Net operating working capital and firm value: A cross-country analysis

Abstract

Here, we use a sample of firms from 30 countries during the period 1995–2013 to examine the relationship between net operating working capital (NWC) and firm value. Specifically, we show that the value of NWC varies across countries and that it depends on both investor protection and a country’s financial and economic development. Our findings imply that shareholders value NWC more in countries with strong enforcement of investor rights, and greater financial and economic development. Jel Classification: G15; G18; G31; G32