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Working Capital Management and Performance in Financially Dependent Firms: Evidence from Developing Asian Economies

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  • Bahadir Karakoç

    (University of Samsun, Türkiye)

Abstract

This paper examines the impact of working capital management on firm performance in nine developing economies in Asia. Specifically, the study focuses on two critical aspects: the management of trade credit and inventory. The empirical findings reveal that effective management of these components significantly enhances the performance of financially dependent firms. In fact, during critical periods such as the 2008 financial crisis, these management strategies helped to boost performance considerably. However, no comparable association was observed in other firms within the sample. These results suggest that appropriate handling of trade credit and inventory can yield a significant performance advantage.

Suggested Citation

  • Bahadir Karakoç, 2023. "Working Capital Management and Performance in Financially Dependent Firms: Evidence from Developing Asian Economies," European Journal of Business Science and Technology, Mendel University in Brno, Faculty of Business and Economics, vol. 9(1), pages 37-55.
    • Handle: RePEc:men:journl:v:9:y:2023:i:1:p:37-55
    DOI: 10.11118/ejobsat.2023.005
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    More about this item

    Keywords

    corporate performance; financial dependence; financing constraint; profitability; trade credit;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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