This research is part of the Project ECO2008-06179/ECON financed by the Research Agency of the Spanish government. Sonia Baños-Caballero was in receipt of a FPU grant from the Spanish Government. The authors also acknowledge financial support from Fundación CajaMurcia. A version of this work has previously been published as Working Paper No. 457 of the Working Papers Collection of the Foundation of Savings Banks (FUNCAS).
Working capital management in SMEs
Article first published online: 17 AUG 2010
© 2009 The Authors. Accounting and Finance © 2009 AFAANZ
Accounting & Finance
Volume 50, Issue 3, pages 511–527, September 2010
How to Cite
Baños-Caballero, S., García-Teruel, P. J. and Martínez-Solano, P. (2010), Working capital management in SMEs. Accounting & Finance, 50: 511–527. doi: 10.1111/j.1467-629X.2009.00331.x
- Issue published online: 17 AUG 2010
- Article first published online: 17 AUG 2010
- Received 19 December 2008; accepted 18 September 2009 by Robert Faff (Editor).
- Cash conversion cycle;
- Working capital;
- Market imperfections;
This paper analyses the determinants of Cash Conversion Cycle (CCC) for small- and medium-sized firms. It has been found that these firms have a target CCC length to which they attempt to converge, and that they try to adjust to their target quickly. The results also show that it is longer for older firms and companies with greater cash flows. In contrast, firms with more growth opportunities, and firms with higher leverage, investment in fixed assets and return on assets have a more aggressive working capital policy.