Liquidity management,operating performance,and corporate value: evidence from Japan and Taiwan |
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| Institution: | 1. New York University, Stern School of Business, 44 West Fourth Street, New York, NY 10012, USA;2. School of Economics and Finance, Faculty of Business and Economics, The University of Hong Kong, Pokfulam Road, Hong Kong;3. Finance Group, Warwick Business School, University of Warwick, Coventry, CV4 7AL, UK;1. Shanghai University of Finance and Economics, China;2. Peking Univeristy, China;3. University of Manitoba, Canada;4. University of Regina, Canada;1. Department of Finance, School of Business, Quinnipiac University, Hamden, CT 06518, United States;2. HSBC Business School, Peking University, Shenzhen, China;1. Graduate School of Business Administration, Fordham University, Room 1319, 1790 Broadway, New York, NY 10023, United States\n;2. Department of Finance, National Chung Hsing University, 250 Kuo-Kuang Road, Taichung 402, Taiwan, ROC\n;1. Sheffield University Management School, University of Sheffield, Conduit Road, Sheffield S10 1FL, United Kingdom;2. Department of Economics, University of Birmingham, Birmingham B15 2TT, United Kingdom;3. Durham University Business School, Durham University, Mill Hill Lane, Durham DH1 3LB, United Kingdom |
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| Abstract: | This study examines the relationship between liquidity management and operating performance, and that between liquidity management and corporate value for firms in Japan and Taiwan. We observe that the cash conversion cycle (CCC)–returns on assets (ROA) and CCC–returns on equity (ROE) relationships are commonly negative and sensitive to industry factors. Both Japanese and Taiwanese firms with q>1 have significantly lower CCC than firms with q?1. In addition, Japanese firms with q>1 have significantly higher ROA and ROE than firms with q?1. Overall, the findings indicate that aggressive liquidity management enhances operating performance and is usually associated with higher corporate values for both countries in spite of differences in structural characteristics or in financial system of a firm. |
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