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Impact of Working Capital Management on the Performance of the Firms Listed on the Tehran Stock Exchange


  • Mehdi Rezaie Ahmadabadi

    () (Islamic Azad University)

  • Esmaeil Mehrabi

    () (Islamic Azad University)

  • Ali Fazel Yazdi

    () (Islamic Azad University)


The world economy has changed rapidly. The rise of economic and technological variations featured by the incremental global competition has made the directors more accountable in carrying out their operations. Decision making is one of the significant roles played by the directors. Making decisions sheds lights on the whole financial affairs. This is not exceptional in working capital management. Designing and developing working capital management impact the improvement of the firms’ oper- ations. This study intends to find empirical evidence about the effect of working capital management on the firm’s performance. The performance evaluation measures include refined economic value added and market value added. In doing so, a sample composed of the firms listed on the Tehran Stock Exchange for a five year period including 2006 to 2010 has been considered. The regression results represent that there is no significant relationship between working capital management and refined economic value added. However, the variables of working capital management and market value added are significantly associated. As a whole, the managers might enhance the firm’s per- formance through declining the liquidity cycle.

Suggested Citation

  • Mehdi Rezaie Ahmadabadi & Esmaeil Mehrabi & Ali Fazel Yazdi, 2013. "Impact of Working Capital Management on the Performance of the Firms Listed on the Tehran Stock Exchange," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 3(3), pages 352-364, July.
  • Handle: RePEc:hur:ijaraf:v:3:y:2013:i:3:p:352-364

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    References listed on IDEAS

    1. Theofanis Karagiorgos & George Drogalas & Nikolaos Giovanis, 2011. "Evaluation of the Effectiveness of Internal Audit in Greek Hotel Business," International Journal of Business and Economic Sciences Applied Research (IJBESAR), Eastern Macedonia and Thrace Institute of Technology (EMATTECH), Kavala, Greece, vol. 4(1), pages 19-34, March.
    2. Maria RADU, 2012. "Corporate Governance, Internal Audit and Environmental Audit - The Performance Tools in Romanian Companies," Journal of Accounting and Management Information Systems, Faculty of Accounting and Management Information Systems, The Bucharest University of Economic Studies, vol. 11(1), pages 112-130, March.
    3. Dieter De Smet & Anne-Laure Mention, 2011. "Improving auditor effectiveness in assessing KYC/AML practices: Case study in a Luxembourgish context," Managerial Auditing Journal, Emerald Group Publishing, vol. 26(2), pages 182-203, January.
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