Determinants of working capital management in Latin American companies/Determinantes de la gestion del capital de trabajo en Latinoamerica/Facteurs determinants de la gestion du capital de travail en amerique latine/Determinantes da gestao do capital de trabalho na America Latina

The aim of this study is to determine the factors that affect working capital management in Latin American companies. Using an unbalanced panel data analysis for companies quoted in five Latin American capital markets it is shown that companies in Argentina, Brazil, Chile and Mexico are holding cash excesses, which could destroy firm value. Results show that the industry cash conversion cycle, the company market power, its future sales and country risk have an influence on the way Latin American companies manage their working capital with significant differences among countries in the region.