Title: Working capital management and firm profitability: evidence from emerging markets

Authors: Nurlan Orazalin

Addresses: Bang College of Business, KIMEP University, Almaty, 050000, 2 Abai Avenue, Office 346, Kazakhstan

Abstract: The purpose of this study is to provide empirical evidence on the relationship between working capital management (WCM) and the profitability of top manufacturing firms in two main emerging markets in the Commonwealth Independent States (CIS) region. The study employs panel data methodology using data of top manufacturing firms operating in Kazakhstan and Russia over the period 2010-2014. The empirical results show that Kazakh firms, following more aggressive strategies of working capital, exhibit higher profitability than Russian firms. The study also established a linear relationship between profitability and working capital, which indicates the absence of an optimal working capital level that could maximise the profitability of Kazakh and Russian firms. The findings indicate that managers can maximise shareholder value by following more aggressive practises of WCM in transition economies similar to Kazakhstan and Russia.

Keywords: working capital management; WCM; profitability; emerging markets; Kazakhstan; Russia.

DOI: 10.1504/IJBG.2019.100254

International Journal of Business and Globalisation, 2019 Vol.22 No.4, pp.524 - 540

Received: 23 May 2017
Accepted: 11 Oct 2017

Published online: 21 Jun 2019 *

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