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Cash flow management and its effect on firm performance: Empirical evidence on non-financial firms of China

The main purpose of this research is to investigate the impact of changes in cash flow measures and metrics on firm financial performance. The study uses generalized estimating equations (GEEs) methodology to analyze longitudinal data for sample of 20288 listed Chinese non-financial firms from the p...

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Detalles Bibliográficos
Autores principales: Laghari, Fahmida, Ahmed, Farhan, López García, María de las Nieves
Formato: Online Artículo Texto
Lenguaje:English
Publicado: Public Library of Science 2023
Materias:
Acceso en línea:https://www.ncbi.nlm.nih.gov/pmc/articles/PMC10281586/
https://www.ncbi.nlm.nih.gov/pubmed/37339157
http://dx.doi.org/10.1371/journal.pone.0287135
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author Laghari, Fahmida
Ahmed, Farhan
López García, María de las Nieves
author_facet Laghari, Fahmida
Ahmed, Farhan
López García, María de las Nieves
author_sort Laghari, Fahmida
collection PubMed
description The main purpose of this research is to investigate the impact of changes in cash flow measures and metrics on firm financial performance. The study uses generalized estimating equations (GEEs) methodology to analyze longitudinal data for sample of 20288 listed Chinese non-financial firms from the period 2018:q2-2020:q1. The main advantage of GEEs method over other estimation techniques is its ability to robustly estimate the variances of regression coefficients for data samples that display high correlation between repeated measurements. The findings of study show that the decline in cash flow measures and metrics bring significant positive improvements in the financial performance of firms. The empirical evidence suggests that performance improvement levers (i.e. cash flow measures and metrics) are more pronounced in low leverage firms, suggesting that changes in cash flow measures and metrics bring more positive changes in low leverage firms’ financial performance relatively to high leveraged firms. The results hold after mitigating endogeneity based on dynamic panel system generalized method of moments (GMM) and sensitivity analysis considering the robustness of main findings. The paper makes significant contribution to the literature related to cash flow management and working capital management. Since, this paper is among few to empirically study, how cash flow measures and metrics are related to firm performance from dynamic stand point especially from the context of Chinese non-financial firms.
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spelling pubmed-102815862023-06-21 Cash flow management and its effect on firm performance: Empirical evidence on non-financial firms of China Laghari, Fahmida Ahmed, Farhan López García, María de las Nieves PLoS One Research Article The main purpose of this research is to investigate the impact of changes in cash flow measures and metrics on firm financial performance. The study uses generalized estimating equations (GEEs) methodology to analyze longitudinal data for sample of 20288 listed Chinese non-financial firms from the period 2018:q2-2020:q1. The main advantage of GEEs method over other estimation techniques is its ability to robustly estimate the variances of regression coefficients for data samples that display high correlation between repeated measurements. The findings of study show that the decline in cash flow measures and metrics bring significant positive improvements in the financial performance of firms. The empirical evidence suggests that performance improvement levers (i.e. cash flow measures and metrics) are more pronounced in low leverage firms, suggesting that changes in cash flow measures and metrics bring more positive changes in low leverage firms’ financial performance relatively to high leveraged firms. The results hold after mitigating endogeneity based on dynamic panel system generalized method of moments (GMM) and sensitivity analysis considering the robustness of main findings. The paper makes significant contribution to the literature related to cash flow management and working capital management. Since, this paper is among few to empirically study, how cash flow measures and metrics are related to firm performance from dynamic stand point especially from the context of Chinese non-financial firms. Public Library of Science 2023-06-20 /pmc/articles/PMC10281586/ /pubmed/37339157 http://dx.doi.org/10.1371/journal.pone.0287135 Text en © 2023 Laghari et al https://creativecommons.org/licenses/by/4.0/This is an open access article distributed under the terms of the Creative Commons Attribution License (https://creativecommons.org/licenses/by/4.0/) , which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.
spellingShingle Research Article
Laghari, Fahmida
Ahmed, Farhan
López García, María de las Nieves
Cash flow management and its effect on firm performance: Empirical evidence on non-financial firms of China
title Cash flow management and its effect on firm performance: Empirical evidence on non-financial firms of China
title_full Cash flow management and its effect on firm performance: Empirical evidence on non-financial firms of China
title_fullStr Cash flow management and its effect on firm performance: Empirical evidence on non-financial firms of China
title_full_unstemmed Cash flow management and its effect on firm performance: Empirical evidence on non-financial firms of China
title_short Cash flow management and its effect on firm performance: Empirical evidence on non-financial firms of China
title_sort cash flow management and its effect on firm performance: empirical evidence on non-financial firms of china
topic Research Article
url https://www.ncbi.nlm.nih.gov/pmc/articles/PMC10281586/
https://www.ncbi.nlm.nih.gov/pubmed/37339157
http://dx.doi.org/10.1371/journal.pone.0287135
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