Working Capital Management And Corporate Performance

In the Post-financial-crisis period, working capital management have attracted the attention of scholars, because they realized that the low efficiency of working capital management is a direct result of the failure or bankruptcy of the company. In October1975, WT.Grant, the largest retailer in the United States, filed for bankruptcy, it is a classic case of working capital management failure led to the company’s bankruptcy.In recent years, foreign scholars have done a lot of research on working capital management, and domestic scholars became aware of the importance of working capital management gradually, but most research of the working capital management is standard qualitative research, and the research is mainly around the evaluation index. Empirical research on working capital management in domestic is little.The purpose of this writing is to analysis the relationship between working capital management and performance of the company. A-share listed companies from2001to2009in Shanghai and Shenzhen in China as the research object, using balanced panel data for the empirical analysis. Firstly, descriptive statistics and correlation analysis of the variables; Secondly,regression analysis, analysis using pooled model, fixed effects model and random effects model:Finally, the robustness test of the conclusion.In this paper, the research methods and research perspective are a breakthrough. On the one hand, we integrated using OLS, GLS and FGLS with panel data, the content is richer than previous studies which just use OLS; On the other hand. This article has conducted the robustness test, the conclusion is more robust.Through empirical analysis, we have the following conclusions:the cash conversion cycle and the performance of the company has a significant negative correlation; The accounts receivable turnover period and the performance of the company has a significant negative correlation; The inventory turnover period and the firm’s performance negatively correlated, but not significantly;The payables turnover period has a significant positive correlation with the performance of the company.