EconPapers    
Economics at your fingertips  
 

Working Capital Management and Stock Performance: Evidence from an Emerging Market

Lloyd Blenman (), Hung T Pham (), Tu V Dao () and Ben Le ()

International Journal of Applied Economics, Finance and Accounting, 2022, vol. 14, issue 2, 137-151

Abstract: Previous research found a negative relationship between net working capital (NWC) and firm risk without accounting for investor protection. Bangladesh is different. We find a positive relationship between NWC and firm risk in an environment with weak governance and lax protection of property rights. Higher NWC must maintain to balance firm risk. Financial reporting quality (FRQ), liquidity risk, revenue uncertainty and weak capital market access have impact on firm risk. Poor FRQ adversely affects cost of capital and also limited financing choice. Changes in NWC have a significant impact on stock performance in firms with slower sales growth and less access to external capital. Our finding’s reliability is supported by both the fixed-effects panel and GMM regressions. The results have implications for Bangladeshi investors and firm managers as well as for other emerging markets with limited capital market access, high cost of bank debt and weak enforcement of property rights.

Keywords: Access to capital; Financial reporting quality; Firm risk; Stock performance; Working capital management. (search for similar items in EconPapers)
Date: 2022
References: Add references at CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://onlineacademicpress.com/index.php/IJAEFA/article/view/691/689 (application/pdf)
http://onlineacademicpress.com/index.php/IJAEFA/article/view/691/696 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oap:ijaefa:v:14:y:2022:i:2:p:137-151:id:691

Access Statistics for this article

More articles in International Journal of Applied Economics, Finance and Accounting from Online Academic Press
Bibliographic data for series maintained by Heather Rothman ().

 
Page updated 2022-10-28
Handle: RePEc:oap:ijaefa:v:14:y:2022:i:2:p:137-151:id:691