Tracking the Credit Collection Period of Malaysian Small and Medium-Sized Enterprises

Zainudin, Nasruddin

doi:10.5539/ibr.v1n1p78

Cited by 7 publications

(36 citation statements)

References 18 publications

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“…Late payments cause an increase in working capital for the firms due to the need to raise financing from one of the four sources (Chittenden & Bragg 1997). It also increased debt, which resulted into higher interest payments, reduced borrowing capacity, reduced profits, increased equity, which dilutes and devalues existing investors' stakes if stockholders' returns are unaffected; reduced capital investment in the future, limiting the seller's longterm business performance; or an increase in the length (and therefore the amount) of trade credit taken from suppliers (Fisman & Love, 2003;Love et al,, 2007;Love & Zaidi, 2010;Paul & Boden, 2014;Paul et al, 2012;Zainudin, 2008). Late payment is, therefore, an imperative factor that may deter overall firm value.…”

Section: Working Capital Management and Firm Valuementioning

confidence: 99%

Working Capital Management and Firm Value: The Role of Firm Innovativeness

Nurein

Din

2017

Book of Abstracts International Conference on Economics and Development

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Abstract:There have been variations in working capital performance among firms and industries in various countries over the last decade. One of the causes of the variations is level of firm innovativeness. This study aims to examine the moderating role of firm innovativeness on the effect of working capital management on firm value between innovative and non-innovative firms in an emerging market. The study was carried out based on 400 listed firms in Bursa Malaysia for the period 2006-2015. By using a fixed regression estimation, the findings indicate that innovative firms have a better working capital performance than the non-innovative firms since they apply their innovative capabilities towards improving their working capital performance. This study suggests that firms need to align their innovative capabilities towards working capital management to improve firm value.

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Section: Working Capital Management and Firm Valuementioning

confidence: 99%

Working Capital Management and Firm Value: The Role of Firm Innovativeness

Nurein

Din

2017

Book of Abstracts International Conference on Economics and Development

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“…However, there is very little empirical evidence on the role of the proposed factors in explaining how much firms are prepared to invest in AR within emerging and developing economies, especially in Asia (Zainudin, 2008;Love and Zaidi, 2010). Most of the empirical literature has focused particularly on the US and the UK, even though firms in less developed Asian economies have been found to be more reliant on finance from trade credit than is the case with firms from more developed economies (Ge and Qiu, 2007).…”

Section: Literature Review and Hypotheses Developmentmentioning

confidence: 99%

Why do firms invest in accounts receivable? An empirical investigation of the Malaysian manufacturing sector

Paul

Guermat

Devi³

2018

JAEE

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The purpose of this paper is to investigate the factors that influence Malaysian manufacturing sector investment in accounts receivable, an asset seen by many as one of the riskiest in any company's balance sheet. We test several theories, related to accounts receivable, using a cross-section of 262 listed manufacturing firms over a period of five years (2007)(2008)(2009)(2010)(2011). Both fixed and random effect approaches are considered to deal with potential heterogeneity across firms. Our results show that the absolute level of accounts receivable is almost exclusively explained by size. However, the ratio of accounts receivable to assets is influenced by firm size, short-term finance, sales growth, and collateral. Profit, liquidity and gross margin have no role in affecting the decision to grant trade credit to customers. Some of our results are mostly inconsistent with previous studies. Size and short-term finance have a negative, rather than a positive, impact. Liquidity and gross margin have no, rather than a positive, effect. Profit and sales growth are expected to exhibit a U-shaped relationship with investment in accounts receivable. We found, however, that the former is insignificant while the latter is strictly increasing. The only factor found to be consistent with prior studies, in developed counties, is collateral. Our findings have important implications for policy makers in Malaysia and other emerging economies, especially in the light of the forthcoming International Financial Reporting Standard 9.3

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“…The closest study, Zainudin (2008) that analyzed trade credit with special interest in late payments did focused on the Malaysian economy where firm heterogeneity is not much pronounced. Since, firms in the same country experiences virtually same financial developments and economic conditions.…”

Section: Introductionmentioning

confidence: 99%

“…But, prior studies on late payments either concentrate on analyzing firm profitability within specific country (Zainudin, 2008;Paul et al, 2012), or analyze the relationship between trade credit and company growth when the interest is geared towards cross country analysis (Fisman and Love, 2003;Ferrando and Mulier, 2013). The study is set apart by relying on a panel dataset of 54,277 EU firms for the period 2005 through 2014 inclusive.…”

Section: Introductionmentioning

confidence: 99%

“…Since, firms in the same country experiences virtually same financial developments and economic conditions. Also, the study of Zainudin (2008) analyzed late payments of trade credit provision with the average collection period instead of the former as dependent variable due to lack of data on firms' credit period. The situation is addressed by this study with access to data on the credit period.…”

Section: Introductionmentioning

confidence: 99%

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Delaying Payments after the Financial Crisis: Evidence from EU Companies

Obeng

2017

Acta Univ. Agric. Silvic. Mendelianae Brun.

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OBENG ISAAC KWAME ESSIEN. 2017. Delaying Payments after the Financial Crisis: Evidence from EU Companies. Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, 65(2): 447-463.The paper investigates economic impact of delayed payments caused by liquidity crisis in the European Union. Using micro data sets on financial statements of 54,277 firms for the period of 2005 to 2014 inclusive, we perform panel data analysis by estimating fixed effects regression models with selected macroeconomic shocks. The results show high variability of late payments during financial crisis compare to period of relative stable economic situations and late payments is significantly evident across countries under different economic conditions. Additionally, we identify positive relationship between the response variable, late payments, and firm profitability measured with returns on assets, but negative relationship with firm total assets as it depends on the speed of collections from receivables. The results suggest delays in payment of invoices beyond the given credit period across the different European Union member countries.

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Tracking the Credit Collection Period of Malaysian Small and Medium-Sized Enterprises

Cited by 7 publications

References 18 publications

Working Capital Management and Firm Value: The Role of Firm Innovativeness

Working Capital Management and Firm Value: The Role of Firm Innovativeness

Why do firms invest in accounts receivable? An empirical investigation of the Malaysian manufacturing sector

Delaying Payments after the Financial Crisis: Evidence from EU Companies

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