Universität zu Köln

Hoberg, Kai ORCID: 0000-0003-2835-572X, Protopappa-Sieke, Margarita and Steinker, Sebastian (2017). How do financial constraints and financing costs affect inventories? An empirical supply chain perspective. Int. J. Phys. Distrib. Logist. Manag., 47 (6). S. 516 - 536. BINGLEY: EMERALD GROUP PUBLISHING LTD. ISSN 1758-664X

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Abstract

Purpose - The purpose of this paper is to identify the interplay between a firm's financial situation and its inventory ownership in a single-firm and a two-firm perspective. Design/methodology/approach - The analysis uses different secondary data sources to quantify the effect of both financial constraints and cost of capital on inventory holdings of public US firms. The authors first adopt a single-firm perspective and analyze whether financial constraints and cost of capital do generally affect the amount of inventory held. Next, the authors adopt a two-firm perspective and analyze the inventory ownership in customer-supplier relationships. Findings - Inventory levels are affected by financial constraints and cost of capital. Results indicate that higher costs of capital are weakly associated with lower inventories. However, contrary to the authors' expectations, firms that are less financially constrained hold less inventories than firms that are more financially constrained. Finally, the authors find that customers hold the larger fraction of supply chain inventory in supplier-customer dyads. Practical implications - The authors' results indicate that financial considerations generally play a role in inventory management. However, inventory holdings seem to be influenced only slightly by financing costs and inventory holdings between supplier and customer seem to be less than optimal from a financial perspective. Considering those financial aspects can lead to relevant financial advantages. Originality/value - In contrast to other recent research, the authors study how the financial situation of a firm affects its inventory levels (not vice versa) and also consider inventories from a two-firm perspective.

Item Type:	Journal Article
Creators:	Creators Email ORCID ORCID Put Code Hoberg, Kai UNSPECIFIED orcid.org/0000-0003-2835-572X UNSPECIFIED Protopappa-Sieke, Margarita UNSPECIFIED UNSPECIFIED UNSPECIFIED Steinker, Sebastian UNSPECIFIED UNSPECIFIED UNSPECIFIED
URN:	urn:nbn:de:hbz:38-243514
DOI:	10.1108/IJPDLM-05-2016-0142
Journal or Publication Title:	Int. J. Phys. Distrib. Logist. Manag.
Volume:	47
Number:	6
Page Range:	S. 516 - 536
Date:	2017
Publisher:	EMERALD GROUP PUBLISHING LTD
Place of Publication:	BINGLEY
ISSN:	1758-664X
Language:	English
Faculty:	Unspecified
Divisions:	Unspecified
Subjects:	no entry
Uncontrolled Keywords:	Keywords Language PUBLIC RETAILERS; PERFORMANCE; MANAGEMENT; INVESTMENT; IMPACT; BANKRUPTCY; FORECASTS; COMPANIES; DYNAMICS; INDUSTRY Multiple languages Management Multiple languages
Refereed:	Yes
URI:	http://kups.ub.uni-koeln.de/id/eprint/24351