Stochastic frontier modelling of working capital efficiency across Europe

Journal article


Afrifa, A. G., Tingbani, I. and Adesina, O. O. 2022. Stochastic frontier modelling of working capital efficiency across Europe. Technological Forecasting and Social Change. 184, p. 122012. https://doi.org/10.1016/j.techfore.2022.122012
AuthorsAfrifa, A. G., Tingbani, I. and Adesina, O. O.
Abstract

This paper adopts the stochastic frontier analysis (SFA) to model working capital efficiency (WCE) on a sample of 6,170 European firms from 2009 to 2018. We find: (i) larger firms are more efficient with their working capital management (WCM) than smaller firms, (ii) higher cash holding contributes to WCE, (iii) high competition is less conducive to WCE than low competition, (iv) export and sales growth potential decrease WCE and (v) WCE increases with access to bank credit. In the analysis, a distinction is made between the "old" EU countries and the "new" EU countries. The results are sensitive to the year of admission into the EU. The results are robust to omitted variable bias, using a more novel approach.

KeywordsWorking capital efficiency; Working capital management; Determinants of WCE; Inventory; Trade receivables; Trade payables; Stochastic frontier analysis
Year2022
JournalTechnological Forecasting and Social Change
Journal citation184, p. 122012
PublisherElsevier
ISSN0040-1625
Digital Object Identifier (DOI)https://doi.org/10.1016/j.techfore.2022.122012
Official URLhttps://www.sciencedirect.com/science/article/pii/S0040162522005339
Publication dates
Print11 Sep 2022
Publication process dates
Accepted29 Aug 2022
Deposited12 Sep 2022
Accepted author manuscript
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Restricted
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https://repository.canterbury.ac.uk/item/92583/stochastic-frontier-modelling-of-working-capital-efficiency-across-europe

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