An investigation the role of Life Cycle on the relationship between Working Capital Policies and Performance

This research attempts to focus on the relationship between working capital policies and company performance and the influence of various periods of the company’s life cycle on the analysis of the type of working capital policies. Actual data from 152 companies listed in the Tehran Stock Exchange from 2001 to 2011 have been obtained and analyzed for this purpose. Results shall reflect the influences of the life cycle on the relationship between working capital policies and performance. The influence is presented as the fact that under general circumstances (regardless of the life cycle), no relationship exists between working capital policies and performance; however, when the life cycle is taken into consideration, the relationship between working capital policies and performance in developed companies are direct with the general circumstances discussed above while the same relationship is inverse in developing companies. In other words, in the development stage, a meaningful relationship exists between working capital policies and performance. Moreover, to offer an opinion on declining companies would be an impossible task, due to the non-reliability of statistical data collected.

Working Capital Policies, Performance, Life Cycle