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Abnormal Inventory and Performance in Manufacturing Companies: Evidence from the Trade Credit Channel.

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Afrifa, G., Alshehabi, A., Tingbani, I. and Halabi, H., 2021. Abnormal Inventory and Performance in Manufacturing Companies: Evidence from the Trade Credit Channel. Review of Quantitative Finance and Accounting, 56, 581-617.

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DOI: 10.1007/s11156-020-00903-y

Abstract

This paper examines the value of abnormal inventory and the channels through which firms decrease abnormally high inventory or increase abnormally low inventory for a sample of 976 United Kingdom (UK) manufacturing firms over the period from 2006 to 2015. Using GMM regressions, the results show that (i) an optimal inventory policy exists; and (ii) firms that are able to converge at this optimal inventory level by either decreasing abnormally high inventory or increasing abnormally low inventory to improve operational and stock performance. Importantly, the results show that trade receivables and trade payables are the channels through which firms achieve efficient inventory management.

Item Type:Article
ISSN:0924-865X
Uncontrolled Keywords:Abnormal inventory, firm performance, trade receivables, trade payables, firm risk
Group:Bournemouth University Business School
ID Code:34016
Deposited By: Symplectic RT2
Deposited On:20 May 2020 10:41
Last Modified:14 Mar 2022 14:22

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