Effects Of Working Capital Policy On Performance Of Vietnamese Listed Firms

Abstract

This paper aims to study the relationship between the firm’s performance and working capital management policy, based on the data of 564 companies listed on the Vietnamese Stock Market over the period from 2006 to 2013. The Fixed effects model and Random effects model regressions are employed for unbalanced –panel data in this research. The tests indicate that the fixed effects model explain better the relationship between the independent variables and the firm’s profitability. The findings show statistically significant negative relationships between the profitability measured as ROA and days of working capital conversion as inventory conversion period, average collection period, payables deferral period and cash conversion cycle. Besides, the positive association between the current assets turnover, the level of current assets in total assets (as percentage of total assets) and ROA are also documented. The implication is that the managers of Vietnamese listed firms should pursue a proper working capital policy to enhance the performance.

Keywords

• công ty niêm yết
• hiệu quả hoạt động
• vốn lưu động