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Efficient working capital management, financial constraints and firm value: a text-based analysis
journal contribution
posted on 2019-12-01, 00:00 authored by S Dhole, Sagarika MishraSagarika Mishra, A M PalIn this paper we examine the association between efficient working capital management and financial constraints for a sample of Australian firms. Using a text-based measure of financial constraints, we show that efficient working capital management is associated with lower financial constraints in firms in the next two to three years. Ours is the first study to use a text-based measure of financial constraints for Australian firms. We also show that the negative association between financial constraints and future share price is significantly weakened for firms with efficient working capital management, suggesting that such firms have higher market valuations despite being financially constrained. Finally, analysts seem take into account working capital management of firms when setting the one year ahead target price.
History
Journal
Pacific-Basin finance journalVolume
58Article number
101212Pagination
1 - 19Publisher
ElsevierLocation
Amsterdam, The NetherlandsPublisher DOI
ISSN
0927-538XLanguage
engPublication classification
C1 Refereed article in a scholarly journal; C Journal articleCopyright notice
2019, Elsevier B.V.Usage metrics
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