Kostenmanagement in Krisenzeiten: Rentabilitätssteigerung durch Working Capital Management?

Wöhrmann, Arnt; Knauer, Thorsten; Gefken, Johannes

doi:10.1365/s12176-012-0649-2

Cited by 7 publications

(5 citation statements)

References 7 publications

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“…The effects of the CCC, and its components, on profitability are well documented. Most studies find a negative relationship between CCC and the profitability of firms around the world, for example, for the USA (see Jose et al , 1996; and Shin and Soenen, 1998); for Japan and Taiwan (see Wang,2002); for Greece (see Lazaridis and Tryfonidis, 2006); for Spain, during the period 1996 to 2002 (see García-Teruel and Martínez-Solano, 2007); for Pakistan (see Raheman and Nasr, 2007); for Turkey (see Karaduman et al , 2010; and for Germany, see (Wöhrmann et al , 2012). Deloof (2003) finds a negative relationship between CCC and profitability in Belgian markets; however, these results are insignificant.…”

Section: Literature Reviewmentioning

confidence: 99%

Working capital management and firm’s valuation, profitability and risk

2019

IJMF

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Purpose The purpose of this paper is to examine the effects of working capital management on firm valuation, profitability and risk. Design/methodology/approach The paper uses a panel data set of 497 firms covering the period 2007 to 2016. The authors test the effects of working capital management on firm valuation, profitability and risk using the panel data methodology that includes firm and year fixed effects regressions. Findings The authors find a significantly negative relationship between net working capital (NWC) and firm valuation, profitability and risk. The results suggest that, in managing working capital, firm managers must make a trade-off between their objectives for profitability and risk control. Working-capital management is of particular importance in firms with less access to capital; it is also important when firms are expanding their investments during periods of economic recovery. Originality/value This paper contributes to the literature in several ways. First, to my knowledge, it provides the most comprehensive investigation, to date, on the relationship between working capital management and firm valuation, profitability and risk in an emerging market. Second, this study documents the existence of an optimal level of NWC in an emerging market. Third, firm performance, as measured in both market and accounting value, can be improved with efficient working capital management. Finally, the study includes the impact of the business cycle in an analysis of the effects of working capital management on firm performance.

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Section: Literature Reviewmentioning

confidence: 99%

Working capital management and firm’s valuation, profitability and risk

2019

IJMF

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“…2, pp. 027-039 considered in a value-based context would also explain the positive relationship for payables found by Wöhrmann et al (2012) who likewise calculated with ROCE.…”

Section: The Impact Of Working Capital Managementmentioning

confidence: 75%

“…As the authors were not able to prove the findings of previous research, they suggested extending the work with a longer period. Six years later, Wöhrmann et al (2012) continued the research and considered working capital management of 4,963 German firms in light of the financial crisis (2007)(2008)(2009). Their research motivation was the need for internal financing in times of crisis and the question of whether too aggressive working capital management, e.g., too aggressive receivable management, might harm customer relations.…”

Section: The Impact Of Working Capital Management On Profits Of Domesmentioning

confidence: 99%

“…Overall, empirical research, nationally as well as internationally, shows fairly consistent results and provides evidence of an inverse relationship between efficient working capital management, measured with the CCC and profitability ratios. This paper intends to add to the research of Wöhrmann et al (2012) for the subsequent years 2011 to 2017 after the financial crisis. This leads to the following hypothesis:…”

Section: The Impact Of Working Capital Management On Profits Of Domesmentioning

confidence: 99%

“…First, it provides recent evidence on the development of working capital in business firms in Germany. Second, there exist only a few studies investigating the impact of working capital management on profitability in Germany, which are out of date and published in German language only (Meyer & Lüdtke, 2006;Wöhrmann, Knauer & Gefken, 2012). Third, this paper contributes to the literature by assessing the relationship of shareholder value with working capital management and all its determinants.…”

Section: Introductionmentioning

confidence: 98%

See 2 more Smart Citations

The development of working capital management and its impact on profitability and shareholder value: Evidence from Germany

Högerle¹,

Charifzadeh²,

Ferencz³

et al. 2020

Strategic Management

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This study investigates empirically the development of working capital management and its impact on profitability and shareholder value in Germany. We analyse panel data of 115 firms listed on the German Prime Standard, covering the period from 2011 to 2017. The results provide evidence that efficient working capital management, indicated by a shorter cash conversion cycle, deteriorated over time, but that a shorter cash conversion has a positive impact on profitability and shareholder value. The findings highlight the need that managers should give greater priority to working capital optimization, even in a low-interest environment. The paper contributes to the literature by advancing this research area in Germany, and it is the first study investigating shareholder relationship with working capital management and all its determinants.

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Working capital management and firm profitability

Knauer

Wöhrmann

2013

J Manag Control

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Kostenmanagement in Krisenzeiten: Rentabilitätssteigerung durch Working Capital Management?

Cited by 7 publications

References 7 publications

Working capital management and firm’s valuation, profitability and risk

Working capital management and firm’s valuation, profitability and risk

The development of working capital management and its impact on profitability and shareholder value: Evidence from Germany

Working capital management and firm profitability

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