Is There a Non-linear Relationship between Net Trade Cycle and Corporate Performance in Turkey?

  •  Mehmet Soykan    
  •  Recep Ulucak    


The aim of this study is to examine the relationship between working capital management and corporate performance for non-financial firms quoted in Borsa İstanbul for the period 2009-2014. The working capital investment decisions of the firms are utmost important since firms can continue their operations without discontinuance, raise their value and reduce risks as long as working capital level is attentively administered. Our research contributes to the working capital literature by investigating the non-linear relation between net trade cycle (NTC) and firm performance, utilising contemporary data and using system Panel GMM method. Our results indicate that there is a non-linear relationship between NTC and corporate performance. This means that there is an optimal NTC value where firm value is maximised. At this optimal working capital level, costs and advantages are poised. This implies that corporate executives should carefully manage their working capital investment and strive to be close to the optimal level as much as possible.

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