Working Capital Management and Firm Performance in Emerging Economies: Evidence from India

Shikha Bhatia and Aman Srivastava

Management and Labour Studies, 2016, vol. 41, issue 2, 71-87

Abstract: This article aims to investigate the relationship between working capital management and firm performance in an emerging market. The analysis is done over a long window spanning across 2000–2014 by using ordinary least square (OLS), fixed- and random-effects model and generalized method of moments (GMM) on 2,327 firm-year observations, a panel data of 179 companies listed on the S&P BSE 500 Index of Bombay Stock Exchange (BSE). For robustness, in addition to accounting performance, market-based performance measure has also been employed to measure firm performance. This study based on India finds a negative relationship between the working capital management and firm performance, necessitating the need to efficiently manage the working capital for enhanced profitability.

Keywords: Working capital management; cash conversion cycle; profitability; emerging markets; India; panel data; GMM (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:sae:manlab:v:41:y:2016:i:2:p:71-87

DOI: 10.1177/0258042X16658733

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