Working Capital Investing Policy under Economic Recession Focusing on Small-medium Size Companies

Lawrence Awopetu, Peter Wui and Jonghae Park

A small business’s working capital is faced with many constraints passing through a financial recession since 2008. The paper investigates how the working capital investment policies of small firms in the United States impact their profitability and their impact over the recession. The multivariate panel regression models are estimated by using 100 best small company data over 2002 through 2011. The small firms need a conservative strategy for higher profitability and Tobin’s Q. Comparatively, after recessions, a small firm will need a conservative strategy, whereas, they need a less conservative strategy for the higher Tobin’s Q.

DOI : https://doi.org/10.21102/irbrp.2017.03.131.02