A fundamental goal of this study is theoretical and empirical analysis of the role played by working capital and cash flow in effective management of companies. A generally accepted strategic long-term aim of companies is to maximize their market value, whereas a fundamental goal of short-term...

We provide novel evidence that frictions in the financing of working capital can limit firms'production capacity, leading to the amplification and propagation of liquidity problems overtime. We propose a new approach to identify this firm credit multiplier that compares how asame firm responds...