Stochastic frontier modelling of working capital efficiency across Europe: evidence from a stochastic frontier analysis
Stochastic frontier modelling of working capital efficiency across Europe: evidence from a stochastic frontier analysis
This paper adopts the stochastic frontier analysis (SFA) to model working capital efficiency (WCE) on a sample of 6170 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.
Determinants of WCE, Inventory, Stochastic frontier analysis, Trade payables, Trade receivables, Working capital efficiency, Working capital management
Afrifa, Godfred Adjapong
b38efd3a-338e-4910-af21-c7f673ebf095
Tingbani, Ishmael
e6b2741a-d792-4adf-84cc-a2f64d5545ca
Adesinac, Oluseyi Oluseun
27529b21-3d0e-47b4-8ff2-090492220ee4
November 2022
Afrifa, Godfred Adjapong
b38efd3a-338e-4910-af21-c7f673ebf095
Tingbani, Ishmael
e6b2741a-d792-4adf-84cc-a2f64d5545ca
Adesinac, Oluseyi Oluseun
27529b21-3d0e-47b4-8ff2-090492220ee4
Afrifa, Godfred Adjapong, Tingbani, Ishmael and Adesinac, Oluseyi Oluseun
(2022)
Stochastic frontier modelling of working capital efficiency across Europe: evidence from a stochastic frontier analysis.
Technological Forecasting and Social Change, 184, [122012].
(doi:10.1016/j.techfore.2022.122012).
Abstract
This paper adopts the stochastic frontier analysis (SFA) to model working capital efficiency (WCE) on a sample of 6170 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.
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WORKING CAPITAL EFFICIENCY ACROSS EUROPE - EVIDENCE FROM STOCHASTIC FRONTIER ANALYSIS (1)
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Accepted/In Press date: 29 August 2022
e-pub ahead of print date: 11 September 2022
Published date: November 2022
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© 2022 The Authors
Keywords:
Determinants of WCE, Inventory, Stochastic frontier analysis, Trade payables, Trade receivables, Working capital efficiency, Working capital management
Identifiers
Local EPrints ID: 470235
URI: http://eprints.soton.ac.uk/id/eprint/470235
ISSN: 0040-1625
PURE UUID: a45d0ef5-3a7f-45de-93d4-2652332b2a9e
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Date deposited: 05 Oct 2022 16:32
Last modified: 17 Mar 2024 04:02
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Author:
Godfred Adjapong Afrifa
Author:
Oluseyi Oluseun Adesinac
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