The Effect of Working Capital Management on Corporate Performance

운전자본관리가 기업성과에 미치는 영향

  • Received : 2016.02.29
  • Accepted : 2016.06.02
  • Published : 2016.06.30


This study examines the effect of firms' working capital management on their performance for a sample of non-financial companies listed on the Korea Exchange (KRX). The working capital and corporate performance are measured as the ratio of the net working capital to sales and return on assets, respectively. The results are as follows. First, there is no significant relationship between the working capital and corporate performance in the total sample. Second, the working capital is positively related to the firms' performance in the negative working capital group while the working capital is negatively related to the corporate performance in the positive working capital group. These findings indicate the existence of an optimal working capital level for firms. Third, the firms' financial constraints have no effects on the relationship between the working capital and corporate performance. This suggests that there are no interactive effects among the working capital, financial constraints, and profitability of the firms. This study implicates that managers should consider the different roles and impacts when developing an efficient working capital management strategy.


Corporate performance;Firms' profitability;Panel analysis;Working capital;Working capital management


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Supported by : 청운대학교