The development of working capital management and its impact on profitability and shareholder value: evidence from Germany
- 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.
| Author of HS Reutlingen | Charifzadeh, Michel; Ferencz, Marlene |
|---|---|
| URN: | urn:nbn:de:bsz:rt2-opus4-27448 |
| DOI: | https://doi.org/10.5937/StraMan2002027H |
| ISSN: | 1821-3448 |
| eISSN: | 2334-6191 |
| Erschienen in: | Strategic management : international journal of strategic management and decision support systems in strategic management |
| Publisher: | University of Novi Sad |
| Place of publication: | Subotica |
| Document Type: | Journal article |
| Language: | English |
| Publication year: | 2020 |
| Tag: | Germany; cash conversion cycle; market value added; panel data; profitability; return on capital employed; shareholder value; working capital management |
| Volume: | 25 |
| Issue: | 2 |
| Page Number: | 13 |
| First Page: | 27 |
| Last Page: | 39 |
| DDC classes: | 650 Management |
| Open access?: | Ja |
| Licence (German): |  Creative Commons - CC BY - Namensnennung 4.0 International |
