Inventory management, cost of capital and firm performance: evidence from manufacturing firms in Jordan
Several studies have examined the relationship between inventory management and firm performance. However, most of these studies ignore the impact of inventory types on the relationship. Moreover, the relationship is influenced by some factors such as cost of capital which has not been considered. T...
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| Format: | Article |
| Language: | English |
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LLC "CPC "Business Perspectives"
2017-10-01
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| Series: | Investment Management & Financial Innovations |
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| Online Access: | https://businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/9194/imfi_2017_03_Salem.pdf |
| _version_ | 1818038690042085376 |
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| author | Ashraf Mohammad Salem Alrjoub Muhannad Akram Ahmad |
| author_facet | Ashraf Mohammad Salem Alrjoub Muhannad Akram Ahmad |
| author_sort | Ashraf Mohammad Salem Alrjoub |
| collection | DOAJ |
| description | Several studies have examined the relationship between inventory management and firm performance. However, most of these studies ignore the impact of inventory types on the relationship. Moreover, the relationship is influenced by some factors such as cost of capital which has not been considered. This study examines the moderating effect of cost of capital on the relationship between inventory types and firm performance. The data of 48 firms for the period 2010-2016 which formed 279 firm-year observations were used in this study. With the use of Pearson correlation and panel Generalized Method of Moments (GMM) estimation, the findings show that inventory management with consideration of its types influence firm performance in the long term. In addition, it is also found that cost of capital moderates the relationship between inventory management and firm performance. However, the interaction between cost of capital and inventory types has different implications. It is suggested that firms should consider cost of capital when making decision on inventory types and align their inventory control to fit in to the changes in their business environment. |
| first_indexed | 2024-12-10T07:46:44Z |
| format | Article |
| id | doaj.art-61ab72e46e7b4dd7b9dd27252070ce0a |
| institution | Directory Open Access Journal |
| issn | 1810-4967 1812-9358 |
| language | English |
| last_indexed | 2024-12-10T07:46:44Z |
| publishDate | 2017-10-01 |
| publisher | LLC "CPC "Business Perspectives" |
| record_format | Article |
| series | Investment Management & Financial Innovations |
| spelling | doaj.art-61ab72e46e7b4dd7b9dd27252070ce0a2022-12-22T01:57:10ZengLLC "CPC "Business Perspectives"Investment Management & Financial Innovations1810-49671812-93582017-10-0114341410.21511/imfi.14(3).2017.019194Inventory management, cost of capital and firm performance: evidence from manufacturing firms in JordanAshraf Mohammad Salem Alrjoub0Muhannad Akram Ahmad1Dr., Al-Balqa Applied UniversityDr., Al-Bayat UniversitySeveral studies have examined the relationship between inventory management and firm performance. However, most of these studies ignore the impact of inventory types on the relationship. Moreover, the relationship is influenced by some factors such as cost of capital which has not been considered. This study examines the moderating effect of cost of capital on the relationship between inventory types and firm performance. The data of 48 firms for the period 2010-2016 which formed 279 firm-year observations were used in this study. With the use of Pearson correlation and panel Generalized Method of Moments (GMM) estimation, the findings show that inventory management with consideration of its types influence firm performance in the long term. In addition, it is also found that cost of capital moderates the relationship between inventory management and firm performance. However, the interaction between cost of capital and inventory types has different implications. It is suggested that firms should consider cost of capital when making decision on inventory types and align their inventory control to fit in to the changes in their business environment.https://businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/9194/imfi_2017_03_Salem.pdfcost of capitalfinished goodsfirm valueinventoryraw materialswork-in-process |
| spellingShingle | Ashraf Mohammad Salem Alrjoub Muhannad Akram Ahmad Inventory management, cost of capital and firm performance: evidence from manufacturing firms in Jordan Investment Management & Financial Innovations cost of capital finished goods firm value inventory raw materials work-in-process |
| title | Inventory management, cost of capital and firm performance: evidence from manufacturing firms in Jordan |
| title_full | Inventory management, cost of capital and firm performance: evidence from manufacturing firms in Jordan |
| title_fullStr | Inventory management, cost of capital and firm performance: evidence from manufacturing firms in Jordan |
| title_full_unstemmed | Inventory management, cost of capital and firm performance: evidence from manufacturing firms in Jordan |
| title_short | Inventory management, cost of capital and firm performance: evidence from manufacturing firms in Jordan |
| title_sort | inventory management cost of capital and firm performance evidence from manufacturing firms in jordan |
| topic | cost of capital finished goods firm value inventory raw materials work-in-process |
| url | https://businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/9194/imfi_2017_03_Salem.pdf |
| work_keys_str_mv | AT ashrafmohammadsalemalrjoub inventorymanagementcostofcapitalandfirmperformanceevidencefrommanufacturingfirmsinjordan AT muhannadakramahmad inventorymanagementcostofcapitalandfirmperformanceevidencefrommanufacturingfirmsinjordan |