Does Credit Policy Affect Performance of Saudi Construction Companies

Nobanee, H. E., Ellili, N. O. Does Credit Policy Affect Performance of Saudi Construction Companies?. (2015), Actual Problems of Economics., 171, 9, pp 226-234

10 Pages Posted: 18 May 2017 Last revised: 1 Jan 2018

See all articles by Haitham Nobanee

Haitham Nobanee

University of Oxford; Abu Dhabi University; University of Liverpool

Nejla Ellili

Abu Dhabi University

Date Written: May 17, 2015

Abstract

This paper aims to examine the relationship between the length of receivable conversion period as a measure of credit policy and operating profit margin as a measure of operational performance of construction firms listed in the Saudi stock market This relation is examined using dynamic panel data two- steps robust system estimation for the period 2004-2013. The analysis is applied at the levels of the full sample and divisions of the sample by crisis and non-crisis periods, sector, and by size. The results show negative and significant relationship between receivable conversion period as a measure of credit policy and profitability for the full sample. The result of the relationship between receivable conversion period and profitability for small firms is negative and significant. The results also show negative and significant relationship between receivable conversion period and profitability of real estate companies and negative and insignificant relation for building and construction companies

Keywords: Credit Policy, Profitability, Small Firms, Financial Crisis, Saudi Stock Market (Tadawul)

JEL Classification: G30, G32, L25, O25

Suggested Citation

Nobanee, Haitham and Nobanee, Haitham and Ellili, Nejla, Does Credit Policy Affect Performance of Saudi Construction Companies (May 17, 2015). Nobanee, H. E., Ellili, N. O. Does Credit Policy Affect Performance of Saudi Construction Companies?. (2015), Actual Problems of Economics., 171, 9, pp 226-234, Available at SSRN: https://ssrn.com/abstract=2970187 or http://dx.doi.org/10.2139/ssrn.2970187

Haitham Nobanee (Contact Author)

University of Oxford ( email )

Mansfield Road
Oxford, Oxfordshire OX1 4AU
United Kingdom

Abu Dhabi University ( email )

Abu Dhabi
United Arab Emirates

University of Liverpool ( email )

Chatham Street
Brownlow Hill
Liverpool, L69 7ZA
United Kingdom

Nejla Ellili

Abu Dhabi University ( email )

Abu Dhabi
United Arab Emirates

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