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Is working capital management value-enhancing? Evidence from firm performance and investments

Aktas, Nihat; Croci, Ettore; Petmezas, Dimitris

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Authors

Nihat Aktas

Ettore Croci



Abstract

We examine the value effect of working capital management (WCM) for a large sample of US firms between 1982–2011. Our results indicate (i) the existence of an optimal level of working capital policy; and (ii) firms that converge to that optimal level (either by increasing or decreasing their investment in working capital) improve their stock and operating performance. We also document that corporate investment is the channel through which efficient WCM translates into superior firm performance. In particular, efficient WCM allows firms to redeploy underutilized corporate resources to higher-valued use, such as the funding of cash acquisitions.

Citation

Aktas, N., Croci, E., & Petmezas, D. (2015). Is working capital management value-enhancing? Evidence from firm performance and investments. Journal of Corporate Finance, 30, 98-113. https://doi.org/10.1016/j.jcorpfin.2014.12.008

Journal Article Type Article
Acceptance Date Dec 18, 2014
Online Publication Date Dec 24, 2014
Publication Date 2015-02
Deposit Date Jul 29, 2020
Publicly Available Date Jul 29, 2020
Journal Journal of Corporate Finance
Print ISSN 0929-1199
Publisher Elsevier
Peer Reviewed Peer Reviewed
Volume 30
Pages 98-113
DOI https://doi.org/10.1016/j.jcorpfin.2014.12.008
Public URL https://durham-repository.worktribe.com/output/1264968
Related Public URLs https://epubs.surrey.ac.uk/820735/

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