Table 6. Interaction effect of NWCR with...

Table 6.

Interaction effect of NWCR with cash level in the GMM model using ROA/ROE as the dependent variable testing H4 and H5

	ROA		ROE
Sample	Positive working capital H4	Negative working capital H5	Positive working capital H4	Negative working capital H5
NWCR	−0.03005 ^***	0.114142	−0.07231 ^***	0.07087
Cash level (dummy)	−0.00406	0.09231 ^**	0.014925	0.066132
NWCR ^∗ cash level (dummy)	0.006473	0.421561 ^***	−0.00104	−0.00776
Size	0.005999 ^**	0.025562	0.005301	−0.01174
Growth	0.067657 ^***	0.051947	0.089586	0.225585 ^***
Leverage	−0.02149 ^*	−0.135903 ^**	0.01237	0.075443
GDP	0.57326 ^***	1.802422 ^***	0.176366	−0.15096
Observations	496	76	487	76

	ROA		ROE
Sample	Positive working capitalH4	Negative working capitalH5	Positive working capitalH4	Negative working capitalH5
NWCR	−0.03005^***	0.114142	−0.07231^***	0.07087
Cash level (dummy)	−0.00406	0.09231^**	0.014925	0.066132
NWCR ^∗ cash level (dummy)	0.006473	0.421561^***	−0.00104	−0.00776
Size	0.005999^**	0.025562	0.005301	−0.01174
Growth	0.067657^***	0.051947	0.089586	0.225585^***
Leverage	−0.02149^*	−0.135903^**	0.01237	0.075443
GDP	0.57326^***	1.802422^***	0.176366	−0.15096
Observations	496	76	487	76

Notes:

ROA = return on assets = EBIT/total assets; ROE = return on equity = net income/total equity; NWCR = (trade receivables + inventory – trade payables)/sales; size = logarithm of total assets; Growth = sales growth rate (Sales_n − Sales_n_–1)/ Sales_n_–1; LEV = total liabilities/total assets; GDP = real GDP growth rate calculated as (GDP_n − GDP_n_–1)/GDP_n_–1; cash rate is dummy variable (1 for cash rate above sector median and 0 for cash rate below sector median) calculated as (cash and cash equivalents)/sales; NWCR∗Cash rate (dummy) is interaction term; Obs. = number of observations.

Significant @ 10%;

Significant @ 5%; and

***

Significant @ 1%

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