Agric. Econ. - Czech, 2023, 69(2):78-88 | DOI: 10.17221/383/2022-AGRICECON


Working capital management in the food and beverage industry: Evidence from listed European companiesOriginal Paper

Hakan Özkaya1, ªebnem Yaºar2
1 Department of International Trade, School of Applied Sciences, Dokuz Eylul University, Izmir, Turkey
2 Department of Accounting and Tax Applications, Izmir Vocational School, Dokuz Eylul University, Izmir, Turkey


Optimizing current assets and their financing resources is of great importance for firms to sustain their existence with the highest level of profitability. However, empirical evidence from the food and beverage industry on the effects of working capital management (WCM) on profitability is scarce and mixed. This study aims to understand how various components of WCM affect the profitability of listed European food and beverage (F&B) companies. For this purpose, static panel data methodology was used to test the relationship between profitability and WCM measured by the cash conversion cycle and its components. The results were checked for robustness by using dynamic panel data methodology. Our results indicate a negative relationship between profitability and the cash conversion cycle. Unlike previous studies that have analysed a single country, this study provides evidence based on analyses of the largest possible sample of listed European F&B companies.

Keywords: cash conversion cycle; financial management; liquidity; profitability

Accepted: February 14, 2023; Published: February 21, 2023  Show citation

ACS AIP APA ASA Harvard Chicago Chicago Notes IEEE ISO690 MLA NLM Turabian Vancouver
Özkaya H, Yaºar ª.
Working capital management in the food and beverage industry: Evidence from listed European companies. Agric. Econ. - Czech. 2023;69(2):78-88. doi: 10.17221/383/2022-AGRICECON.
Share...
Download citation
  • BibTeX (.bib)
  • Bookends (.ris)
  • EasyBib (.ris)
  • EndNote (.enw)
  • EndNote 8 (.xml)
  • ISI WoS (.isi)
  • Medlars (.medlars)
  • Mendeley (.ris)
  • MODS (.xml)
  • Papers (.ris)
  • RefWorks (.txt)
  • RefManager (.ris)
  • RIS (.ris)
  • MS Word (.xml)
  • Zotero (.ris)
    • Open full article

    References

    1. Ademola O.J. (2014): Working capital management and profitability of selected quoted food and beverages manufacturing firms in Nigeria. European Journal of Accounting Auditing and Finance Research, 2: 10-21.
    2. Akdoğan E.C., Dinç D.T. (2019): Managing working capital efficiency in Turkish agribusinesses and the impact of globalisation: Insights from an emerging market. International Food and Agribusiness Management Review, 22: 557-569. Go to original source...
    3. Aytac B., Hoang T.H.V., Lahiani A., Michel L. (2020): Working capital management and profitability of wine firms in France: An empirical analysis. International Journal of Entrepreneurship and Small Business, 41: 368-396. Go to original source...
    4. Baltagi B.H. (2005): Econometric Analysis of Panel Data. West Sussex, John Wiley & Sons: 291.
    5. Baños-Caballero S., García-Teruel P.J., Martínez-Solano P. (2014): Working capital management, corporate performance, and financial constraints. Journal of Business Research, 67: 332-338. Go to original source...
    6. Bellemare M.F., Masaki T., Pepinsky T.B. (2017): Lagged explanatory variables and the estimation of causal effect. The Journal of Politics, 79: 949-963. Go to original source...
    7. Bieniasz A., Go³a¶ Z. (2011): The influence of working capital management on the food industry enterprises profitability. Contemporary Economics, 5: 68-81. Go to original source...
    8. Deloof M. (2003): Does working capital management affect profitability of Belgian firms. Journal of Business Finance & Accounting, 30: 573-588. Go to original source...
    9. European Commission (2022): Annual Report on European SMEs 2021/2022. Available at https://single-market-economy.ec.europa.eu/document/download/40742729-315d-48ed-b7f1-6335ce2819b8_en (accessed July 5, 2022).
    10. Fernández-López S., Rodeiro-Pazos D., Rey-Ares L. (2020): Effects of working capital management on firms' profitability: Evidence from cheese-producing companies. Agribusiness, 36: 770-791. Go to original source...
    11. García-Teruel P.J., Martinez-Solano P. (2007): Effects of working capital management on SME profitability. International Journal of Managerial Finance, 3: 164-177. Go to original source...
    12. Go³a¶ Z. (2020): Impact of working capital management on business profitability: Evidence from the Polish dairy industry. Agricultural Economics - Czech, 66: 278-285. Go to original source...
    13. Maranda N.Z., Makoni P.L. (2019): Working capital management and financial performance: Evidence from listed food and beverage companies in South Africa. Academy of Accounting and Financial Studies Journal, 23: 1-10.
    14. Nurein S.A., Din M.S., Mohd Rus R. (2015): Nonlinear relationship between investment in working capital and performance: Innovative evidence from food and beverages industry. European Journal of Economics, Finance and Administrative Sciences, 77: 63-72.
    15. Özkaya H., Yaºar ª. (2022): Replication Data for Özkaya and Yaºar. [Dataset]. Harvard Dataverse. Available at https://dataverse.harvard.edu/dataset.xhtml?persistentId=doi:10.7910/DVN/2JRHX4 (accessed Dec 18, 2022). Go to original source...
    16. Pais M.A., Gama P.M. (2015): Working capital management and SMEs profitability: Portuguese evidence. International Journal of Managerial Finance, 11: 341-358. Go to original source...
    17. Reed W.R. (2015): On the practice of lagging variables to avoid simultaneity. Oxford Bulletin of Economics and Statistics, 77: 897-905. Go to original source...
    18. Rey-Ares L., Fernández-López S., Rodeiro-Pazos D. (2021): Impact of working capital management on profitability for Spanish fish canning companies. Marine Policy, 130: 104583. Go to original source...
    19. Roodman D. (2009): How to do xtabond2: An introduction to difference and system GMM in Stata. The Stata Journal, 9: 86-136. Go to original source...
    20. Sensini L., Vazquez M. (2021): Effects of working capital management on SME profitability: Evidence from an emerging economy. International Journal of Business and Management, 16: 85-95. Go to original source...
    21. Verbeek M., Nijman T.E. (1992): Testing for selectivity bias in panel data models. International Economic Review, 33: 681-703. Go to original source...
    22. Wooldridge J.M. (1995): Selection corrections for panel data models under conditional mean independence assumptions. Journal of Econometrics, 68: 115-132. Go to original source...
    23. Zabolotnyy S., Sipiläinen T. (2020): A comparison of strategies for working capital management of listed food companies from Northern Europe. Agricultural and Food Science, 29: 239-249. Go to original source...

    This is an open access article distributed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International (CC BY NC 4.0), which permits non-comercial use, distribution, and reproduction in any medium, provided the original publication is properly cited. No use, distribution or reproduction is permitted which does not comply with these terms.


    Return to the content