Empirical Study On The Impact Of Working Capital Management And Market Environment On Corporate Performance

Most of China’s enterprises are in the growth and expansion period and have limited financing channels,with large demand for capital and less internal accumulation.Therefore,this article aims to study the impact of working capital management and external market environment on enterprise performance in the context of Chinese economy.In particular,taking enterprise scale as internal factor and market environment as external factor,the paper explores how internal and external factors affect enterprise profitability.The samples selected in this paper are all non-financial Chinese A-share enterprises from 2008 to 2019,and the regression model is two-way fixed effect model.Firstly,it’s found that cash conversion cycle is negatively correlated with corporate performance.Secondly,it’s found that firm size has a moderating effect on the negative relationship,and the negative relationship becomes stronger with the decrease of firm size.Finally,the market environment contains the nonstate economy factor and government factor.The profitability of sizeable firms is positively correlated with the non-state-owned economy while other firms are not,showing that the profitability of large enterprises is closely related to nonstate economy.In addition,government factors are negatively correlated with profitability for both large and small firms,which is contrary to the expected results.Innovatively,this paper investigates the impact of firm size,working capital management and market environment on corporate performance by combining three internal and external factors.Firstly,from internal factors,this paper studies the influence of enterprise size and working capital management on enterprise performance and finds that there are significant differences among enterprises of different sizes.Secondly,the influence of market environment on profitability is classified according to the enterprise scale.The results show that the market environment has a more obvious influence on large firms than other ones.