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Determinants of cash conversion cycle in MENA countries

Determinants of cash conversion cycle in MENA countries This study investigates the determinants of the cash conversion cycle (CCC in the Middle East and North Africa (MENA) countries).Design/methodology/approachUsing the data of 395 companies from 10 countries in the MENA region for six years (2013–2018), the authors run dynamic panel regressions. The authors developed several models to examine the determinants of CCC and its components. The models included several control variables: firm, industry and country characteristics.FindingsThe results reveal that firm characteristics (e.g. operating cash flow, sales growth rate, operating profit margin, firm size and tangibility) affect CCC. The model in which CCC is a dependent variable produced more significant results than those which the components of CCC were dependent variables.Practical implicationsThe findings suggest that corporate managers when making their working capital management decisions should pay equal attention to the components of CCC and develop a comprehensive working capital management policy.Originality/valueTo the best of the authors’ knowledge, this is the first study to examine determinants of CCC in the MENA context in both country and industry details. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Managerial Finance Emerald Publishing

Determinants of cash conversion cycle in MENA countries

Managerial Finance , Volume 49 (7): 21 – Jun 22, 2023

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References (38)

Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
0307-4358
DOI
10.1108/mf-03-2022-0101
Publisher site
See Article on Publisher Site

Abstract

This study investigates the determinants of the cash conversion cycle (CCC in the Middle East and North Africa (MENA) countries).Design/methodology/approachUsing the data of 395 companies from 10 countries in the MENA region for six years (2013–2018), the authors run dynamic panel regressions. The authors developed several models to examine the determinants of CCC and its components. The models included several control variables: firm, industry and country characteristics.FindingsThe results reveal that firm characteristics (e.g. operating cash flow, sales growth rate, operating profit margin, firm size and tangibility) affect CCC. The model in which CCC is a dependent variable produced more significant results than those which the components of CCC were dependent variables.Practical implicationsThe findings suggest that corporate managers when making their working capital management decisions should pay equal attention to the components of CCC and develop a comprehensive working capital management policy.Originality/valueTo the best of the authors’ knowledge, this is the first study to examine determinants of CCC in the MENA context in both country and industry details.

Journal

Managerial FinanceEmerald Publishing

Published: Jun 22, 2023

Keywords: Cash conversion cycle; Working capital management; Profitability

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