Working capital (mis)management – impact of executive age

Hari P. Adhikari, Marcin W. Krolikowski, James Malm and Nilesh B. Sah

Accounting and Finance, 2021, vol. 61, issue 1, 727-761

Abstract: Several recent studies have used the upper echelons theory to explain the impact of personal traits of top executives on various corporate policies. In this, first of its kind, study we find that older executives invest more in working capital; take longer to convert inventories to cash; and pay their suppliers sooner. These findings are consistent with the argument that risk aversion increases with executive age. Our findings indicate that executive age has significant bearing on working capital management policies. This study also initiates new avenues in research relating behavioral aspect of executives with short‐term financial management.

Date: 2021
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