A behavioural approach to working capital management
2016 (English)In: European Journal of Finance, ISSN 1351-847X, E-ISSN 1466-4364, Vol. 22, no 8-9, 662-687 p.Article in journal (Refereed) Published
This paper documents the behaviour of corporate treasurers who are involved in the decision-making process in the areas of cash, inventory, accounts receivable, accounts payable and risk management during the global financial crisis. Using a survey questionnaire, we attempt to find out if working capital managers are prone to certain heuristic-driven biases, such as loss aversion, high confidence level, anchoring and self-serving biases. Our findings show that these professionals exhibit signs of behavioural biases. Although the biases lead to sub-optimal decisions in certain areas of working capital management (WCM), they can also be desirable attributes in other aspects of WCM. We propose a profile of a good working capital manager.
Place, publisher, year, edition, pages
2016. Vol. 22, no 8-9, 662-687 p.
loss aversion, high confidence, anchoring, self-serving bias, working capital management
IdentifiersURN: urn:nbn:se:su:diva-116184DOI: 10.1080/1351847X.2014.883549ISI: 000378805100003OAI: oai:DiVA.org:su-116184DiVA: diva2:802616
1st Conference of the Behavioural-Finance-Working-Group, London, England, June 21-22, 2012