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Cash cycle: A cross‐country analysis

Author

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  • Abu Jalal
  • Shahriar Khaksari
Abstract
We study the cross‐country differences in the cash cycles of companies and find a negative relation between a country's development and the cash cycles of its corporations. The ability of companies to obtain raw materials on credit and to better manage inventory plays significant roles in shortening the cash cycle. Various country‐specific factors affect cash cycles. Firms with shorter cash cycles invest more in R&D and participate in more acquisitions. They also have a higher valuation and lower leverage. Overall, our findings indicate a close relation between a company's working capital management, its valuation, and the country's level of development.

Suggested Citation

  • Abu Jalal & Shahriar Khaksari, 2020. "Cash cycle: A cross‐country analysis," Financial Management, Financial Management Association International, vol. 49(3), pages 635-671, September.
    • Handle: RePEc:bla:finmgt:v:49:y:2020:i:3:p:635-671
    DOI: 10.1111/fima.12273
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