Effects of working capital management on firm performance and firm value – A study of the fisheries industry in Vietnam

Abstract

    This research investigates the effects of working capital management through cash conversion cycle and itscomponents (average receivable days - ARD, average inventory days - AID, and average payable days - APD),along with the effects of the working capital management policies on firm performance and firm value in thefisheries industry. Generalized Method of Moment (GMM) was applied with the data collected from 21 fisheriescompanies listed on Vietnam's stock market in the period 2008 -2012. The research found that cash conversioncycle, average receivable days, average inventory days, and average payable days have a negative impact on firmperformance (ROA) and firm value (Tobin'Q). The research results also showed that aggressive working capitalpolicy has a negative impact, but conservative working capital policy has a positive impact on firm performance andfirm value of fisheries selected companies.