Working Capital Management and Earnings Management Methods

Student: Mikhalev Nikolay

Faculty: St.Petersburg School of Economics and Management

Educational Programme: Management (Bachelor)

Year of Graduation: 2019

The objective of this work is to study the relationship between working capital management (WCM) and the profitability of Russian companies. The study is based on data from the financial statements of Russian enterprises over the past five years, which were obtained from the SPARK database. This study uses a two-step generalized method of GMM moments to obtain results. The results themselves demonstrate the presence of a U-shaped link between working capital management and profit. Were also found and indicated the optimal date for the conversion of funds of the enterprise. The value of this work is to demonstrate new evidence about the presence of a U-shaped link between working capital management and profit and, accordingly, refutation of the idea of the linearity of this relationship. In addition, this study uses GMM to control the potential problems of endogeneity.

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