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TD5 - EF5: Financial performance
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| Presentations | ||
The role of Supply Networks in Managing net Operating Working Capital 1KU Leuven, Belgium; 2TU Eindhoven In this article, we investigate how the working capital management practice of a firm impacts its upstream and downstream supply chain partners. We propose a Cash Conversion Distance (CCD) metric that identifies the degree with which a firm practices aggressive (or lax) working capital management. We use secondary empirical data to show how firm's profitability as well as that of its partners varies as a function of this measure and its `importance' in the network. When firms go public, standards drop 1McGill University, Canada; 2McGill University, Canada; 3McGill University, Canada Online platforms screen users who wish to benefit from their marketplaces. We show that when a platform transitions from private to public ownership, it will drop its screening standards, thus admitting otherwise unqualified users. Dropping standards ahead of an initial public offering allows platforms to increase their user base, leading stock investors to overvalue the stock (while imposing a cost on their users). We substantiate this hypothesis with data from p2p lending platforms. | ||