ABSTRACT
The cash conversion cycle is a crucial firm-level factor in liquidity in sustainable firm growth; therefore, the effects of macroeconomic factors on cash conversion cycle have high importance to economic development and growth in developing countries, such as Turkey. Unlike previous studies, we use a set of different macroeconomic variables (growth volatility, inflation, and real exchange rate) to check the effects of macroeconomic variables on firms’ cash conversion cycle for the Turkish manufacturing sector in the 2006–2017 period. The obtained findings show that the cash conversion cycle is affected by macroeconomic factors in the Turkish manufacturing sector.
Disclosure statement
No potential conflict of interest was reported by the authors.
Notes
1. The total liabilities/total assets ratio was also employed as leverage, but the results were not altered.
2. Growth volatility variable captures the effects of the financial crisis of 2008 which was occurred in the period of 2007–09 since the effect of the financial crisis can be traced with the fluctuations of GDP. In addition, the crisis period is also estimated appropriately in a dynamic way by using a differenced GMM estimation since the GMM estimation modeled firm dynamics by using instrumental variables (both GMM and IV) in a dynamic framework (up to 4 years period in our model).