The Speed of Adjustment in Net Operating Working Capital: An International Study

Forthcoming, Spanish Journal of Finance and Accounting / Revista Española de Financiación y Contabilidad DOI: 10.1080/02102412.2020.1864176

30 Pages Posted: 8 Mar 2021

See all articles by Sonia Baños-Caballero

Sonia Baños-Caballero

affiliation not provided to SSRN

Pedro J. García-Teruel

University of Murcia

Pedro Martínez-Solano

University of Murcia

Date Written: January 7, 2021

Abstract

This paper analyses whether there are differences in the speed of adjustment in net operating working capital (NWC) across countries. Unlike prior research, which reported that the adjustment speed of any current item is always rapid, we find that the speed of adjustment to NWC targets depends on a country’s investor protection and financial development. Specifically, using a sample of firms from 30 countries, we show that NWC adjustment speeds vary across countries, and they are faster for companies that operate in countries with stronger investor protection and greater financial development.

Keywords: Net operating working capital, adjustment speed, legal system, financial development

JEL Classification: G15, G18, G31, G32

Suggested Citation

Baños-Caballero, Sonia and García-Teruel, Pedro J. and Martínez-Solano, Pedro, The Speed of Adjustment in Net Operating Working Capital: An International Study (January 7, 2021). Forthcoming, Spanish Journal of Finance and Accounting / Revista Española de Financiación y Contabilidad DOI: 10.1080/02102412.2020.1864176 , Available at SSRN: https://ssrn.com/abstract=3761854

Sonia Baños-Caballero

affiliation not provided to SSRN

No Address Available

Pedro J. García-Teruel (Contact Author)

University of Murcia ( email )

Department of Management and Finance
Murcia, 30100
Spain
34 868887828 (Phone)
34 868887537 (Fax)

HOME PAGE: http://webs.um.es/pjteruel/miwiki/doku.php

Pedro Martínez-Solano

University of Murcia ( email )

Dpt. Management and Finance
Murcia, Murcia 30100
Spain
34 868 883 747 (Phone)
34 868 887 537 (Fax)

HOME PAGE: http://webs.um.es/pmsolano

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
30
Abstract Views
133
PlumX Metrics