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Is There a Non-linear Relationship between Net Trade Cycle and Corporate Performance in Turkey?

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  • Mehmet Erkan Soykan
  • Recep Ulucak

Abstract

The aim of this study is to examine the relationship between working capital management and corporate performance for non-financial firms quoted in Borsa İstanbul for the period 2009-2014. The working capital investment decisions of the firms are utmost important since firms can continue their operations without discontinuance, raise their value and reduce risks as long as working capital level is attentively administered. Our research contributes to the working capital literature by investigating the non-linear relation between net trade cycle (NTC) and firm performance, utilising contemporary data and using system Panel GMM method. Our results indicate that there is a non-linear relationship between NTC and corporate performance. This means that there is an optimal NTC value where firm value is maximised. At this optimal working capital level, costs and advantages are poised. This implies that corporate executives should carefully manage their working capital investment and strive to be close to the optimal level as much as possible.

Suggested Citation

  • 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.
    • Handle: RePEc:ibn:ibrjnl:v:9:y:2016:i:6:p:95-101
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    References listed on IDEAS

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    6. Filiz KONUK & Feyyaz ZEREN, 2014. "Is Cash Conversion Cycles Optimum in Turkish Listed Food-Beverage Firms?," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(12(601)), pages 153-164, December.
    7. de Almeida, Juliano Ribeiro & Eid, William, 2014. "Access to finance, working capital management and company value: Evidences from Brazilian companies listed on BM&FBOVESPA," Journal of Business Research, Elsevier, vol. 67(5), pages 924-934.
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    Cited by:

    1. Wetzel, Philipp & Hofmann, Erik, 2019. "Supply chain finance, financial constraints and corporate performance: An explorative network analysis and future research agenda," International Journal of Production Economics, Elsevier, vol. 216(C), pages 364-383.

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    More about this item

    Keywords

    Borsa Istanbul; firm performance; net trade cycle; working capital management;
    All these keywords.

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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