Original scientific paper
https://doi.org/10.1080/1331677X.2021.1986675
Working capital management and business performance: evidence from Latin American companies
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.
Keywords
Working capital; emerging economies; financial performance; non-linear relationship
Hrčak ID:
302503
URI
Publication date:
31.3.2023.
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