Working capital management during the global financial crisis: Evidence from Japan

Daisuke Tsuruta

Japan and the World Economy, 2019, vol. 49, issue C, 206-219

Abstract: This paper demonstrates the adjustment speed of firm working capital and the relationships between working capital and firm performance in Japan during the global financial crisis. Using quarterly firm-level data, we find that the adjustment of working capital was weaker during the crisis. Moreover, the negative relationship between excess working capital and firm performance became more significant during the crisis, especially for larger firms. However, this crisis-related working capital–firm performance effect does not appear to persist for very long, because to finance any excess working capital, firms borrow from banks and reduce their internal cash both during and outside periods of crisis.

Keywords: Working capital; Financial crisis; Firm performance; Inventories; Trade receivables (search for similar items in EconPapers)
JEL-codes: G01 G31 G32 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:japwor:v:49:y:2019:i:c:p:206-219

DOI: 10.1016/j.japwor.2019.01.002

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