Contextualized Identification of the Asset Structure-Earnings Relationship: The A-share Evidence of Industry/Size Moderation and Working Capital Mechanisms (2018–2024)

Qiannong Yu

doi:10.6981/FEM.202512_6(12).0003

Authors

Qiannong Yu

DOI:

https://doi.org/10.6981/FEM.202512_6(12).0003

Keywords:

Asset Structure; Profitability; Moderation; Working-Capital Efficiency; A-share.

Abstract

This paper examines how a firm’s asset structure-disaggregated into current, fixed and intangible assets-relates to profitability and how this relationship varies by context. Using Chinese A-share non-financial listed firms from 2018–2024, we estimate two-way fixed-effects models, then validate with system-GMM and panel quantile regressions. We further test a mediation channel via working-capital efficiency (proxied by the cash conversion cycle), and moderation by industry attributes and firm size. Results show that intangible-asset intensity is positively associated with ROA/ROE, whereas high shares of current and fixed assets are associated with lower profitability. The positive effect of intangibles is stronger in high-tech industries and for larger firms. Mechanism tests indicate that approximately two-fifths of the negative effect of current-asset share operates through reduced working-capital efficiency (a lengthened cash conversion cycle). Findings are robust to alternative measures and sample restrictions. The study advances contextual identification of the asset structure–earnings link and provides actionable implications: firms should manage liquid-asset buffers and fixed-asset commitments prudently, while building intangible capital where it can be effectively commercialized, especially in technology-intensive sectors and at larger scales.

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