Working capital management and firm performance: are their effects same in covid 19 compared to financial crisis 2008?

Ahmad, Mazida; Bashir, Rabia; Waqas, Hamid

doi:10.1080/23322039.2022.2101224

Cited by 35 publications

(59 citation statements)

References 59 publications

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“…This finding is consistent with previous findings, such as those of Zimon and Tarighi [21], which confirmed that COVID-19 does not significantly influence WCM efficiency in Polish firms. Moreover, these outcomes are inconsistent with prior findings, such as those of Ahmad et al [38], which confirm that WCM efficiency was more significantly and negatively influenced by COVID-19. Hamshari et al [39] indicate that COVID-19 negatively impacts WCM efficiency in Jordanian firms.…”

Section: Tobit Regression Resultscontrasting

confidence: 99%

“…Moreover, Ahmad et al [ 38 ] investigated the impact of COVID-19 on efficiency of WCM compared with the 2008 financial crisis using a sample of 577 firms from three developing Asian countries from 2004 to 2020. The results reveal that WCM efficiency was more significantly and negatively influenced during the COVID-19 crisis than during the financial crisis of 2008.…”

Section: Literature Reviewmentioning

confidence: 99%

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Evaluating the Super-Efficiency of Working Capital Management Using Data Envelopment Analysis: Does COVID-19 Matter?

Habib¹,

Kayani

2023

Oper. Res. Forum

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This study evaluates the working capital management (WCM) super-efficiency in UAE firms and determines how the COVID-19 crisis may affect WCM super-efficiency from a statistical perspective. Data envelopment analysis (DEA), difference tests, and Tobit regression techniques are used. Integration of DEA with Tobit regression is required to recognize the potential statistical consequence of COVID-19 on the super-efficiency of WCM. The results show that WCM super-efficiency is moderate and requires decision-makers' corrective measures to attain best practices. The study results show no significant difference in WCM super-efficiency, and COVID-19 does not significantly influence WCM super-efficiency. The results would rouse decision-makers' interests, who would look into the firm's efficiency and weak spots. They would then take major steps to improve efficiency and achieve the best practices. Stakeholders such as managers, financiers, and investors may need these results to monitor how firms manage their assets and liabilities. We contribute to the literature by investigating and evaluating firms' WCM super-efficiency pre and post the COVID-19 pandemic employing a unique technique based on DEA super-efficiency and examining whether COVID-19 has affected WCM super-efficiency to extend the scope of knowledge and stressing the importance of sound WCM, especially in periods of economic distress.

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Section: Tobit Regression Resultscontrasting

confidence: 99%

Section: Literature Reviewmentioning

confidence: 99%

Evaluating the Super-Efficiency of Working Capital Management Using Data Envelopment Analysis: Does COVID-19 Matter?

Habib¹,

Kayani

2023

Oper. Res. Forum

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“…The results showed that WCM has a significant positive association with financial performance. A study by Ahmad et al (2022) selected a sample of 577 companies from three countries in Asia between 2004 and 2020 to establish how WCM affected firm performance. The study documented that the CCC significantly increased ROA.…”

Section: Literature Review and Hypotheses Development 21 A Brief Over...mentioning

confidence: 99%

The impact of working capital management on the profitability of listed halal food and beverage companies

Umar,

Al-Faryan

2023

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PurposeThis study investigated how working capital management (WCM) influences the profitability of listed halal food and beverage companies.Design/methodology/approachThe study utilized a sample of 56 listed halal food and beverage companies operating in Indonesia, Malaysia, Saudi Arabia, Pakistan and the United Arab Emirates (UAE). Unbalanced panel data were generated from the Bloomberg database between 2008 and 2021. Besides, the study employed the two-step system generalized method of moments (GMM) technique for the estimation, which can address the models' endogeneity, heteroskedasticity and autocorrelation problems. Also, feasible generalized least square (FGLS) regression was applied to check the robustness of the results.FindingsThe study revealed that the cash conversion cycle (CCC) and accounts receivable period (ARP) significantly reduced firm profitability. Also, the inventory conversion period (ICP) significantly reduced return on assets (ROA) but insignificantly influenced return on equity (ROE). However, the results showed that the accounts payable period (APP) significantly increased firm profitability. These findings are robust to the results obtained by applying FGLS regression.Research limitations/implicationsThe study utilized a sample of only the listed halal food and beverage firms that operate in Indonesia, Malaysia, Saudi Arabia, Pakistan and the United Arab Emirates (UAE).Practical implicationsThe study suggests that the management of listed halal firms should adopt an aggressive policy in managing their working capital in order to enhance their financial performance. This could be attained by lowering CCC when ARP and ICP are reduced and APP is increased.Originality/valueThis study contributes to the literature by providing cross-country empirical evidence showing how working capital and its components affect the financial performance of firms that solely produce or buy and sell halal food and beverage products in five countries.

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“…In another work, Ahmad et al. [75] considered a long horizon 2004 to 2020 for delving into the interrelationship of working capital management and organizational performance and the effect of the pandemic. The study on 577 units from the developing countries in Asia considering working capital policy, cash conversion cycle, net working capital (working capital management) and return on asset and Tobin’s Q (as indicators for firm performance) revealed that both working capital and return got affected by COVID-19 and working capital management has a causal bearing on return.…”

Section: Related Workmentioning

confidence: 99%

A multi-criteria based analytic framework for exploring the impact of Covid-19 on firm performance in emerging market

Biswas

Bandyopadhyay

Mukhopadhyaya

2022

Decision Analytics Journal

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Working capital management and firm performance: are their effects same in covid 19 compared to financial crisis 2008?

Cited by 35 publications

References 59 publications

Evaluating the Super-Efficiency of Working Capital Management Using Data Envelopment Analysis: Does COVID-19 Matter?

Evaluating the Super-Efficiency of Working Capital Management Using Data Envelopment Analysis: Does COVID-19 Matter?

The impact of working capital management on the profitability of listed halal food and beverage companies

A multi-criteria based analytic framework for exploring the impact of Covid-19 on firm performance in emerging market

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