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Does the efficiency of working capital management and environmental, social, and governance performance affect a firm’s value? Evidence from the United States

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  • Habib Ahmed Mohamed

    (Independent Accounting and Finance Researcher, Zagazig, Egypt)

Abstract

This study evaluates the efficiency of U.S. firms’ working capital management (WCME) by employing the data envelopment analysis technique (DEA). This study uses regression analysis to examine the impact of WCME and environmental, social, and governance (ESGP) performance on U.S. firm value. This study uses a data sample consisting of 964 firm-year observations from a longitudinal panel collected from 2016 to 2019. Endogeneity issues and the employment of additional analyses for robustness were considered. The results indicated that most firms under investigation were relatively inadequate regarding WCME and required correctional efforts by decision-makers to accomplish most reasonable efficiency, directly related to enhancing firm sales and net income. Additionally, the results reveal significant and positive influences of WCME and ESGP on firm value. The implications of this study would push decision-makers to employ the most reasonable procedures and strategies to improve the activities of a firm’s WCM and ESG to boost its value and excel in the business environment.

Suggested Citation

  • Habib Ahmed Mohamed, 2022. "Does the efficiency of working capital management and environmental, social, and governance performance affect a firm’s value? Evidence from the United States," Financial Markets, Institutions and Risks, Sciendo, vol. 6(3), pages 18-25, September.
    • Handle: RePEc:vrs:fmiris:v:6:y:2022:i:3:p:18-25:n:6
    DOI: 10.21272/fmir.63.18-25.2022
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    Keywords

    Data envelopment analysis; Efficiency; Environmental; ESG; Governance; Performance; Social; WCM; United States; Working capital management;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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