Performance Effects of Working Capital in Emerging Markets

• Main Author: Turki Alshammari
• Format: Article
• Language: English
• Published: EconJournals 2018-09-01
• Series: International Journal of Economics and Financial Issues
• Online Access: https://www.econjournals.com/index.php/ijefi/article/view/6745

<p>This paper strives to provide evidence of the effect of working capital policies on corporate profitability in a new and different setting, the Gulf Cooperation Council (GCC) countries. As the corporate private sector receives lavish subsidies from local oil-rich governments, both the theoretical propositions and the worldwide accepted evidence are glitched. Employing a set of pooled regression models, this paper documents a trivial, if any, association between the efficiency of working capital management and the corporate profitability for a set of nonfinancial firms in all the GCC countries. The results are robust to the econometric model, the profitability measure, and the country.</p><p><strong>Keywords:</strong> Working Capital, Tobin’s Q, Debt ratio, Profitability, Cash Conversion Cycle, GCC countries, Firm Value</p><p><strong>JEL Classifications</strong>: G3, G31</p>