Get 20M+ Full-Text Papers For Less Than $1.50/day. Start a 14-Day Trial for You or Your Team.

Learn More →

Cash conversion cycle and firm's performance of Japanese firms

Cash conversion cycle and firm's performance of Japanese firms Purpose – The purpose of this paper is to investigate the relation between a firm's cash conversion cycle and its profitability. Design/methodology/approach – The relation between the firm's cash conversion cycle and its profitability is examined using dynamic panel data analysis for a sample of Japanese firms for the period from 1990 to 2004. The analysis is applied at the levels of the full sample and divisions of the sample by industry and by size. Findings – A strong negative relation between the length of the firm's cash conversion cycle and its profitability is found in all of the authors’ study samples except for consumer goods companies and services companies. Originality/value – Traditional focus in corporate finance was on the long‐term financial decisions, particularly capital structure, dividends, and company valuation decisions. However, the recent trend in corporate finance is the focus on working capital management. Most of working capital management literature is based on the US experience. This study investigates the relation between the firm's cash conversion cycle and its profitability of Japanese firms where the organizational structure is totally different from that of the US firms; most of the Japanese firms are interconnected and related through corporate groups ( keiretsu ). http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Asian Review of Accounting Emerald Publishing

Cash conversion cycle and firm's performance of Japanese firms

Download PDF
10 pages

Loading next page...
 
/lp/emerald-publishing/cash-conversion-cycle-and-firm-s-performance-of-japanese-firms-OP1NM00BXi

References (46)

Publisher
Emerald Publishing
Copyright
Copyright © 2011 Emerald Group Publishing Limited. All rights reserved.
ISSN
1321-7348
DOI
10.1108/13217341111181078
Publisher site
See Article on Publisher Site

Abstract

Purpose – The purpose of this paper is to investigate the relation between a firm's cash conversion cycle and its profitability. Design/methodology/approach – The relation between the firm's cash conversion cycle and its profitability is examined using dynamic panel data analysis for a sample of Japanese firms for the period from 1990 to 2004. The analysis is applied at the levels of the full sample and divisions of the sample by industry and by size. Findings – A strong negative relation between the length of the firm's cash conversion cycle and its profitability is found in all of the authors’ study samples except for consumer goods companies and services companies. Originality/value – Traditional focus in corporate finance was on the long‐term financial decisions, particularly capital structure, dividends, and company valuation decisions. However, the recent trend in corporate finance is the focus on working capital management. Most of working capital management literature is based on the US experience. This study investigates the relation between the firm's cash conversion cycle and its profitability of Japanese firms where the organizational structure is totally different from that of the US firms; most of the Japanese firms are interconnected and related through corporate groups ( keiretsu ).

Journal

Asian Review of Accounting – Emerald Publishing

Published: Jul 19, 2011

Keywords: Japan; Organizational performance; Working capital; Cash conversion cycle; Return on investment

There are no references for this article.