[{"data":1,"prerenderedAt":-1},["ShallowReactive",2],{"doc-detail-122482-en":3,"doc-seo-122482-105":30,"detail-sidebar-cat-0-en-105":91},{"code":4,"msg":5,"data":6},0,"success",{"doc_id":7,"user_id":8,"nickname":9,"user_avatar":10,"doc_module":4,"category_id":11,"category_name":12,"doc_title":13,"doc_description":14,"doc_content":15,"file_id":16,"file_url":17,"file_type":18,"file_size":19,"view_count":4,"is_deleted":4,"is_public":20,"is_downloadable":20,"audit_status":20,"page_count":21,"language":22,"language_code":23,"site_id":24,"html_lang":23,"table_of_contents":25,"faqs":26,"seo_title":27,"seo_description":14,"update_tm":28,"read_time":29},122482,1374391974585,"Genevieve","https://ap-avatar.wpscdn.com/davatar_276721f389ce27ea32af1340a28f341c",8,"Research & Report","Working capital financing and firm performance - a machine learning approach","Companies must balance risk and return across investment choices, financing structures, and daily operations. This study examines how ownership status, firm size, and leverage moderate the relationship between short-term borrowings and profitability across six sectors of Chinese firms. Using principal component analysis to construct master proxies, the work compares decision tree regression and random forest regression against a fixed effects model. Results support an inverted U-shaped linkage between working capital finance and profitability, with sector exceptions and clear dependence on ownership, size, and leverage.","University of Groningen  \nWorking capital financing and firm performance  \nMahmood, Faisal; Ahmed, Zahoor; Hussain, Nazim; Ben-Zaied, Younes  \nPublished in:  \nReview of Quantitative Finance and Accounting  \nDOI:  \n10.1007/s11156-023-01185-w  \nIMPORTANT NOTE: You are advised to consult the publisher's version (publisher's PDF) if you wish to cite from it. Please check the document version below.  \nDocument Version  \nPublisher's PDF, also known as Version of record  \nPublication date: 2025  \nLink to publication in University of Groningen/UMCG research database  \nCitation for published version (APA):  \nMahmood, F. , Ahmed, Z. , Hussain, N. , & Ben-Zaied, Y. (2025) . Working capital financing and firm performance: A machine learning approach. Review of Quantitative Finance and Accounting , 65(1), 71-  \n106. [https://doi.org/10.1007/s11156-023-01185-w](https://doi.org/10.1007/s11156-023-01185-w)  \nCopyright  \nOther than for strictly personal use, it is not permitted to download or to forward/distribute the text or part of it without the consent of the author(s) and/or copyright holder(s), unless the work is under an open content license (like Creative Commons) .  \nThe publication may also be distributed here under the terms of Article 25fa of the Dutch Copyright Act, indicated by the “Taverne” license. More information can be found on the University of Groningen website: [https://www.rug.nl/library/open-access/self-archiving-pure/taverne](https://www.rug.nl/library/open-access/self-archiving-pure/taverne)amendment.  \nTake-down policy  \nIf you believe that this document breaches copyright please contact us providing details, and we will remove access to the work immediately and investigate your claim.  \nDownloaded from the University of Groningen/U MCG research database (Pure): [http://www.rug. nl/research/portal. For technical reasons the](http://www.rug. nl/research/portal. For technical reasons the)[ ](http://www.rug. nl/research/portal. For technical reasons the)[number of authors shown on this cover page is limited to 10 maximum.](number of authors shown on this cover page is limited to 10 maximum.)  \nDownload date: 30-12-2025  \nReview of Quantitative Finance and Accounting (2025) 65:71–106  \n[https://doi.org/10.1007/s1](https://doi.org/10.1007/s1)1156-023-01185-w  \nORIGINAL RESEARCH  \nWorking capital financing and firm performance: a machine learning approach  \nFaisal Mahmood1 · Zahoor Ahmed2,3 · Nazim Hussain4,5 · Younes Ben‑Zaied6  \nAccepted: 18 July 2023 / Published online: 1 August 2023  \n© The Author(s), under exclusive licence to Springer Science+Business Media, LLC, part of Springer Nature 2023  \nAbstract  \nCompanies always try to balance the risk and return on their investments, finances, and daily operations. This study presents the moderating role of ownership status, company size, and leverage level while investigating the relationship between short-term-borrowingsand profitability in six sectors of Chinese firms. Contrary to the prevalent literature, the current study creates master proxies, via principal component analysis, for major analysis. Two machine learning techniques, decision tree regression, and random forest regression algorithms, are compared with the fixed effect model to find the better estimation approach. The findings confirm the existence of an inverted U-shaped relationship between working capital finance and profitability in six sectors except the textile, significantly affected by ownership structure, company size, and leverage level. Various policy implications are suggested for company managers as well as lending organizations.  \nKeywords Short-term borrowings · Working capital finance · Profitability · Principal component analysis · Decision tree regression · Random forest regression  \n* Younes Ben-Zaied[ybenzaied@edcparis.edu](ybenzaied@edcparis.edu)  \nFaisal Mahmood  \n[faisal_mahmood217@yahoo.com](faisal_mahmood217@yahoo.com)  \nZahoor Ahmed  \n[zahoor.ahmed@baucyprus.edu.tr](zahoor.ahmed@ba","cbCaipaWGEKO6Pwe","https://ap.wps.com/l/cbCaipaWGEKO6Pwe","pdf",1918432,1,37,"English","en",105,"# Introduction\n## Financing theories and prior evidence\n## Motivation and study focus\n# Methodology\n## Data and variable construction\n## Machine learning models vs. fixed effects\n# Results\n## Inverted U-shaped relationship findings\n## Moderating effects: ownership, size, leverage\n# Policy implications\n## Guidance for managers and lending organizations","[{\"question\":\"What relationship does the study find between working capital financing and profitability?\",\"answer\":\"The findings confirm an inverted U-shaped relationship between working capital finance and profitability in six sectors, with an exception for the textile sector.\"},{\"question\":\"Which moderating factors are analyzed in the study?\",\"answer\":\"Ownership status, company size, and leverage level are tested as moderating factors affecting the short-term borrowings–profitability relationship.\"},{\"question\":\"How do the authors estimate the relationship using machine learning?\",\"answer\":\"They create master proxies via principal component analysis and compare decision tree regression and random forest regression with a fixed effect model to identify the better estimation approach.\"}]","Working capital financing and firm performance - a machine learning approach | PDF",1785810884,93,{"code":4,"msg":31,"data":32},"ok",{"site_id":24,"language":23,"slug":33,"title":13,"keywords":34,"description":14,"schema_data":35,"social_meta":86,"head_meta":88,"extra_data":90,"updated_unix":28},"working-capital-financing-and-firm-performance-a-machine-learning-approach","",{"@graph":36,"@context":85},[37,54,68],{"@type":38,"itemListElement":39},"BreadcrumbList",[40,44,48,51],{"item":41,"name":42,"@type":43,"position":20},"https://docshare.wps.com","Home","ListItem",{"item":45,"name":46,"@type":43,"position":47},"https://docshare.wps.com/document/","Document",2,{"item":49,"name":12,"@type":43,"position":50},"https://docshare.wps.com/document/research-report/",3,{"item":52,"name":13,"@type":43,"position":53},"https://docshare.wps.com/document/working-capital-financing-and-firm-performance-a-machine-learning-approach/122482/",4,{"url":52,"name":13,"@type":55,"author":56,"headline":13,"publisher":58,"fileFormat":61,"inLanguage":23,"description":14,"dateModified":62,"datePublished":62,"encodingFormat":61,"isAccessibleForFree":63,"interactionStatistic":64},"DigitalDocument",{"name":9,"@type":57},"Person",{"url":41,"name":59,"@type":60},"DocShare","Organization","application/pdf","2026-08-04",true,{"@type":65,"interactionType":66,"userInteractionCount":4},"InteractionCounter",{"@type":67},"ViewAction",{"@type":69,"mainEntity":70},"FAQPage",[71,77,81],{"name":72,"@type":73,"acceptedAnswer":74},"What relationship does the study find between working capital financing and profitability?","Question",{"text":75,"@type":76},"The findings confirm an inverted U-shaped relationship between working capital finance and profitability in six sectors, with an exception for the textile sector.","Answer",{"name":78,"@type":73,"acceptedAnswer":79},"Which moderating factors are analyzed in the study?",{"text":80,"@type":76},"Ownership status, company size, and leverage level are tested as moderating factors affecting the short-term borrowings–profitability relationship.",{"name":82,"@type":73,"acceptedAnswer":83},"How do the authors estimate the relationship using machine learning?",{"text":84,"@type":76},"They create master proxies via principal component analysis and compare decision tree regression and random forest regression with a fixed effect model to identify the better estimation approach.","https://schema.org",{"og:url":52,"og:type":87,"og:title":13,"og:site_name":59,"og:description":14},"article",{"robots":89,"canonical":52},"index,follow",{"doc_id":7,"site_id":24},{"code":4,"msg":5,"data":92},[93,97,101,105,110,115,120,123,128,131,135],{"id":20,"doc_module":4,"doc_module_name":46,"category_name":94,"show_sort_weight":95,"slug":96},"Story & Novel",90,"story-novel",{"id":47,"doc_module":4,"doc_module_name":46,"category_name":98,"show_sort_weight":99,"slug":100},"Literature",80,"literature",{"id":53,"doc_module":4,"doc_module_name":46,"category_name":102,"show_sort_weight":103,"slug":104},"Exam",70,"exam",{"id":106,"doc_module":4,"doc_module_name":46,"category_name":107,"show_sort_weight":108,"slug":109},5,"Comic",60,"comic",{"id":111,"doc_module":4,"doc_module_name":46,"category_name":112,"show_sort_weight":113,"slug":114},6,"Technology",50,"technology",{"id":116,"doc_module":4,"doc_module_name":46,"category_name":117,"show_sort_weight":118,"slug":119},7,"Healthcare",40,"healthcare",{"id":11,"doc_module":4,"doc_module_name":46,"category_name":12,"show_sort_weight":121,"slug":122},30,"research-report",{"id":124,"doc_module":4,"doc_module_name":46,"category_name":125,"show_sort_weight":126,"slug":127},9,"Religion & Spirituality",20,"religion-spirituality",{"id":126,"doc_module":4,"doc_module_name":46,"category_name":129,"show_sort_weight":126,"slug":130},"World Cup","world-cup",{"id":132,"doc_module":4,"doc_module_name":46,"category_name":133,"show_sort_weight":132,"slug":134},10,"Lifestyle","lifestyle",{"id":136,"doc_module":4,"doc_module_name":46,"category_name":137,"show_sort_weight":106,"slug":138},19,"General","general"]