Working Capital Management, Financial Constraints, and Exports. Evidence from European and US Manufacturers

Jose Manuel Mansilla-Fernandez and Juliette Milgram Baleix
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Jose Manuel Mansilla-Fernandez: Universidad Publica de Navarra

No 22/11, ThE Papers from Department of Economic Theory and Economic History of the University of Granada.

Abstract: This paper investigates the effect of firms’ working capital management, measured by the cash conversion cycle (CCC) on exports, on both the intensive and extensive margins. By using Heckman’s two-stage model for the treatment of sample selection bias, we find that the longer the CCC, the lower firms’ likelihood of exporting and the lower the volume of their exports. This phenomenon is economically more relevant for financially constrained firms than for unconstrained firms. The results are robust to the propensity score matching, the transition sample and the placebo analyses. Finally, these results can be extrapolated in the context of the Covid-19 crisis because of the decline in trading conditions and firms’ shortage of liquidity.

Keywords: Cash conversion cycle; Covid-19 crisis; exports; financial constraints; working capital management (search for similar items in EconPapers)
JEL-codes: G01 G21 G32 H63 (search for similar items in EconPapers)
Pages: 47 pages
Date: 2022-08-15
New Economics Papers: this item is included in nep-cfn, nep-fdg and nep-int
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http://www.ugr.es/~teoriahe/RePEc/gra/wpaper/thepapers22_11.pdf (application/pdf)

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Journal Article: Working capital management, financial constraints and exports: evidence from European and US manufacturers (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:gra:wpaper:22/11

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