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Impact of working capital management on firm value: an empirical examination of firms listed on the Bombay Stock Exchange in India

Author

Listed:
  • Nabil Ahmed Mareai Senan
  • Mamdouh Abdulaziz Saleh Al-Faryan
  • Suhaib Anagreh
  • Eissa A. Al-Homaidi
  • Mosab I. Tabash

Abstract

This study examines the impact of working capital management on firm value of 2,326 Indian firms listed in the Bombay Stock Exchange (BSE). This study used pooled, fixed and random, and generalised method of moments (GMM) model effect models. Firm value of Indian firms is measured by Tobin-Q is used as a dependent variable, while networking capital, size firm, financial leverage, current ratio, quick ratio, sales growth, annual real GDP and inflation rate are used as independent variables. The results of the current study indicated that firm size, financial leverage, current ratio and quick ratio are the most important factors that affecting firm value of Indian listed firms. The results also revealed that firm size, financial leverage and quick ratio have a negative and significant influence on firm value, except net working capital has a positive and significant effect on firm value. Sales growth, annual real GDP and inflation rate have a positive and insignificant influence on firm value of Indian listed firms during the period of the study.

Suggested Citation

  • Nabil Ahmed Mareai Senan & Mamdouh Abdulaziz Saleh Al-Faryan & Suhaib Anagreh & Eissa A. Al-Homaidi & Mosab I. Tabash, 2022. "Impact of working capital management on firm value: an empirical examination of firms listed on the Bombay Stock Exchange in India," International Journal of Managerial and Financial Accounting, Inderscience Enterprises Ltd, vol. 14(2), pages 138-156.
    • Handle: RePEc:ids:injmfa:v:14:y:2022:i:2:p:138-156
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