Faculty Scholarly Dissemination Grants

Title

Is the Cash Conversion Cycle A Return Predictive Signal?

Department

Finance Department

College

Seidman College of Business

Disciplines

Business

Abstract

The purpose of this research is to measure if the cash conversion cycle (CCC) of a firm is identifiable as a return predictive signal (RPS). Current published research has identified more than 330 signals (Green, Hand and Zhang, forthcoming 2013). Our research will examine the impact of inventory, accounts receivable and account payable have on stock returns of publicly traded firms. The unit for the CCC is in days per year, with the specific components of days of sales in inventory (DSI) plus the average collection period (ACP) minus the average payables period (APP). The lower (higher) the CCC, the more (less) efficient the company is in managing the working capital. We have begun the process of collecting the firm-specific data from the Research Insight database.

Conference Name

SOBIE 2014 Annual Conference

Conference Location

Destin, FL

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