The inverse hockey stick effect: an empirical investigation of the fiscal calendar’s impact on firm inventories
研究了美国制造企业如何在财政年末减少库存以管理盈余和现金流，导致第四季度库存平均降低3.9%-6.0%，形成与销售相反的“反向曲棍球棒效应”。
We empirically investigate how manufacturers’ inventory decisions relate to the fiscal calendar. Although optimal firm inventories should depend on demand and supply, we find that the artificial accounting construct of the fiscal year frequently drives inventory dynamics. In an effort to manage earnings and cash flows (CFs) towards the fiscal year-end (FYE), firms significantly reduce their inventories in the fourth fiscal quarter only to increase their inventories in the next fiscal year. Using a sample of 4877 US manufacturing firms for the period 1990–2010, we find that inventories are 3.9–6.0% lower on average in the fourth fiscal quarter. In the analysis, we control for inventory theory-related factors that have been identified in prior literature. Because this pattern is the inverse of that observed for sales, we refer to this phenomenon as the inverse hockey stick effect. The effect holds for all three individual inventory types: raw materials, work in progress and finished goods. We find that inventory reductions in the fourth fiscal quarter are particularly substantial if firms have an incentive to beat CF targets. In contrast to our expectations, we do not find evidence that financial distress links to inventory reductions at the FYE.