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Effect of Working Capital Management on the Profitability of Steel Companies on Vietnam Stock Exchanges

Kien Xuan Pham · Quang Ngoc Nguyen · Công Văn Nguyến

49 citations0/0 files storedJournal of Asian Finance Economics and Business

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Working Capital and Financial Performance Financial Analysis and Corporate Governance Supply Chain and Inventory Management

Abstract

This study examines the influence of working capital management (WCM) factors on the profitability of steel companies listed on the Stock Exchange of Vietnam. Data was collected from audited financial statements of companies for a period of 10 years, from 2010 to 2019. The number of samples eligible for research is 20 out of 26 companies, which is equivalent to 76.9%. With the help of dedicated software Stata version 14, the impact determination of WCM (through 8 independent variables: DIO, DPO, DSO, CCC, SIZ, CR, LEV, GRO) to the firm's profitability (through the dependent variable) is performed through multivariate regression models. Research results from companies in the steel industry in Vietnam during this period indicate that WCM has a strong impact on the profitability of businesses. Among 8 factors affecting the profitability of steel enterprises, factors DPO, DIO, DSO, CR, SIZ, GRO have a positive impact, boosting profitability; 2 factors CCC and LEV have a negative impact on profitability; in which, the effect of CCC is negligible. This conclusion is almost in contrast to many previously published studies due to the specifics of the industry as well as the different stages of economic development associated with the economic management policies of the State.

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1980Optimal capital structure under corporate and personal taxation 1984On the Existence of an Optimal Capital Structure: Theory and Evidence 2003Does Working Capital Management Affect Profitability of Belgian Firms?1990Determinants of Financial Performance: A Meta-Analysis 2005The determinants of capital structure: Evidence from China 1947The Theory of Monopolistic Competition. A Re-orientation of the Theory of Value.1980A Cash Conversion Cycle Approach to Liquidity Analysis 2010The Relationship Between Working Capital Management And Profitability: Evidence From The United States

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