Working Capital Management during and after the Global Financial Crisis. Evidence from Germany

Table of Contents

1 Introduction

2 Literature Review

2.1 Object of Working Capital Management

2.1.1 Working Capital

2.1.2 Management

2.1.3 Working Capital Management

2.2 Company Crises

2.2.1 Crisis Process

2.2.2 Crises Causes

2.2.3 Early Detection and Intervention

2.3 Working Capital Management during Crisis

2.3.1 Working Capital Management as a Cause, Indicator and Counteragent

2.3.2 Working Capital Management during the Global Financial Crisis

2.3.3 Working Capital Management after the Global Financial Crisis

3 Methodology

4 Results of Empirical Research

4.1 Overall Results

4.2 Special Observations regarding the Object of Cognition

4.2.1 Industry Sectors and the Relationship to Working Capital Management

4.2.2 Company’s Size and the Relationship to Working Capital Management

4.2.3 Company’s Age and the Relationship to Working Capital Management

5 Discussion

6 Conclusion and Forecast

Research Objectives and Themes

The thesis investigates whether the Working Capital Management (WCM) of German companies has been reactive to changing interest rates or pro-active since the early 2000s. By analyzing 130 companies listed in the DAX, MDAX, and SDAX, the study seeks to determine if the credit crunch during the Global Financial Crisis and subsequent easy-money policies influenced WCM quality, taking into account firm size, age, and industry sector.

• Theoretical foundation of Working Capital (WC) and its role in crisis management.
• Quantitative empirical time comparison of WCM quality from 2004 to 2014.
• Analysis of the impact of the Global Financial Crisis and ECB monetary policy.
• Evaluation of firm-specific parameters including size, age, and industry sector.

Excerpt from the Book

Summary of Chapters

1 Introduction: Provides the research rationale, objectives, and the context of Working Capital Management in German companies against the backdrop of the Global Financial Crisis.

2 Literature Review: Defines Working Capital and WCM theoretically, discusses company crisis processes, and sets the stage for analyzing the financial crisis impact.

3 Methodology: Details the empirical approach, data source (DataStream), sample size (N=99), and the analytical models used to measure WCM quality.

4 Results of Empirical Research: Presents the quantitative findings and statistical analysis of WC-Ratio trends across various industry sectors, firm sizes, and ages.

5 Discussion: Interprets the empirical results within the theoretical framework, highlighting the influence of firm characteristics and macroeconomic conditions.

6 Conclusion and Forecast: Synthesizes the main findings, confirms the reactive nature of German WCM, and provides a forward-looking perspective on WCM's role in future financial stability.

Keywords

Working Capital Management, WCM, Working Capital, Global Financial Crisis, Germany, Liquidity, Profitability, Credit Crunch, European Central Bank, DAX, MDAX, SDAX, Financial Crisis, Management Accounting, Corporate Finance.

Frequently Asked Questions

What is the core focus of this research?

The research examines whether the Working Capital Management of German companies is reactive to market conditions, specifically interest rates and the Global Financial Crisis, or whether it follows a pro-active improvement strategy.

What are the primary themes discussed?

The thesis covers theoretical WCM definitions, the process of company crises, the impact of the Global Financial Crisis, and empirical analysis of German companies listed in leading stock indices.

What is the central research question?

The study investigates whether the management of WC in Germany between 2004 and 2014 was rather reactionary than pro-active in response to external economic pressures.

Which methodology is applied?

The author performs a quantitative empirical time comparison using data from Thomson Reuters DataStream and statistical analysis via SPSS to evaluate changes in WCM quality.

What does the main body address?

The main body integrates theoretical literature with an empirical study of 99 German companies, examining WCM quality across different time periods, industries, firm sizes, and firm ages.

Which keywords describe this work?

Key terms include Working Capital Management, Financial Crisis, liquidity, profitability, German stock indices (DAX, MDAX, SDAX), and corporate finance.

How does firm size affect the WCM results?

The thesis suggests that larger companies (DAX) may have more stable management processes, whereas smaller companies (SDAX, MDAX) showed higher WC-Ratios, potentially indicating less experience or competence in managing working capital.

What conclusion does the author reach regarding the "pro-active" literature claim?

The author concludes that WCM in German companies is more reactive than pro-active, as evidenced by changes in management effort correlating significantly with external economic indicators rather than a continuous pro-active improvement.