Is Inventory Investment an Opportunity to Improve Performance, or a Challenge to Make It Worse?

Document Type : Research Paper

Authors

1 Assistant Professor of Accounting, University of Ferdowsi, Mashhad, Iran.

2 Associate Professor of Accounting, University of Ferdowsi, Mashhad, Iran.

3 Ph.D. Student of Accounting, University of Ferdowsi, Mashhad, Iran.

10.22103/jak.2019.12148.2696

Abstract

Objective: Given the importance of lean inventory and inventory cost as barrier to better performance, there is the challenge of whether absorption costing with higher production and more inventory lead to improved performance, or inventory costs overcome the benefit of absorption costing and makes the performance worse. This study aimed to examine the relationship between inventory investment and company’s performance.
Method: In line with positive accounting research, this study used panel data analysis with data from 163 companies listed in the Tehran Stock Exchange from 2009 to 2016.
Results: Findings showed that there is no significant relationship between inventory investment and company’s performance. Furthermore, the findings indicated a significant relationship between changes in inventory investment and sales growth.
Conclusion: Inventory holding in the Iranian companies could not have statistically significant effects on company performance.

Keywords

References

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Journal of Accounting Knowledge
Volume 10, Issue 4 - Serial Number 39
December 2019
Pages 121-142

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History

  • Receive Date: 13 May 2018
  • Revise Date: 21 October 2018
  • Accept Date: 04 August 2019

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