Economics and Financial Issues, vol. 2(4), pages 488-495.
    • Handle: RePEc:eco:journ1:2012-04-11
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    References listed on IDEAS

    as
    1. Preve, Lorenzo & Sarria-Allende, Virginia, 2010. "Working Capital Management," OUP Catalogue, Oxford University Press, number 9780199737413.
    2. Marc Deloof, 2003. "Does Working Capital Management Affect Profitability of Belgian Firms?," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 30(3‐4), pages 573-588, April.
    3. Marc Deloof, 2003. "Does Working Capital Management Affect Profitability of Belgian Firms?," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 30(3-4), pages 573-588.
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    Citations

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    Cited by:

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    2. Jacek Jaworski & Leszek Czerwonka, 2024. "Profitability and working capital management: a meta-study in macroeconomic and institutional conditions," DECISION: Official Journal of the Indian Institute of Management Calcutta, Springer;Indian Institute of Management Calcutta, vol. 51(1), pages 123-145, March.
    3. Mohammed Ibrahim & Bula Yila Dengel, 2021. "Cash Conversion Cycle and Value of Listed Oil and Gas Companies in Nigeria," Review of Market Integration, India Development Foundation, vol. 13(1), pages 20-41, April.
    4. Foster, Benjamin P. & Manikas, Andrew & Preece, Dianna & Kroes, James R., 2021. "Noteworthy diversity efforts and financial performance: Evidence from DiversityInc's top 50," Advances in accounting, Elsevier, vol. 53(C).
    5. Syed Ahsan Jamil & Mawih Kareem Al Ani & Faris Nasif Al Shubiri, 2015. "The Effect of Working Capital Management Efficiency on the Operating Performance of the Industrial Companies in Oman," International Journal of Economics and Financial Issues, International Journal of Economics and Financial Issues, vol. 5(4), pages 897-904.
    6. Mehmet Erkan Soykan & Recep Ulucak, 2016. "Is There a Non-linear Relationship between Net Trade Cycle and Corporate Performance in Turkey?," International Business Research, Canadian Center of Science and Education, vol. 9(6), pages 95-101, June.
    7. Amr Ahmed Moussa, 2018. "The impact of working capital management on firms’ performance and value: evidence from Egypt," Journal of Asset Management, Palgrave Macmillan, vol. 19(4), pages 259-273, July.
    8. Benjamin P. Foster & Andrew S. Manikas & James R. Kroes, 2023. "Which diversity measures best capture public company value?," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(1), pages 236-247, January.
    9. Sara Fernández‐López & David Rodeiro‐Pazos & Lucía Rey‐Ares, 2020. "Effects of working capital management on firms' profitability: evidence from cheese‐producing companies," Agribusiness, John Wiley & Sons, Ltd., vol. 36(4), pages 770-791, October.
    10. Tanveer Bagh & Muhammad Imran Nazir & Muhammad Asif Khan & Muhammad Atif Khan & Sadaf Razzaq, 2016. "The Impact of Working Capital Management on Firms Financial Performance: Evidence from Pakistan," International Journal of Economics and Financial Issues, International Journal of Economics and Financial Issues, vol. 6(3), pages 1097-1105.

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    Keywords

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    JEL classification:

    • G39 - Financial Economics - - Corporate Finance and Governance - - - Other
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes

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