IDEAS home Printed from https://ideas.repec.org/a/eme/ijppmp/ijppm-10-2019-0468.html
   My bibliography  Save this article

Working capital management, firm performance and nature of business

Author

Listed:
  • Kumar Sanjay Sawarni
  • Sivasankaran Narayanasamy
  • Kanagaraj Ayyalusamy

Abstract

Purpose - This paper aims to investigate the impact of the efficiency of working capital management (WCM) on the performance of a sample of Indian companies and explore how the nature of the firm's business influences the significance and direction of this impact. Design/methodology/approach - The data for this study were collected for the period of 2012–2018 for 414 non-financial firms listed on the Bombay Stock exchange. Fixed-effect regression models were run by taking Tobin'sQand return on equity (ROE) as dependent variables, and net trade cycle (NTC) and its components as explanatory variables in the presence of liquidity, leverage, size, age and growth as control variables. Sample firms were segregated into manufacturing, trading and service groups, and regression models were used for all the groups to understand the effect of the nature of a firm's business. Findings - WCM efficiency has a significant impact on the performance of the sample firms. Non-financial Indian firms deliver better financial performance by maintaining lower NTC. Like NTC, its components also impact firm value and profitability. The results report that the significance of the relationship varies depending upon the nature of the firm's business. Originality/value - The previous research studies had not used a sample of large number of Indian firms. Unlike previous studies, this study reports the influence of the nature of business on the relationship between WCM and firm performance. Further, this paper also examines how the individual components of working capital influence the performance of Indian firms.

Suggested Citation

  • Kumar Sanjay Sawarni & Sivasankaran Narayanasamy & Kanagaraj Ayyalusamy, 2020. "Working capital management, firm performance and nature of business," International Journal of Productivity and Performance Management, Emerald Group Publishing Limited, vol. 70(1), pages 179-200, March.
    • Handle: RePEc:eme:ijppmp:ijppm-10-2019-0468
    DOI: 10.1108/IJPPM-10-2019-0468
    as

    Download full text from publisher

    File URL: https://www.emerald.com/insight/content/doi/10.1108/IJPPM-10-2019-0468/full/html?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://www.emerald.com/insight/content/doi/10.1108/IJPPM-10-2019-0468/full/pdf?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://libkey.io/10.1108/IJPPM-10-2019-0468?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sawarni, Kumar Sanjay & Narayanasamy, Sivasankaran & Padhan, Purna Chandra, 2023. "Impact of earnings management on working capital management efficiency," Finance Research Letters, Elsevier, vol. 54(C).
    2. Shrikant Krupasindhu Panigrahi & Maryam Juma Al Farsi & Sumathi Kumaraswamy & Muhammad Waris Ali Khan & Faisal Rana, 2022. "Working Capital Management and Shareholder’s Wealth Creation: Evidence from Manufacturing Companies Listed in Oman," IJFS, MDPI, vol. 10(4), pages 1-16, September.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eme:ijppmp:ijppm-10-2019-0468. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Emerald Support (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.