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Working capital management and business performance: evidence from Latin American companies

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  • Juan Gallegos Mardones

Abstract

Working capital management is one of the most important decisions that affect an organisation’s financial performance. Despite the importance of this topic, the empirical evidence for emerging economies is scarce; therefore, this research attempts to estimate and compare how investment in working capital impacts the financial performance of companies listed on the stock exchanges in Chile, Mexico, Peru, and Brazil for the years 2000 to 2018. This study uses panel data methodology, and the results show the existence of a positive and significant but non-linear relationship between investments in working capital and firm performance. However, there are mixed results for different countries and industries that could be explained by macroeconomic variables that favour access to financing for such investments. Furthermore, the results show that investments in working capital perform better for larger companies than smaller companies.

Suggested Citation

  • Juan Gallegos Mardones, 2022. "Working capital management and business performance: evidence from Latin American companies," Economic Research-Ekonomska Istraživanja, Taylor & Francis Journals, vol. 35(1), pages 3189-3205, December.
    • Handle: RePEc:taf:reroxx:v:35:y:2022:i:1:p:3189-3205
    DOI: 10.1080/1331677X.2021.1986675
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    Cited by:

    1. Ahmed Mohamed Habib & Tamanna Dalwai, 2024. "Does the Efficiency of a Firm’s Intellectual Capital and Working Capital Management Affect Its Performance?," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(1), pages 3202-3238, March.

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