Cash conversion cycle and corporate performance: Global evidence

Previous studies have seldom explored issues regarding liquidity management; hence, we conduct a global empirical analysis of the relationship between the cash conversion cycle (CCC) and corporate performance by adopting enterprises from different countries as samples. We observe a negative relationship between the CCC and firm's profitability and value, supporting that an aggressive working capital policy can enhance corporate performance; however, this effect reduces or reverses when firms exist at the lower CCC level. Results remain identical after considering endogenous problems, changes in macroeconomic environments, economic development status, financial crises, corporate governance, and financial constraints.