Ma ine Policy 130 (2021) 104583
A ailable online 12 May 2021
0308-597X/© 2021 The Au ho (s). Published by Else ie L d. This is an open access a icle unde he CC BY-NC-ND license
(h p://c ea i ecommons.o g/licenses/by-nc-nd/4.0/).
Impac o wo king capi al managemen on p o i abili y o Spanish ish
canning companies
Lucía Rey-A es
a
, Sa a Fe n´
andez-L´
opez
b
, Da id Rodei o-Pazos
b
a
Depa men o Business, Uni e sidade da Co u˜
na, Campus de Es ei o, Fe ol, 15403 A Co u˜
na, Galicia, Spain
b
Depa men o Finance and Accoun ing, Uni e sidade de San iago de Compos ela, A da. do Bu go, s/n., 15782 San iago de Compos ela, Galicia, Spain
ARTICLE INFO
JEL Classi ica ion:
C23
G31
L25
L79
Q22
Keywo ds:
Canned sea ood companies
Wo king capi al managemen (WCM)
P o i abili y
Collec ion pe iod
Paymen pe iod
Cash con e sion cycle (CCC)
ABSTRACT
C edi es ic ions, such as hose happening in he cu en con ex shaped by he c isis de i ed om COVID-19,
make wo king capi al managemen (WCM) a d i ing o ce behind SME pe o mance. This pape analyses
whe he WCM policies a ec he economic and inancial p o i abili y o Spanish companies in he ish canning
indus y. Spain leads he EU’s p oduc ion o canned sea ood and he sea ood indus y is a key sec o o he
Spanish economy. To assess he WCM-p o i abili y ela ionship, we applied a dynamic panel da a me hodology
in a sample consis ing o 377 companies du ing he pe iod 2010–2018. We can conclude ha he economic
p o i abili y o ish canning companies is ela ed o he collec ion pe iod (Days Sales Ou s anding o DSO) and
he in en o y con e sion pe iod (Days In en o y Ou s anding o DIO). Mo eo e , empi ical e idence e eals he
exis ence o an op imal le el o ecei ables ha balances he bene i s o inc easing sales and he oppo uni y
cos s o cus ome unding. The indings also iden i y a con ex ela ionship be ween in es men in in en o y and
economic p o i abili y.
1. In oduc ion
The li e a u e on co po a e inance has adi ionally ocused on long-
e m inancial decisions [4,38], lea ing sho - e m inances behind (i.e.,
wo king capi al in es men and inancing policies). Ne e heless, he
la e condi ions he day- o-day ac i i ies o companies and, in u n,
hei inancial ou comes, especially in small and medium-sized en e -
p ises (SMEs). Along his line o easoning, Howo h and Wes head [25]
highligh ha wo king capi al managemen (WCM) has a g ea e impac
on SME p o i abili y han in la ge companies due o he high pe cen age
o cu en asse s, he insu icien amoun o liquidi y, and he highly
ola ile cash lows ha o en cha ac e ise SMEs [43]. Addi ionally, since
SMEs ace mo e di icul ies in accessing long- e m deb , hey inc ease
hei eliance on sho - e m liabili ies h ough spon aneous inancing
and sho - e m bank loans [13,17]. All o hese SME cha ac e is ics
unde line he impo ance o an e icien WCM o enhance inancial
ou comes such as i m p o i abili y and su i al [17,25,41].
Besides, he inancial cons ain s and high dependence on bank
lending o en expe ienced by SMEs [24] ha e led hem o encoun e a
d as ic sho age o liquidi y in he a e ma h o he G ea Recession [7].
Responding o his challenge, Eu opean go e nmen s ha e inc eased
e o s owa ds acili a ing access o inance o SMEs [14], imple-
men ing s a egies o ensu e imely paymen s among o he ac ions. The
cu en con ex shaped by he c isis de i ed om he COVID-19
pandemic sugges s a liquidi y sho age simila o ha expe ienced
du ing and a e he inancial c isis o 2007.
The a o emen ioned ci cums ances s ess he impo ance o WCM as
a d i ing o ce behind SMEs’ pe o mance, especially when hey a e
exposed o c edi es ic ions. Consequen ly, he li e a u e on he WCM-
p o i abili y ela ionship has lou ished since 2008 ( o a e iew, see
[16,53]). Howe e , he ex an s udies lea e se e al gaps. Fi s , hey
o en use a sample o lis ed i ms, bu , as desc ibed, WCM is mo e
ele an o SMEs, which a e usually non-lis ed i ms [16]. Second, mos
o hem ocus on he e ec o WCM on economic p o i abili y, o e -
looking i s po en ial e ec on inancial p o i abili y. Thi d, excluding
some e e ences, he li e a u e analyses companies om di e en in-
dus ies, igno ing ha ac ha wo king capi al in es men and
inancing policies di e g ea ly ac oss indus ies. Indeed, no s udy has
assessed he WCM-p o i abili y ela ionship in he ish canning indus y
o da e.
This pape seeks o add ess hese esea ch gaps. Thus, i aims o
analyse whe he WCM policies a ec he economic and inancial
E-mail add esses: [email p o ec ed] (L. Rey-A es), [email p o ec ed] (S. Fe n´
andez-L´
opez), [email p o ec ed] (D. Rodei o-Pazos).
Con en s lis s a ailable a ScienceDi ec
Ma ine Policy
jou nal homepage: www.else ie .com/loca e/ma pol
h ps://doi.o g/10.1016/j.ma pol.2021.104583
Recei ed 14 Ma ch 2021; Recei ed in e ised o m 2 May 2021; Accep ed 3 May 2021
Ma ine Policy 130 (2021) 104583
2
p o i abili y o Spanish companies in he ish canning indus y. In so
doing, a sample o 377 ish canning companies o e he pe iod
2010–2018 is conside ed and a dynamic panel da a me hodology is
applied. As demons a ed, cu en asse s ep esen on a e age 61.7% o
i ms’ o al asse s, while he WCM is mo e complex in his indus y han
in o he manu ac u ing sec o s, pu ing he su i al o companies a isk.
Addi ionally, he sea ood indus y is a key sec o o he Spanish econ-
omy. The sha e o his sec o in he o al indus ial sec o accoun ed o
1% in e ms o he alue o p oduc ion and employmen in 2018; ha is,
a p oduc ion alue o 5989 million eu os and 21,984 employees [26].
Indeed, Spain leads he p oduc ion o canned sea ood in he EU [15].
Acco dingly, gaining insigh s in o how WCM in luences p o i abili y is
essen ial in e ms o he design o policies aiming o enhance he pe -
o mance o ish canning i ms.
Empi ical e idence e eals ha he economic p o i abili y is ela ed
o he DSO and he DIO. Namely, an in e ed U-shaped ela ionship
be ween he collec ion pe iod and he economic p o i abili y is
con i med, he e o e leading o he exis ence o an op imal le el o e-
cei ables. Simila ly, empi ical e idence sugges s he exis ence o a
con ex o U-shaped ela ionship be ween he in en o y in es men and
he economic p o i abili y, i.e., an ini ial inc ease in in en o y le els will
educe he company’s economic p o i abili y un il a poin whe e he
inc ease in in en o y will lead o inc eases in he economic p o i abili y.
The e a e h ee main con ibu ions o his pape . Fi s , we examine
he WCM-p o i abili y ela ionship in a p e iously unexplo ed indus y,
namely he ish canning sec o . In so doing, his pape con ibu es o a
be e knowledge o WCM in indus ies made up o SMEs (97% o he
o al companies in he indus y acco ding o INE [26] wi h a high
p esence o cu en asse s and liabili ies in hei balance shee and
highly s essed wo king capi al policies). Second, unlike mos p e ious
s udies, we es he po en ial non-linea e ec s o WCM on i ms’ eco-
nomic p o i abili y, also including he inancial p o i abili y in he
analysis. The hi d con ibu ion o his pape elies on he cha ac e is ics
o he selec ed con ex ; ha is, Spain du ing he pe iod 2010–2018. The
coun y leads he p oduc ion o canned sea ood in he EU [15], so he
esul s ob ained can be unde s ood as being b oadly ep esen a i e o
he si ua ion o he sec o wo ldwide and, u he mo e, he analysed
pe iod in he immedia e a e ma h o he 2007 inancial c isis illus a es
a ime o se e e c edi c unch o SMEs [7].
A e his in oduc o y sec ion, he es o he pape is o ganised as
ollows. Sec ion 2 o e s a gene al o e iew o he ish canning indus y
in Spain, as well as o he ele ance o WCM wi hin i . Sec ion 3 in-
oduces he ele an li e a u e on WCM and he esea ch hypo heses.
Sec ion 4 desc ibes he me hodology, whils Sec ion 5 discusses he
empi ical esul s. Finally, Sec ion 6 concludes and se s ou he majo
ques ions o u u e esea ch.
2. The Spanish ish canning indus y: dimensions and he
ele ance o WCM
The canned sea ood manu ac u ing sec o is c ucial o he Spanish
economy and leads he p oduc ion he eo in he EU [15]. This sec ion
b ie ly desc ibes he impo ance and main cha ac e is ics o he sec o .
The ish canning indus y has a non-negligible ole in he Spanish
economy. I s sha e in he o al indus ial sec o accoun ed o 0.69% in
e ms o sales u no e and 0.67% employmen in 2018 [26]. Mo eo e ,
he sales u no e o he canning sec o ep esen s 72.75% o he o e all
u no e o he ish p ocessing indus y [26]. In 2018, i s p oduc ion
exceeded 350,112 ons [1], gene a ing an income o 4565 million eu os
[26]. The e olu ion o he canned sea ood indus y income has posi-
i ely e ol ed since 2016, wi h 12% accumula ed g ow h. Thus, he
numbe o di ec employees in his sec o was 14,961 in 2018 [26]. The
indus y is mainly composed o medium-sized en e p ises domina ed by
he canning sec o and o a lesse ex en by ozen and esh p ocessed
sea ood [50].
The p oduc wi h he highes p oduc ion also has he highes
demand: una. I accoun s o 59.5% o he o al alue o he indus y,
making i he canned p oduc pa excellence, spanning a la ge pa o
p oduc ion [1].
Rega ding o eign ade, in 2019 he canned sea ood indus y
con inued i s posi i e end o ecen yea s, inc easing by 0.61% o e he
p e ious yea . I is wo h men ioning ha in he las 5 yea s he canned
sea ood indus y expo s g ew 25% in olume and 40% in alue. In
numbe s, expo s in 2019 amoun ed o 204,642 ons wi h a alue o 991
million eu os, ep esen ing 0.61% o o al ood sec o expo s in Spain
[1]. The main des ina ions o hese p oduc s a e in he EU, wi h he
mos impo an buye s being I aly, F ance, Po ugal, and he
Ne he lands; ou side he EU, coun ies such as he Uni ed S a es,
Mo occo, and Libya a e pa amoun [1]. I we ocus on he p oduc
monopolising he majo i y o he ma ke , namely una, Spain is he hi d
la ges expo e in he wo ld, su passed only by Thailand and Ecuado
[36].
As in o he manu ac u ing indus ies, cu en asse s and liabili ies
ep esen he bulk o companies’ balance shee s. Thus, in he sample
companies, cu en asse s ep esen ed on a e age 61.7% o o al asse s
o e he pe iod 2010–2018, while cu en liabili ies eached 36.8%.
These igu es gi e us an idea o he impo ance o WCM o his sec o .
Fu he mo e, he sec o ’s own ope a ion makes he WCM mo e
complex han in o he ood indus ies. This complexi y is la gely due o
he ollowing easons. Fi s , he e is a i al decoupling be ween he
p ocesses comp ising he daily ac i i y o ish canning i ms. Tha is,
while sales and p oduc ion a e ela i ely s able h oughou he yea , he
supply o aw ma e ials is seasonal and usually akes place o e e y
sho pe iods o ime. A such imes, inancing needs may inc ease.
Second, he aw ma e ials on which he sec o depends a e mainly
na u al esou ces, and i is di icul o ac on he olume o hei p o-
duc ion and hei quali y (excep o aquacul u e). This gene a es un-
ce ain y in p oduc ion. Fu he mo e, access o hese na u al esou ces
is condi ioned by in e na ional egula ions ha impose ca ch quo as and
a i s ha a e also pe iodically e iewed (e.g., see he ecen B exi
nego ia ions). In ac , he Spanish sec o is highly dependen on impo s
o aw ma e ials, which a e a ec ed by EU a i s [15]. This adds ye
mo e unce ain y o he companies’ co e business. Thi d, i s main
compe i o s a e loca ed in de eloping coun ies whe e labou cos s a e
lowe [15]. To deal wi h his challenge, he sec o is con inuously
sea ching o mo e alue-added p oduc s using inno a ion. Bu his
p ocess equi es inancial capaci y, which can be eed up by an e icien
WCM. Finally, he p oduc is mos ly comme cialised h ough supe -
ma ke s (52.6%) and hype ma ke s (37.2%) [34], which o en implies
he exis ence o low ba gaining powe o small companies, esul ing in
e y long paymen pe iods.
In sho , he decoupling in he ope a ing p ocesses, he high depen-
dence on aw ma e ials subjec o high le els o unce ain y, he low
ba gaining powe , and he need o a ce ain inancial leeway o ace he
immedia e challenges imposed by compe i o s in eme ging coun ies
make i necessa y o s udy he ela ions be ween he WCM and he
p o i abili y o ish canning companies. As p e iously men ioned, he
ac ha companies in he indus y a e mainly SMEs, whe e he WCM is
in i sel mo e ele an han in la ge companies, and he geog aphical
(Spain) and empo al (2010–2018) con ex o he analysis add in e es o
he s udy.
3. Li e a u e e iew and p oposal o hypo heses
The cu en asse s and liabili ies o SMEs no only ep esen a highe
pe cen age o o al asse s and liabili ies han in la ge i ms [2,41,42],
bu hei managemen also akes signi ican ime and e o [40],
impac ing bo h i m p o i abili y and i m alue [11]. The heo e ical
iew on WCM na u ally aises he no ion ha companies wi h high
le els o wo king capi al in es men educe ope a ional isk (e.g.,
b eakage cos s and p ice luc ua ions o aw ma e ial) [52], bu a he
cos o cu ing hei p o i s by incu ing g ea e oppo uni y and
L. Rey-A es e al.
Ma ine Policy 130 (2021) 104583
3
inancing cos s. The opposi e is expec ed in companies main aining low
le els o wo king capi al asse s [19,33,37,38,58].
Since he pionee ing wo k o Deloo [11], and especially a e he
inancial c isis o 2007, a la ge numbe o s udies ha e a emp ed o
empi ically demons a e his WCM-p o i abili y ela ionship ( o a e-
iew, see [16,53]). This esea ch has p edominan ly ocused on quo ed
companies, despi e he ac ha he WCM is conside ed o be a mo e
c ucial elemen in unde s anding he pe o mance o SMEs, which a e
usually non-quo ed companies [43]. Scan a en ion has been paid o he
in luence o WCM on inancial p o i abili y. A u he subjec o neglec
in his s and o esea ch is he li le e idence e e ing o a speci ic
indus y (i.e., [16,37,58]); ha is, mos o he s udies analyse companies
om di e en indus ies, o e looking ha he wo king capi al p ac ices
di e g ea ly ac oss and be ween hem [16]. In his espec , he e has
been li le wo k explo ing he WCM-p o i abili y ela ionship in he ood
indus y [5,16]; no ably, no s udy has in es iga ed his in he ish can-
ning indus y whose WCM is pa icula ly challenging o he a o e-
men ioned easons.
In he ollowing sec ions, we p esen he heo e ical a gumen s as
well as he empi ical indings o he s udies ha ha e ecen ly analysed
he WCM-p o i abili y ela ionship, in o de o p opose he esea ch
hypo heses.
3.1. Accoun s ecei able
Selling o cus ome s on c edi may ha e a conside able impac on
i m p o i abili y. F om an empi ical pe spec i e, Jakpa e al. [28] and
Khan e al. [32] ind a posi i e ela ionship be ween he collec ion
pe iod (Days Sales Ou s anding o DSO) and he economic p o i abili y.
Thus, g an ing cus ome s mo e collec ion days ends o lead o inc eases
in sales by a ac ing new cus ome s. These cus ome s no only bene i
om ob aining unding a a lowe cos han ha usually o e ed by
inancial ins i u ions, bu hey also bene i om es ing and enjoying he
p oduc s o se ices be o e paying o hem [11,17].
The e a e also au ho s who ha e ailed o ind any signi ican ela-
ionship be ween DSO and economic p o i abili y [35,37,48,49]. How-
e e , he p e ious li e a u e asce ained ha mos s udies ound a
nega i e associa ion be ween bo h a iables [12,17,29–31,33,41,46,5,
51,55,9]. One explana ion o his e idence is based on he ac ha
sho e collec ion pe iods end o igh en away less c edi wo hy cus-
ome s, i.e., as hese cus ome s do no ecei e immedia e inancing
when buying, hey will a oid i and so he numbe o ailed cus ome s
and po en ial de aul s would dec ease [30,51].
D awing on he p e ious li e a u e, we a gue ha g an ing long
collec ion pe iods may posi i ely a ec economic p o i abili y due o he
inc ease in new cus ome s and e enues. Howe e , his e ec is no
inde ini e, as a a ce ain poin he collec ion policies o he company
migh a ac excessi e amoun s o cus ome s wi h liquidi y p oblems,
leading o he eme gence o de aul e s and possible i eco e able deb s,
and as a consequence, he decline o i m p o i abili y. Thus, he
ollowing hypo hesis is p oposed:
Hypo hesis 1a.: An in e ed U-shaped ela ionship be ween he numbe
o Days Sales Ou s anding (DSO) and he economic p o i abili y o he i m is
expec ed.
In e ms o inancial p o i abili y, o e ing ade c edi implies ha
he company needs mo e inancing o hei daily ope a ional ac i i ies
and, he e o e, i s oppo uni y cos inc eases. Con e sely, i he ade
c edi o e ed o cus ome s is educed, he oppo uni y cos will ollow
he same end [11,45]. Along his same line o easoning, Rezaei and
Pou ali [46] iden i y a nega i e ela ionship be ween he collec ion
pe iod and he inancial p o i abili y, based mainly on he oppo uni y
cos o wo king wi h longe collec ion pe iods. Based on hese a gu-
men s, he ollowing hypo hesis on inancial p o i abili y is p esen ed:
Hypo hesis 1b.: A nega i e ela ionship be ween he numbe o Days
Sales Ou s anding (DSO) and he inancial p o i abili y o he i m is
expec ed.
3.2. In en o ies
Simila ly o he case o accoun s ecei able, some au ho s ind a
posi i e ela ionship be ween he in en o y con e sion pe iod (Days
In en o y Ou s anding o DIO) and he economic p o i abili y o he i m
[28,31,39]. In his ega d, a high le el o in en o y p e en s i ms om
los sales [30] and educes hei isk o incu ing b eakage cos s in hei
p oduc ion o supply chain [4,11]. Ba˜
nos-Caballe o e al. [4] also poin
ou ha main aining high le els o in en o y allows o g ea e com-
me cial discoun s when placing la ge o de s. Besides, Gul e al. [19]
indica e ha a company can inc ease i s alue i i has a sa e y s ock.
Howe e , mos au ho s ind e idence o a nega i e ela ionship be-
ween he DIO and i m p o i abili y [5,11,17,19,30,45,56,51,9,12,35,
46,55]. High in en o y le els in ol e conside able cos s (comp ising
main enance cos s, insu ance cos s, o e en obsolescence cos s) ha
migh dec ease p o i abili y. Howe e , i he in en o y le el is educed
and he p ocu emen is ca ied ou e icien ly, he economic p o i abili y
o he i m would inc ease.
Again, we a emp o econcile he appa en ly con adic o y a gu-
men s by p oposing a non-linea ela ionship be ween he DIO and i m
pe o mance. Thus, he economic p o i abili y hypo hesis s a es ha
main aining high in en o y le els may ha e posi i e e ec s on i m
pe o mance (i.e., p ice luc ua ions a e a oided, and b eakage cos s a e
minimised), bu also nega i e ones, since an excess o in en o y in-
c eases main enance and obsolescence cos s. Consequen ly, he
ollowing hypo hesis is sugges ed:
Hypo hesis 2a.: An in e ed U-shaped ela ionship be ween he numbe
o Days In en o y Ou s anding (DIO) and he economic p o i abili y o he
i m is expec ed.
I is wo h no ing ha he e a e also au ho s who de ec no ela-
ionship be ween i m p o i abili y and he in en o y con e sion pe iod
[33,18,32,41,48,49].
As ega ds inancial p o i abili y, high in en o y le els inc ease he
inancial esou ces needed o he i m’s day- o-day ac i i ies [11,45].
Indeed, Rezaei and Pou ali [46] also disco e a nega i e associa ion
be ween he DIO and inancial p o i abili y. D awing on he heo e ical
a gumen s and he empi ical e idence, he ollowing hypo hesis is
p oposed:
Hypo hesis 2b.: A nega i e ela ionship be ween he numbe o Days
In en o y Ou s anding (DIO) and he inancial p o i abili y o he i m is
expec ed.
3.3. Accoun s payable
The p e ious li e a u e inds e idence o a nega i e ela ionship
be ween he paymen pe iod (Days Payable Ou s anding o DPO) and
he economic p o i abili y o i ms [5,12,17,29,31,35,41,45,49,55,56].
Raheman and Nas [45] a gue ha his nega i e associa ion lies in he
ac ha i ms, when de e ing paymen s o supplie s, migh no be
bene i ing om ea ly paymen discoun s and, he e o e, pay a highe
p ice o he p oduc s hey buy. Besides, Deloo [11] poin s ou ha his
nega i e ela ionship could be due o he ac ha less p o i able com-
panies end o delay paymen s o supplie s as much as possible, leading
o an in e se cause-e ec ela ionship; while Jaya a hne’s [30] expla-
na ion lies in he wo sening o ade ela ions wi h supplie s, who in-
c ease he p ice o hei p oduc s i hey an icipa e ha cus ome s wan
o de e he paymen s. The e o e, he ollowing hypo hesis is p oposed:
Hypo hesis 3a.: A nega i e ela ionship be ween he numbe o Days
Payable Ou s anding (DPO) and he economic p o i abili y o he i m is
expec ed.
L. Rey-A es e al.
Ma ine Policy 130 (2021) 104583
4
On he con a y, Rezaei and Pou ali [46] ad oca es a posi i e ela-
ionship be ween he DPO and he inancial p o i abili y o he company.
Spon aneous inancing such as ade c edi s has ze o cos s when he e
a e no discoun s o encou age ea ly paymen s, so companies could op
o his sou ce o inancing while educing o he expenses, such as hose
nego ia ed wi h inancial ins i u ions, in o de o educe hei inancing
cos s. Based on his a gumen , he ollowing hypo hesis is p oposed:
Hypo hesis 3b.: A posi i e ela ionship be ween he numbe o Days
Payable Ou s anding (DPO) and he inancial p o i abili y o he i m is
expec ed.
3.4. Cash Con e sion Cycle
The Cash Con e sion Cycle (CCC) is also a aluable indica o o a
company’s WCM [45,51]. Few au ho s ind a posi i e ela ionship be-
ween he CCC and he economic p o i abili y o he i m [18,29,39].
Indeed, Ba˜
nos-Caballe o e al. [4] a gue ha a longe CCC p e en s
b eakage and supply cos s and a ac s a g ea e numbe o cus ome s,
hus inc easing economic p o i abili y. Howe e , his e ec is no in-
de ini e, because a some poin he nega i e e ec s o ha ing longe
collec ion pe iods (e.g., a ac ing less a ac i e cus ome s who can lead
o de aul s) and longe in en o y con e sion pe iods (e.g., a non-mo ing
in en o y si ua ion ha leads o high main enance cos s) migh a ise
and coun e ac he posi i e e ec s o a longe CCC. This could lead o
dec eases in p o i abili y and in he wo s -case scena ios e en bank-
up cy i i esul s in di icul ies in deb collec ion and supplie s
di e ging om he en e p ise’s c edi ing. In his ega d, a la ge body o
li e a u e de ends a nega i e ela ionship be ween he CCC and eco-
nomic p o i abili y [5,9,17,19,30,32,33,37,45,46,54,55,61]. Following
he a o emen ioned a gumen s, he ollowing hypo hesis is pu o wa d:
Hypo hesis 4a.: An in e ed U-shaped ela ionship be ween he Cash
Con e sion Cycle (CCC) and he economic p o i abili y o he i m is
expec ed.
As ega ds he e ec o CCC on inancial p o i abili y, a longe CCC
necessa ily implies g ea e needs o inancing day- o-day ac i i ies,
which will gene a e highe inancing o oppo uni y cos s o he e-
sou ces, he e o e leading o dec eases in inancial p o i abili y. Fo his
eason, he ollowing hypo hesis is submi ed:
Hypo hesis 4b.: A nega i e ela ionship be ween he Cash Con e sion
Cycle (CCC) and he inancial p o i abili y o he i m is expec ed.
4. Me hodology
4.1. Da a and sample
Da a om he Sis ema de An´
alisis de Balances Ib´
e icos (SABI) da abase
a e used o empi ically es he hypo heses on he WCM-p o i abili y
ela ionship. The SABI da abase con ains comp ehensi e in o ma ion
abou Spanish and Po uguese companies and hei inancials, inancial
s eng h indica o s, ma ke esea ch, and s ock da a o lis ed companies
[6].
This pape ocuses on ish canning companies, whose Na ional
Classi ica ion o Economic Ac i i ies (CNAE, o i s ac onym in Spanish)
code is 1022.
1
A e an ini ial sea ch, a da ase comp ised o 465 ac i e
companies is buil . We subsequen ly e ine he da a wi h he aim o
excluding inconsis en da a as a esul o company mis epo s. Thus, we
disca d obse a ions ha me any o he ollowing c i e ia: he alue o
cu en asse s is equal o o al asse s; DSO o DPO g ea e han 365
days
2
; a nega i e alue o ixed asse s o a alue g ea e han non-
cu en asse s; accoun s ecei ables g ea e han cu en asse s; a cu -
en a io (i.e., cu en asse s/cu en liabili ies) lowe han he acid es ;
o accoun s payables g ea e han cu en liabili ies.
Al hough he numbe o companies in he sample is ele an , hei
mo ali y and he absence o da a on he a iables unde s udy, as well as
he need o ha e mo e han wo consecu i e obse a ions in o de o
apply he dynamic panel da a me hodology, mean ha in he empi ical
analyses he e a e signi ican ly ewe companies. In pa icula , Table 1
summa ises he numbe o companies which p esen obse a ions in he
ROA a iable pe yea . In sum, he inal sample consis ed o an unbal-
anced panel o 377 i ms comp ising a o al o 2215 obse a ions o he
dependen ROA a iable o e he pe iod 2010–2018. I should be no ed
ha he INE epo ed a o al o 457 sea ood canned i ms in i s o icial
s a is ics o 2018 [26]. We can hus conclude ha he sample e lec s
he Spanish popula ion o hese companies qui e well (i.e., sampling
e o unde 2.2%).
4.2. S a egy o es ima ion and model speci ica ion
Panel da a me hodology is applied o es he hypo heses o he e -
ec s o WCM on he economic and inancial p o i abili y o Spanish ish
canning companies. Th ee me hodological issues mo i a e his choice.
Fi s , panel da a me hodology has he ad an age o mi iga ing he
a i ion bias and con olling o unobse able he e ogenei y [59],
which is app op ia e in his case as companies a e he e ogeneous and
ha e speci ici ies ha a ec WCM bu a e di icul o measu e. The e-
Table 1
Numbe o companies wi h obse a ions
in he ROA a iable pe yea .
To al
2010 257
2011 250
2012 237
2013 250
2014 250
2015 244
2016 251
2017 251
2018 225
To al 2215
1
Companies dedica ed o he p ocessing o ish, c us aceans, and molluscs
(CNAE 1021) a e no conside ed in he s udy.
2
To es ablish his h eshold, we based on he Spanish legisla ion -namely, he
Law 15/2010 and he Law 11/2013-, which imposes a maximum supplie
paymen pe iod o 60 days, and 30 days in he case o esh and pe ishable
p oduc s, such as he aw ma e ials used by he canning sec o . In spi e o his,
we conside DSO and DPO up o 365 days o wo main easons. Fi s , his
egula ion became manda o y in 2013 and he pe iod o analysis in his
esea ch is 2010–2018. Second, epo s on he paymen beha iou o Spanish
companies show ha he eali y is qui e a om he legisla ion. Thus, in he
ou h qua e o 2018, DSO and DPO we e a ound 88 days and mo e han 50%
o companies acknowledged ha hey we e no punc ual in mee ing hese
deadlines [27].
L. Rey-A es e al.
Ma ine Policy 130 (2021) 104583
5
o e, he econome ic models inco po a e, in addi ion o he indepen-
den a iables, he companies’ unobse able e ec s (
α
i
), hus mi iga ing
he isk o ob aining biased esul s.
Second, dynamic panel da a models a e applied in o de o ace he
endogenei y p oblems ha he da a can p esen , as he dependen a -
iable ( i m p o i abili y) could also cons i u e a d i ing o ce o a
numbe o he independen a iables included in he models (e.g., i m
le e age o i m size). Mo eo e , he use o an ins umen al a iable
es ima o like he GMM sys em (Gene alised Me hod o Momen s) a-
cili a es he conside a ion o he endogenei y o all ime- a ying
explana o y a iables [44].
Thi d, he li e a u e on p o i pe sis ence has made subs an ial
claims in he applica ion o an au o eg essi e (AR) amewo k and a
GMM es ima o [22]. In his espec , empi ical e idence exis s sup-
po ing he p o i pe sis ence hypo hesis in bo h he ood indus y [8,21]
and ood e ailing [22].
Thus, he basic speci ica ion o he model is shown in Eq. (1):
p o
i
=β
0
+β
1
p o
i, -1
+β
2
X
i
+β
3
X
i 2
+β
4
C
i
+
α
i
+λ
+
ε
i
, (1)
whe e p o
i
is he dependen a iable; X
i
deno es he independen
a iables e e ing o he key elemen s o WCM; C
i
e e s o he con ol
a iables;
α
i
is he unobse able he e ogenei y ha allows he pa icula
cha ac e is ics o each company o be con olled o ; and he pa ame e
λ
is a ime dummy a iable ha cap u es he e ec o con ex ual ac o s
(e.g., in e es a es, axes), which a e beyond he con ol o companies,
bu which a e capable o in luencing hei decisions. Finally, he andom
dis u bance
ε
i
is no mally dis ibu ed wi h a mean 0 and a iance
σ
ε
2
.
In line wi h he es ablished hypo heses, i m p o i abili y (p o
i
) is
measu ed h ough wo di e en a iables: (a) he economic p o i abili y
o Re u n on Asse s (ROA
i
), calcula ed as he a io o Ea nings Be o e
In e es and Taxes (EBIT) o e o al asse s, and (b) he inancial p o i -
abili y o Re u n on Equi y (ROE
i
), measu ed as he ne income o e
sha eholde s’ equi y. This las dependen a iable only conside s hose
obse a ions in which he sha eholde s’ equi y displays posi i e alues;
o he wise, hose obse a ions whose ne ea nings we e nega i e would
ob ain a posi i e bu no ealis ic ROE. In his espec , Singh and Kuma
[53] unde line ha a g owing s eam in he li e a u e on WCM ela es
CCC and i m p o i abili y. Mos o he s udies in his s eam ha e
conside ed he ROA as a measu e o i m p o i abili y (see Fe n´
an-
dez-L´
opez e al. [16] o a e iew o ecen wo ks whe e such a measu e
is used). In con as , ew s udies conside he inancial p o i abili y,
using, in such a case, he ROE as dependen a iable [46].
Based on he p e ious li e a u e, he key independen a iables (X
i
)
a e hose pe iods associa ed wi h he majo accoun ing i ems o wo king
capi al (i.e., he DSO, he DPO, he DIO, and he CCC). The DSO
i
and he
DPO
i
a e di ec ly ex ac ed om he SABI da abase. The DIO
i
is calcu-
la ed as he in en o y di ided by sales and mul iplied by 360 days. The
CCC
i
is he sum o he collec ion and in en o y con e sion pe iods
minus he payable pe iod (i.e., CCC =DSO +DIO – DPO). I should be
no ed ha he hypo hesis e e ing o economic p o i abili y (Hypo heses
a) p oposes a quad a ic ela ionship, sugges ing one in lec ion poin ha
could be op imally de i ed by di e en ia ing ROA wi h espec o each
o he pe iods o wo king capi al. Le ing his pa ial de i a i e equal
ze o, his u ning poin can be compu ed as –β
2
/2β
3
[10].
As con ol a iables (C
i
), ollowing Jaya a hne [30] and Nazi and
A za [38] we include he i m size. In his pape , i m size is app oxi-
ma ed by he log o he o al numbe o employees (ln_nemp
i
). In line
wi h p e ious s udies [16,41,52], he i m’s access o deb is conside ed
h ough he le e age a io (le
i
); ha is, he sum o long- and sho - e m
deb di ided by o al asse s. Mo eo e , we add a le e age squa ed e m
o con ol o he non-linea e ec s o i m le e age on he dependen
a iables acco ding o he ade-o heo y o capi al s uc u e. Simila ly
o L´
opez-P´
e ez e al. [62] and Shin and Soenen [52], we conside he
i m’s liquidi y measu ed by he cu en a io (cu _ a
i
). The i m’s e -
iciency in using i s o al asse s o ob ain sales is measu ed by he o al
asse u no e a io ( a_ u n
i
).
All speci ica ions o Eq. (10) a e es ima ed wi h he GMM es ima o
sys em [3], using he S a a command x abond2 [47]. In pa icula , we
conside he igh -side a iables as endogenous a iables and use hei
lags om -2 o -3 as ins umen s o he equa ions in di e ences, and
he lagged i s -di e enced endogenous eg esso s as ins umen s o he
le el equa ions. In con as , ime dummies a e conside ed o be exoge-
nous a iables.
The alidi y o he econome ic models was es ed. Fi s , h ough he
Hansen J s a is ic (o e -iden i ica ion es ), we e i ied he absence o
co ela ion be ween he ins umen s and he e o e m, as well as he
alidi y o he ins umen s. Second, h ough he AR s a is ic (2) de el-
oped by A ellano and Bond [3], we es ed o he absence o
second-o de se ial co ela ion in he esidues.
5. Empi ical esul s
5.1. Desc ip i e analysis
Fig. 1 p esen s he annual a e age o i m economic and inancial
p o i abili y, as well as ha o he pe iods e e ing o he majo i ems o
wo king capi al. The ROA and ROE a e bo h posi i e. Indeed, he eco-
nomic p o i abili y is be ween 2.61% (2013) and 5.36% (2018). Besides
his, inancial p o i abili y is highe han i s economic coun e pa . I
should be emembe ed ha only hose obse a ions which showed
posi i e equi y alues we e conside ed o he calcula ion o he o me .
In pa icula , he lowes alue is eached in 2012 (3.37%) and he
highes in 2011 (11.87%). In gene al, he ROE shows he same end as
he ROA; we can e e o a alley in he pe iod 2012–2014 o bo h and a
eco e y om ha da e, wi h he excep ion o 2017. I is also wo h
men ioning ha he ROE exceeds he ROA e e y yea , excep o 2015;
his is due o he ac ha he economic p o i abili y exceeds he
inancial cos bo ne by he companies o he liabili ies used, and he
le e age e ec allows he ROE o inc ease.
The DSO sligh ly dec eases o s and a 77 days in 2018, while he
same end is obse ed o he DPO, al hough i s all is mo e no iceable,
om 55 days in 2010 o 37 in 2018. The DIO emains s able du ing he
analysed pe iod. As a esul , he CCC has inc eased om 121 o 130 days
o e he pe iod 2010–2018. These igu es e eal ha he sampled ish
canning companies wo k wi h posi i e ne wo king capi al.
Table 2 illus a es he main desc ip i e s a is ics o he a iables used
in he analysis. Acco ding o he de ini ion o SMEs gi en by he Eu o-
pean Commission, he sha e o la ge companies in he sample anges
om 4.03% in 2015 (9 companies ou o 223) o 2.3% in 2017 (5
companies ou o 217). The e o e, we can con i m ha a leas 96% o
he sampled companies a e SMEs. On a e age, deb inances a ound
58% o he o al asse s o ish canning companies, al hough his pe -
cen age is highe in he ini ial yea s o he analysed pe iod. The cu en
a io expe iences he opposi e e olu ion; un il 2016 i ails o each
alues highe han 3. The DIO is close o 98.24 days; a igu e ha is a
om he 30 days ha Bieniasz and Goła´
s [5] indica ed o en e p ises
ep esen ing he ades o he p ocessing and p ese a ion o ish,
c us aceans, and molluscs, bu close o he en e p ises p ocessing o he
ood p oduc s such as suga , ea, o co ee. Finally, asse u no e
gene ally does no all below 1.2 o e he en i e e iewed pe iod.
Finally, he co ela ion ma ix o he a iables is shown in Table 3.
Besides, since po en ial mul icollinea i y p oblems could a ise, he
Va iance In la ion Fac o (VIF) was calcula ed. O e all, he a e age VIF
was less han 2, which is an accep able h eshold [20].
5.2. Mul i a ia e analysis
The ollowing subsec ions p esen and discusses he esul s o he
econome ic analyses on he economic p o i abili y and he inancial
p o i abili y, espec i ely.
L. Rey-A es e al.

Ma ine Policy 130 (2021) 104583
6
5.2.1. Economic p o i abili y
Table 4 displays he es ima es o he dynamic panel da a models on
economic p o i abili y. Models include he lagged dependen a iable
(ROA
-1
) as an independen a iable, he se o independen a iables on
WCM, and he con ol a iables. The quad a ic o m o he WCM a i-
ables, wi h he excep ion o DPO, is included in o de o es Hypo heses
a. Each o he ou models (M1–M4) al e na i ely includes he ou
ep esen a i e pe iods o WCM. As p e iously men ioned, we use he
Hansen J s a is ic o o e iden i ying es ic ions. Since i s alues a e no
signi ican , he null hypo hesis canno be ejec ed, so he ins umen s we
use a e alid in all o he models. Addi ionally, he AR(2) s a is ic [3]
shows he lack o second-o de se ial co ela ion in he i s -di e ence
esiduals.
Empi ical e idence in Table 4 e eals ha he collec ion pe iod
(p oxied by he DSO) seems o display an in e ed U-shaped ela ionship
wi h he ROA (M1), which allows us o accep Hypo hesis 1a. P e ious
inancial li e a u e inds e idence o a posi i e ela ionship [28,32], bu
also o a nega i e associa ion be ween bo h a iables [17,29,31,33,41,
46,5,51,55,9,12]. In his espec , he empi ical e idence o companies
in he ish canning indus y pa ially ag ees wi h p e ious li e a u e; he
ela ionship be ween he ROA and he collec ion pe iod s a s o become
posi i e, i.e., g an ing ade c edi posi i ely a ec s he a ac ion o
new cus ome s, bu his posi i e e ec does no las inde ini ely. Mo e
121
132 129
134
127 131
125
131 130
3,18%
4,03%
2,83%
2,61%
2,85%
4,45% 4,67%
4,08%
5,36%
6,78%
11,87%
5,23%
3,37%
5,63%
3,90%
10,30%
7,54%
10,88%
96 98 101
106
100 102
94 95 92
84 83 81 81 80 79 79
82
77
55
50 53
49 51 48
43 40 37
0%
2%
4%
6%
8%
10%
12%
14%
0
20
40
60
80
100
120
140
160
2010 2011 2012 2013 2014 2015 2016 2017 2018
P o i abili y
Days
DSO DPO DIO CCC ROA ROE
Fig. 1. ROA, ROE, and he pe iods o wo king capi al (2010–2018).
Table 2
Summa y s a is ics.
Va iable Obs. Mean S d. De . Min. Max.
ROA (%) 2215 0.04 0.10 -0.95 0.96
ROE (%) 1966 0.07 0.35 -7.82 6.52
DSO (days) 2106 80.73 53.36 0.00 363.89
DPO (days) 2106 47.55 46.85 0.00 359.57
DIO (days) 1946 98.24 77.32 0.01 362.17
CTT (days) 1946 128.80 97.61 –289.54 564.55
NEMP
a
1992 46.76 115.08 1.00 1429.00
LEV (%) 1870 0.58 0.24 0.03 1.00
TA_TURN 2106 1.27 0.92 0.00 8.82
CURR_RAT 2152 3.01 5.53 0.00 91.74
No es: Obs. s ands o he numbe o Obse a ions; S d. De . o S anda d De ia-
ion; Min. o Minimum; and Max. o Maximum.
a
The NEMP a iable is no in logs.
Table 3
Co ela ion ma ix.
ROA ROE DSO DIO DPO CTT CURR_RAT NEMP LEV TA_TURN
ROA 1
ROE 0.461*** 1
DSO –0.069** –0.067** 1
DIO –0.281*** –0.143*** 0.055* 1
DPO –0.198*** –0.104*** 0.166*** 0.099*** 1
CTT –0.175*** –0.107*** 0.484*** 0.766*** –0.308*** 1
CURR_RAT 0.027 –0.012 0.040 0.128*** –0.241*** 0.222*** 1
NEMP 0.044 –0.003 –0.054* -0.016 –0.104*** 0.021 –0.076* 1
LEV –0.181*** 0.014 –0.019 0.012 0.366*** –0.162*** –0.455*** –0.096 1
TA_TURN 0.269*** 0.200*** –0.293*** -0.441*** –0.089*** –0.461*** –0.150*** 0.091*** 0.232*** 1
No es: This able shows he Pea son co ela ion coe icien s o he a iables conside ed in he empi ical analyses.
*
p<0.05.
**
p<0.01.
***
p<0.001.
L. Rey-A es e al.
Ma ine Policy 130 (2021) 104583
7
speci ically, he es ima ed coe icien s sugges ha he u ning poin in
his ela ionship is a ound 190 days. Thus, i seems ha by ex ending
collec ion pe iods beyond his limi , cus ome s wi h liquidi y p oblems
a e a ac ed, which could lead o he appea ance o de aul e s and
possible ailu es, and a consequen decline in economic p o i abili y.
This pe iod is leng hy; ne e heless, a ound 90% o he e ail o canned
sea ood goes o supe ma ke s and hype ma ke s [34], which o en
impose e y long deadline paymen s, damaging he p o i abili y o hei
supplie s.
The e idence ound o he in en o y con e sion pe iod (M2) con-
adic s wha was es ablished in Hypo hesis 2a. Thus, da a in Table 4
sugges ha he ela ionship be ween he DIO and he economic p o -
i abili y o ish canning companies is U-shaped. P e ious li e a u e
mos ly poin s o a nega i e in luence o he in en o y con e sion pe iod
on i ms’ economic p o i abili y [5,11,17,19,30,45,56,51,9,12,35,46,
55]. Ou indings coincide o some ex en wi h his nega i e ela ion-
ship. In his ega d, he es ima es indica e ha he DIO ini ially ha e a
nega i e e ec on i ms’ economic p o i abili y since inc eases in in-
en o ies lead o highe cos s (e.g., main enance o obsolescence cos s)
ha dec ease p o i abili y. This nega i e e ec holds ue o a pe iod o
ime (namely, 187 days) a e which he bene i s o a oiding po en ial
p ice luc ua ions and b eaking cos s o e comes he cos s o he ex a
in en o y. Indeed, he li e a u e on he WCM-p o i abili y ela ionship
has also ound a posi i e ela ionship be ween DIO and economic
p o i abili y. This inding, which is o some ex en coun e -in ui i e,
migh also e lec ce ain speci ici ies o he ish canning companies.
Thus, while he consump ion (sales) o canned ish emains ela i ely
s able h oughou he yea , he companies a e subjec o he seasonal
ca ches o ish and ishing quo as imposed by he EU ishe y egula ions
in he Spanish case [57]. As a esul , ish canning companies a e
equen ly o ced o sou ce he aw ma e ial hey will use annually in a
e y sho pe iod o ime; his esul s in high in en o y le els. In such a
con ex , high in en o y le els would ac as a signal ha he p oduc i e
capaci y and he co e age o company demand would be gua an eed
and could he e o e be ansla ed in o s able ela ionships wi h hei
cus ome s and, in u n, in o g ea e economic p o i abili y.
The lack o s a is ical signi icance does no allow con i ming Hy-
po hesis 3a, as in he esea ch o Ng e al. [39]. Simila ly, he ela ionship
be ween he ROA and he CCC, p oposed in Hypo hesis 4a, canno be
con i med. This may be pa ly due o he opposing ela ionship ound o
he DSO and DIO a iables ha would be compensa ed o in he CCC.
Nei he Deloo [11], Vahid e al. [56], no Se asquei o [51] ound a
signi ican e ec o he CCC on i ms’ economic p o i abili y, whe eas
Bieniasz and Goła´
s [5] iden i ied ha p olonging his cycle ansla es
in o a dec ease in he p o i abili y o companies in he ood sec o .
Some o he con ol a iables seem o posi i ely in luence i ms’
economic p o i abili y. Indeed, he signi ican and posi i e coe icien s
o he lagged dependen a iable (ROA) speak in a ou o he p o i
pe sis ence hypo hesis in he ish canning indus y, simila ly o he e-
sul s ob ained by o he s udies pe aining o he ood indus y [8,21,22].
Mo eo e , he posi i e es ima ed coe icien s o he o al asse u no e
a io indica e ha he highe he company’s e iciency in using i s o al
asse s o ob ain sales, he highe i s economic p o i abili y. Finally, i m
size and i m le e age ail o ha e a signi ican impac on economic
p o i abili y. On he one hand, Hi sch and Schie e [23] and
Gschwand ne and Hi sch [60] de e mine ha i m size has a signi i-
can ly posi i e e ec on i m p o i abili y, which migh be due o a
posi i e cos -scale e ec , i.e., la ge i ms a e usually in a be e posi ion
o deal wi h p e-ma ke app o al p ocedu es and ad e ising cos s, o o
cope wi h compe i i e p essu es. In his ega d, bo h pape s p oxy i m
size by he na u al loga i hm o o al asse s, a he han by he numbe o
employees, as his pape does. On he o he hand, Bieniasz and Goła´
s [5]
ound a signi ican ly nega i e e ec o le e age on he economic p o -
i abili y o la ge-sized en e p ises in he ood indus y.
Fi m liquidi y, p oxied by he cu en a io, also ails o be s a is i-
cally signi ican ; a esul in line wi h Bieniasz and Goła´
s [5], who do no
obse e any s a is ically signi ican ela ionship be ween he p o i -
abili y and he cu en and quick a io o mid- and la ge-sized com-
panies in he ood indus y. Howe e , Bieniasz and Goła´
s [5] and
Gschwand ne and Hi sch [60] con i med he exis ence o a signi ican ly
posi i e ela ionship o small-sized en e p ises and o US and EU ood
companies.
5.2.2. Financial p o i abili y
As p e iously men ioned, i ms’ inancial p o i abili y is measu ed
by he ROE. The es ima es ob ained h ough dynamic panel da a models
a e summa ised in Table 5. In line wi h he p oposed hypo heses (Hy-
po heses b), he models a e no quad a ic. Again, he Hansen J s a is ic
and he AR(2) s a is ic allow us o disca d po en ial p oblems o model
misspeci ica ion.
O e all, empi ical e idence e lec s ha WCM does no seem o
a ec he inancial p o i abili y o ish canning companies, i.e., he
s a is ical e idence on he e ec o he DSO, he DPO, he DIO, and he
CCC on he inancial p o i abili y ails o be signi ican and he e o e,
Hypo heses 1b, 2b, 3b, and 4b a e no suppo ed. Simila ly, Chowdhu y
e al. [9] do no ind any e ec o he DSO and he DPO on inancial
p o i abili y.
Al hough he WCM does no ha e a g ea impac on inancial p o -
i abili y, some o he con ol a iables included in he s udy display
Table 4
Dynamic model es ima ions on ROA.
M1 M2 M3 M4
DSO_100 0.091*
(0.05)
DSO_100
2
–0.024†
(0.01)
DIO_100 –0.041*
(0.02)
DIO_100
2
0.011*
(0.01)
DPO_100 –0.018
(0.02)
CCC_100 0.005
(0.01)
CCC_100
2
–0.002
(0.00)
ROA
-1
0.358*** 0.356*** 0.364*** 0.379***
(0.06) (0.06) (0.07) (0.07)
LEV 0.193 0.061 0.003 0.043
(0.13) (0.14) (0.12) (0.13)
LEV
2
–0.246
†
–0.111 –0.046 –0.083
(0.13) (0.13) (0.12) (0.13)
TA_TURN 0.031*** 0.022** 0.01 0.019**
(0.01) (0.01) (0.01) (0.01)
LN_NEMP –0.005 –0.002 –0.003 –0.006
(0.01) (0.01) (0.01) (0.01)
CURR_RAT 0.001 0 0 0
(0.00) (0.00) (0.00) (0.00)
YEARS Yes Yes Yes Yes
Cons an –0.059 0.028 0.065 0.028
(0.04) (0.05) (0.03) (0.03)
Numbe o obse a ions 1638 1638 1550 1550
Numbe o companies 297 297 280 280
Numbe o ins umen s 222 196 222 222
Deg ees o eedom 15 14 15 15
F es 6.73 6.79 7.23 6.56
F p- al. 0.00 0.00 0.00 0.00
AR(1) es –3.23 –3.26 –2.78 –2.81
AR(1) p- al. 0.001 0.001 0.005 0.005
AR(2) es 0.65 0.84 0.86 0.9
AR(2) p- al. 0.518 0.398 0.388 0.367
Hansen J s a is ic 214.29 182.34 217.14 218.44
Hansen J p- al. 0.314 0.437 0.267 0.248
No es: The dependen a iable is economic p o i abili y o ROA; DSO_100,
DIO_100, DPO_100, and CCC_100 a e he WCM managemen a iables di ided
by 100; and DSO_100
2
, DIO_100
2
, and CCC_100
2
hei squa e. ***, **, *, and
†
deno e a p- alue o 0.001, 0.01, 0.05, and 0.1, espec i ely.
L. Rey-A es e al.
Ma ine Policy 130 (2021) 104583
8
s a is ically signi ican ela ionships. In his ega d, a company’s
le e age seems o display an in e ed U-shaped ela ionship wi h espec
o he dependen a iable. This ela ionship can be explained h ough
he deb le e age, i.e., he ampli ica ion o he e u n ea ned on equi y
when an in es men is pa ially inanced wi h bo owed money. By
aking on mo e deb le e age, a company can make mo e in es men s
h ough he economic yea wi hou he need o eques con ibu ions
om i s pa ne s o sha eholde s, which a e mo e cos ly and so he
company p ops up i s p o i abili y. This e ec does no las inde ini ely,
i.e., he e ec is posi i e as long as he cos o he deb -o he in e es
a e- is lowe han he e u n made on he in es men . Howe e , once
he cos o he bo owed money exceeds he e u n made on he in-
es men , he le e age e ec becomes nega i e, hus leading o de-
c eases in inancial p o i abili y.
Again, a i m’s e iciency in using i s asse s o gene a e sales (i.e., he
o al asse s u no e a io) has a posi i e e ec on inancial p o i abili y.
Finally, i should be men ioned ha a nega i e ela ionship be ween
i m size, measu ed by he numbe o employees, and inancial p o i -
abili y is ob ained. Thus, empi ical e idence indica es ha ish canning
companies wi h ewe employees a e mo e likely o ob ain a highe ROE.
6. Conclusions
This pape aims o explo e how wo king capi al policies in luence he
p o i abili y o Spanish ish canning companies. Wi hin he ood
manu ac u ing indus ies, we pay a en ion o his sec o because o he
high sha e o cu en asse s and liabili ies on such companies’ balance
shee s, as well as o he eno mous complexi y o he wo king capi al
in es men and inancing policies. Thus, in he sampled i ms, accoun s
ecei ables and in en o ies comp ised up o 61.7% o o al asse s in he
pe iod 2010–2018. Simila ly, spon aneous inancing and sho - e m li-
abili ies ep esen ed 15% and 21.8% o o al asse s, espec i ely. The
ac ha 97% o he companies in he sec o a e SMEs, oge he wi h a
pe iod o analysis cha ac e ised by an insu icien amoun o liquidi y
o i ms, adds in e es o he s udy conce ning he WCM-p o i abili y
ela ionship.
A e applying dynamic panel da a me hodology in a sample con-
sis ed o 377 companies du ing he pe iod 2010–2018, we ind ha he
economic p o i abili y o ish canning companies is ela ed o he DSO
and DIO. Thus, we can conclude ha g an ing ade c edi and main-
aining in en o y a ec s i ms’ economic p o i abili y. Mo eo e , unlike
p e ious s udies, one con ibu ion o his pape is o analyse he unc-
ional o m o he a o emen ioned ela ionships. Thus, empi ical e i-
dence e eals he exis ence o an in e ed U-shaped ela ionship
be ween he collec ion pe iod and economic p o i abili y, which in-
ol es he exis ence o an op imal le el o ecei ables ha balances he
bene i s o inc easing sales and he oppo uni y cos s o unding cus-
ome s. This op imal poin is eached a a ound 190 days; once hese 190
days ha e been exceeded, he high non-paymen isk dec eases i m
p o i abili y.
The indings also e eal a con ex o U-shaped ela ionship be ween
in es men in in en o y and economic p o i abili y. In o he wo ds, an
ini ial inc ease in he le el o in en o y dec eases he i m’s economic
p o i abili y; howe e , once he u ning poin o 187 days is exceeded,
he inc eases in he in en o y le els enhance economic p o i abili y.
In con as , no signi ican ela ionship was ound o ei he he DPO
o he CCC wi h economic p o i abili y, no did we ind empi ical e i-
dence ha any o he pe iods e e ing o majo i ems o wo king capi al
a e ela ed o inancial p o i abili y.
The indings o his analysis ha e in e es ing manage ial and policy
implica ions. The ela ionship be ween he DSO and he economic
p o i abili y ollowing an in e ed U-shaped pa e n implies he exis-
ence o an op imal poin o managemen o he collec ion pe iod.
The e o e, we p opose wo ypes o policies. On he one hand, hose
companies ha a e below his op imum poin should o e a lexible
c edi policy o hei cus ome s o a be e paymen pe iod. In his sense,
ou ecommenda ion is o ca y ou a sol ency analysis o hei cus-
ome s aimed a o e ing paymen acili ies o hose cus ome s who ha e
a g ea e le el o sol ency. On he o he hand, we ha e hose companies
ha a e abo e he op imum poin and he e o e should educe he
collec ion pe iod, hus inc easing he o a ion o hei c edi s. In his
sense he e a e di e en policies ha would allow o inc ease he c edi
o a ion and hus o educe he collec ion pe iod, as o example:
educing he s anda d paymen pe iod on in oices; equi ing, whene e
possible, an ini ial deposi a he beginning o he wo k o a he signing
o he o de ; es ablishing eal incen i es o ea ly paymen ; es ablishing
special policies o as e collec ion om new cus ome s; and/o
au oma ising he in oicing p ocess so ha in oices a e gene a ed and
sen as quickly as possible.
In ela ion o he second e idence ob ained, i.e., a con ex ela ion-
ship be ween he DIO and he economic p o i abili y, once again, he
e idence leads o he exis ence o an op imal poin . The e o e, com-
panies should analyse hei si ua ion in ela ion o his in lec ion poin ,
and consequen ly, hose companies whose DIO is below he in lec ion
poin should inc ease hei in en o y s ock o a oid po en ial b eakages
in hei supply chain and o bene i om g ea e comme cial discoun s
when placing la ge o de s. On he o he hand, hose companies whose
DIO is abo e he in lec ion poin should main ain o inc ease he in-
en o y con e sion pe iod, bu wi hin easonable limi s, as ex ending
oo much he in en o y con e sion pe iod migh ha e de imen al e -
ec s. I his is he case, i.e., he in en o y con e sion pe iod is oo
leng hy, some possible measu es o educe i migh include: making an
Table 5
Dynamic model es ima ions on ROE.
M1 M2 M3 M4
DSO_100 0.047
(0.06)
DPO_100 –0.071
(0.10)
DIO_100 –0.04
(0.04)
CCC_100 0.004
(0.03)
ROE
-1
–0.024 –0.028* –0.021 –0.021
(0.01) (0.01) (0.01) (0.01)
LEV 1.542* 1.098 0.927 0.942
(0.77) (0.68) (0.60) (0.60)
LEV
2
–1.709* –1.225
†
–1.003 –1.032
(0.81) (0.73) (0.65) (0.63)
TA_TURN 0.146** 0.148** 0.075* 0.100*
(0.05) (0.05) (0.04) (0.04)
LN_NEMP –0.087* –0.076* –0.078** –0.089**
(0.04) (0.03) (0.03) (0.03)
CURR_RAT 0.008
†
0.005 0.004 0.003
(0.01) (0.00) (0.00) (0.00)
YEARS Yes Yes Yes Yes
Cons an 0.000 0.000 0.064 0.026
(.) (.) (0.12) (0.14)
Numbe o obse a ions 1632 1632 1544 1544
Numbe o companies 297 297 280 280
Numbe o ins umen s 196 196 196 196
Deg ees o eedom 14 14 14 14
F es 5.22 4.58 2.23 2.05
F p- al. 0 0 0.01 0.01
AR(1) es –1.14 –1.14 –1.41 –1.42
AR(1) p- al. 0.255 0.253 0.159 0.155
AR(2) es –0.92 –1.08 –1.26 –1.24
AR(2) p- al. 0.255 0.278 0.206 0.217
Hansen J s a is ic 203.64 198.29 200.66 194.84
Hansen J p- al. 0.109 0.166 0.139 0.213
No es: The dependen a iable is inancial p o i abili y o ROE; DSO_100,
DIO_100, DPO_100, and CCC_100 a e he WC managemen a iables di ided by
100. ***, **, *, and †deno e a p- alue o 0.001, 0.01, 0.05, and 0.1, espec i ely.
Obse a ions wi h nega i e alues o he sha eholde s’ equi y a e disca ded;
o he wise, i hese obse a ions also p esen ed nega i e ne ea nings, hey would
esul in a alse posi i e ROE.
L. Rey-A es e al.
Ma ine Policy 130 (2021) 104583
9
accu a e es ima e o demand in o de o p oduce and s ock he igh
in en o y; sho ening supply imes by choosing supplie s wi h as de-
li e ies and nego ia ing app op ia e condi ions; main aining an op i-
mum le el o s ock and imp o ing pu chasing and in o ma ion
managemen , so ha he amoun o in en o y a each s age can be easily
know o calcula ed.
One o he al e na i es ha can help companies in hese wo asks, i.
e., collec ion and in en o y managemen , is he digi isa ion o hese
p ocesses. On he one hand, he digi isa ion o he collec ion p ocess
gene a es an e icien wo k low in which paymen da es a e synch on-
ised wi h key no i ica ions and imp o es he a e age paymen ime. In
addi ion, i allows he online isualiza ion o he s a us o in oices, he
cus ome po olio, o he enabling o di e en online paymen me hods
and he econcilia ion o paymen s. On he o he hand, he digi isa ion
o in en o y and wa ehouse managemen makes i possible o con ol
s ock, ack in en o y and know he a ailable s ock, o au oma e s o age
and picking asks, o o manage in eal ime all he wo k lows ela ed o
he supply chain and he wa ehouse, as well as o ensu e p oduc
aceabili y. In bo h cases, digi isa ion p o ides use ul in o ma ion and
makes i easie o ob ain me ics and da a o analysing he e iciency o
he i ms when ca ying on hese asks.
This pape con ibu es o he ex an li e a u e on he WCM-
p o i abili y ela ionship in h ee undamen al ways. Fi s , i is ocused
on a ood indus y, namely he ish canning sec o , whe e he unde -
s anding o how WCM impac s i m p o i abili y becomes essen ial o
i m pe o mance. Second, unlike mos p e ious wo k, his pape ex-
plo es non-linea e ec s o he pe iods e e ing o WCM upon i m
economic p o i abili y and also conside s inancial p o i abili y. Thi d, i
adds o he li e a u e by p o iding insigh in o a challenging ime pe iod
o wo king capi al policies.
The main limi a ion o his pape is he a ailabili y o da a o he
sample companies. Despi e ha ing a ep esen a i e sample o companies
in he sec o , he need o consis en da a led us o exclude some o he
obse a ions ha p esen ed in o ma ion ha was no consis en wi h he
basic ules o he Gene ally Accep ed Accoun ing P inciples. This has led
o mul i a ia e analyses being limi ed o ewe companies han hose in
he ini ial sample. To be e unde s and how companies manage hei
cu en asse s and liabili ies, su eys would be equi ed in u u e wo k,
whe e manage s could highligh hei policies o dealing wi h issues
such as he liquidi y sho age ha i ms will ace du ing he c isis
de i ed om he COVID-19 pandemic.
CRediT au ho ship con ibu ion s a emen
Lucía Rey-A es: Concep ualiza ion, Me hodology, W i ing - e iew
& edi ing, Fo mal analysis. Sa a Fe n´
andez-L´
opez: Concep ualiza ion,
W i ing - o iginal d a , W i ing - e iew & edi ing, Fo mal analysis,
Supe ision. Da id Rodei o-Pazos: Da a cu a ion, W i ing - o iginal
d a , In es iga ion, Visualiza ion.
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