European Journal of Business Science and Technology 2023, 9(1):37-55 | DOI: 10.11118/ejobsat.2023.005

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

Bahadır Karakoç1
1 University of Samsun, Türkiye

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.

Keywords: corporate performance, financial dependence, financing constraint, profitability, trade credit
JEL classification: G30, G32, L26

Received: December 20, 2022; Revised: April 19, 2023; Accepted: April 23, 2023; Published: June 30, 2023  Show citation

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Karakoç, B. (2023). Working Capital Management and Performance in Financially Dependent Firms: Evidence from Developing Asian Economies. European Journal of Business Science and Technology, 9(1), 37-55. doi: 10.11118/ejobsat.2023.005
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