Financing of working capital requirement, financial flexibility and SME performance
Autor: | Pedro Martínez-Solano, Pedro J. García-Teruel, Sonia Baños-Caballero |
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Jazyk: | angličtina |
Rok vydání: | 2016 |
Předmět: |
Finance
Economics and Econometrics 050208 finance HF5001-6182 working capital requirement business.industry Economic capital financial crisis 05 social sciences Working capital SMEs short-term debt Corporate finance Physical capital Internal financing Financial capital financial flexibility 0502 economics and business Capital requirement Capital employed Business Management and Accounting (miscellaneous) Business business 050203 business & management performance |
Zdroj: | Journal of Business Economics and Management; Vol 17 No 6 (2016); 1189-1204 Journal of Business Economics and Management, Vol 17, Iss 6 (2016) |
ISSN: | 1611-1699 2029-4433 |
Popis: | This paper investigates the relation between the financing strategies of working capital requirement and firm performance for the period 1997 to 2012. Using the two-step generalized method of moments estimator, we find that a suitable financing strategy can help firms improve their performance. Moreover, the results indicate that the working capital requirement financing-performance relation changes during a financial crisis. Finally, we also find that this relation depends on a firm’s financial flexibility. The findings are of interest for managers and researchers and show that managers should not only be concerned about investing in working capital requirement but also consider how this investment is to be financed. To the best of our knowledge, this is the first paper to analyse how the financing strategy selected by firms to finance their working capital requirement affects their performance. |
Databáze: | OpenAIRE |
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