Determinants of Working Capital Management

17 Pages Posted: 24 Nov 2012

See all articles by Elena Archavli

Elena Archavli

Hellenic Mediterranean University - Department of Accounting; University of Macedonia - Department of Business Administration

Costas Siriopoulos

Zayed University, College of Business; University of Patras - Business Administration

Stavros Arvanitis

Hellenic Mediterranean University

Date Written: November 23, 2012

Abstract

Purpose - The purpose of this paper is to provide empirical evidence for the effective management of working capital and for its impact on the performance of Greek listed companies in terms of profitability, performance and market valuation.

Design/Methodology/approach -This research approach is based on the examination of 211 listed on the Athens Stock Exchange firms for a period of six years from 2005 to 2010. This research intents to investigate the effects of the working capital management factors for Greek enterprises’ yields through the examination of profitability (gross operating profit), the performance (return on assets) and the market value of the firm (Tobin Q).

Findings -The results of our research showed that there are significant negative correlations between the variables of working capital and the business performance. Thus, we must highlight the importance of managing working capital to ensure improved profitability, efficiency and market value of companies, as this aspect should be part of strategic and operational thinking of Greek enterprises, in order to operate effectively and efficiently.

Research Limitations/implications -The main limitation of this research is that examining a sample of listed firms does not allow for generalization of conclusions for all listed firms.

Originality/value - This paper provides new evidence for the effects of the determinants of working capital on the efficiency, profitability and market value of listed firms.

Keywords: Working capital management, Cash conversion cycle, Athens Stock Exchange

JEL Classification: G30, M41, O52

Suggested Citation

Archavli, Elena and Siriopoulos, Costas and Arvanitis, Stavros, Determinants of Working Capital Management (November 23, 2012). Available at SSRN: https://ssrn.com/abstract=2179907 or http://dx.doi.org/10.2139/ssrn.2179907

Elena Archavli

Hellenic Mediterranean University - Department of Accounting ( email )

Crete, Agios Nikolaos GR-72100
Greece

University of Macedonia - Department of Business Administration ( email )

Thessaloniki
Greece

Costas Siriopoulos (Contact Author)

Zayed University, College of Business ( email )

P.O. Box 144534
Abu Dhabi
United Arab Emirates

University of Patras - Business Administration ( email )

Patras
Greece

Stavros Arvanitis

Hellenic Mediterranean University ( email )

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