Title: Working capital management and profitability of wine firms in France: an empirical analysis

Authors: Beysül Aytac; Thi Hong Van Hoang; Amine Lahiani; Laure Michel

Addresses: Montpellier Business School, 2300 Avenue des Moulins, 34185 Montpellier, France ' Montpellier Business School, 2300 Avenue des Moulins, 34185 Montpellier, France ' LEO, University of Orléans, France ' Interprofessional Council of Languedoc Wines, 9, Cours Mirabeau, 11100 Narbonne, France

Abstract: We estimated the impact of cash conversion cycle (CCC) on the return on assets of wine firms in France over the 2003-2014 period. After controlling for factors such as size, growth, tangibility and leverage, we found that CCC had a negative impact on the profitability of French wine firms, suggesting an aggressive working capital management strategy. However, there was no optimal level of CCC allowing firms to maximise their profitability. On the other hand, French wine firms should grant a payment delay to their customers while reducing the delay to sell stocked wines. They should also lengthen the payment delay to their suppliers while considering potential borrowing cost and potential discounts for early payments. A robustness check on two different sub-periods shows that the recent global financial crisis had a significant impact on the relationship between working capital management and the profitability of wine firms in France.

Keywords: working capital management; WCM; cash conversion cycle; CCC; profitability; French wine firms; panel data; generalised method of moments; GMM; France.

DOI: 10.1504/IJESB.2020.110803

International Journal of Entrepreneurship and Small Business, 2020 Vol.41 No.3, pp.368 - 396

Received: 27 Sep 2018
Accepted: 01 Oct 2019

Published online: 29 Oct 2020 *

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