Working capital management policy in health care: The effect of leverage

The impact of digital financial development on corporate leverage ratio: The case of a-share listed non-financial enterprises in China's Shanghai and Shenzhen stock exchanges

This study investigates the impact of digital finance on corporate leverage ratios. The study employed a large sample of China's Shanghai and Shenzhen A-share non-financial listed enterprises from 2011-2020. The study's results depict that the development of digital finance can significantly reduce the leverage ratio of enterprises. We empirically identified that digital finance affects the difference in the term structure of the corporate leverage ratio. It was found that the development of digital finance has a significant negative impact on enterprises' short-term and long-term leverage ratios. Moreover, our heterogeneity analysis shows that the negative effect of digital financial development on corporate leverage ratios is different in state-owned and non-state-owned enterprises, large-scale and small-scale enterprises, and high-leverage and low-leverage enterprises. Mechanism analysis shows that the development of digital finance can reduce corporate leverage by lowering financing costs, alleviating financing constraints, and weakening non-systemic risks. Therefore, policymakers should focus on developing and adopting digital finance by creating a supportive regulatory environment, improving access to digital financial services, and encouraging innovation in the digital finance sector. Finally, our results remain robust after addressing endogeneity issues and conducting robustness checks.

Does working capital management improve financial performance in China's agri-food sector during COVID-19? A comparison with the 2008 financial crisis

The objective of this study is to explore the impact of working capital management on firms' financial performance in China's agri-food sector from 2006 to 2021. In addition, we analyze whether this impact is the same during the 2008 financial crisis and the 2020 COVID-19 crisis. Working capital management is measured by working capital investment policy (measured by current assets to total assets ratio), working capital financing policy (measured by current liabilities to total assets ratio), cash conversion cycle, and net working capital ratio. The results reveal that current assets to total assets ratio and net working capital ratio positively influence financial performance measured through return on assets (ROA), while current liabilities to total assets ratio and cash conversion cycle negatively influence ROA. We also find that the relationship between working capital management and financial performance is more affected during COVID-19 than in the 2008 financial crisis. The findings might provide important implications for company managers to make optimal working capital management practices, depending on the economic environment.

R&D investment and financial performance in EU countries: The role of shareholder protection and creditor rights in renewable energy firms

Renewable energy sources have become a priority for countries' energy agendas due to climate change. Accordingly, the financial performance of renewable energy firms should be enhanced through research and development (R&D) investment to achieve the energy transition. The positive effect of R&D investment on financial performance is well documented in the literature. However, it is not clear whether this positive effect varies or not depending on the institutional characteristics of countries, such as shareholder protection and creditor rights. This study examines whether shareholder protection, on the one hand, and creditor rights, on the other, have any moderating effect on the R&D-financial performance nexus by using firm-level data from 912 renewable energy firms in 21 European Union countries from 2011 to 2020. The results show that shareholder protection strengthens the positive effect of R&D investment on the financial performance of renewable energy firms, while creditor rights negatively moderate this relationship. Thus, firms operating in countries with strong shareholder protection (creditor rights) invest more (less) in R&D activities, which leads to an increase (decrease) in financial performance. Consequently, policymakers may consider policy changes that encourage shareholders and discourage creditors from maximizing their R&D investments, which increase financial performance.

Analyzing the Efficiency of Working Capital Management: a New Approach Based on DEA-Malmquist Technology

In this study, we analyze the efficiency of working capital management (WCME) for Gulf companies before and during the coronavirus crisis, then explore the influence of the coronavirus crisis on WCME. This study uses several techniques to achieve its goals, including the Malmquist index (MI), data envelopment analysis (DEA), and Tobit regression. The results demonstrate that most firms (approximately 84%) adopt a conservative strategy for their WCM. The WCME results revealed a statistical difference in the technological and pure efficiency scores for companies before and during the coronavirus crisis, while the results revealed no statistical difference in the technical, scale, and total factor productivity scores. Tobit’s results show that the coronavirus crisis had no significant influence on companies’ WCM performance. Finally, our results indicate that firms that are efficient in terms of WCM have higher sales returns and net income. The findings of this study have important implications for stakeholders to increase their awareness of companies’ WCM performance before and during a crisis. In addition, the results could have implications for trading strategies as investors and financiers seek to invest in companies with good WCM. The implications of WCM performance on social interests would cause decision-makers to use the best strategies and procedures to enhance WCM activities to improve their investments and image in the community in which it operates. We advance a novel contribution to the literature by analyzing and appraising the WCME for companies before and during the coronavirus crisis using a new approach based on DEA-Malmquist technology and then examining whether the coronavirus crisis has affected the WCME.

Bibliometric Analysis for Working Capital: Identifying Gaps, Co-Authorships and Insights from a Literature Survey

From a financial perspective, working capital represents the liquidity of firms that makes them able to deal with short-term liabilities in current assets (inventories, receivables accounts, and net financial resources). However, this concept is also considered in scientific literature as, among other meanings, stock of productive capital, or variables costs. Considering the importance of working capital in a firms’ dynamics, the principal objective of this study is to highlight the main gaps and insights in literature concerning working capital and to suggest future research. For this purpose, bibliometric analysis was carried out through bibliographic information from both the Web of Science Core Collection and from the Scopus for the topic of “working capital”. These data were first worked through bibliometric approaches, considering the VOSviewer and Gephi software and later surveyed through a literature review. As the main insights, it is worth highlighting that there are several gaps in related literature, where the most worrying is the weak reference to sustainability or sustainable development concepts. Finally, the majority of the networked research was focused on just a few authors, organizations, and countries.

Effects of the COVID-19 Global Crisis on the Working Capital Management Policy: Evidence from Poland

The paper aims to investigate the effects of the COVID-19 pandemic on working capital management policies among Polish small and medium-sized enterprises operating in Group Purchasing Organizations (GPOs). The results show that the firms adopted a moderate–conservative strategy for their working capital management. Moreover, the evidence confirms that the COVID-19 pandemic crisis did not change Working Capital Management (WCM) strategies significantly. The companies that have high financial security as a result of the high ratio of Liquidity, Quick, and cash conversion cycle (CCC) have tried to attract more new customers in the market by increasing the due date of accounts receivable so they can improve their sales performance, and also reduce the liabilities turnover to be able to work with more suppliers in the market. Moreover, among the various WCM strategies, the companies with a higher CCC ratio, along with those whose bulk of current assets consisted of accounts receivable and short-term investments, managed to have higher sales returns. Finally, our outcomes indicate that the firms operating in large cities have lower sales returns, meaning even Polish small and medium-sized enterprises’ ability within GPOs with the aid of the central unit can also get high return on sales (ROS) results.

Quality Management Systems and Working Capital SMEs in GPO—A Case of Poland

Working capital is designed to provide enterprises with financial security. Its level depends on the strategy of managing individual elements of working capital. An appropriate management strategy allows companies to obtain added working capital. Working capital management is a difficult process as it concerns both current assets and current liabilities. Therefore, company managers are constantly looking for solutions, methods and tools that will help them to manage their working capital. A quality management system is the one that facilitates control over the management of individual elements that create net working capital. The introduction of appropriate procedures derived from quality management systems in specific areas is a great support for creating a positive net working capital. The aim of this paper is to show how the introduction of quality management systems can positively affect the level of working capital. The article presents how quality management systems allow for optimizing the level of individual components, creating a positive net working capital. The research was carried out on a group of 102 Polish small trading companies operating in the same industry. The enterprises were divided into two groups of companies applying the quality management system and of those that did not use such systems. Based on the financial statements for the years 2017–2019 and by means of appropriately selected financial ratios, an analysis of the impact of quality management systems on net working capital was carried out. The results in some areas of management of individual components of net working capital in different groups of enterprises were compared. The research was carried out with the application of appropriate statistical methods. The analysis showed that enterprises using quality management systems managed working capital more efficiently. In the literature, the subject of the impact of quality management systems on working capital is not popular. This paper may be a source for further, extended research and considerations regarding the impact of quality management on the level of working capital in enterprises.

Influences of career establishment strategies on generation Y’s self-directedness career

Purpose

The purpose of this paper is to examine the influence of generation Y’s career establishment strategies on self-directedness career and to determine the moderation effect of gender on the relationship.

Design/methodology/approach

Data were collected from 188 full-time employees from different functional areas and departments of selected MNCs in Malaysian Electrical and Electronic Industry. Partial least squares structural equation modeling was used to examine the influences of establishment strategies and the moderating role of gender on self-directedness career.

Findings

Findings show that there are significant positive relationship between career strategies and self-directedness career at career establishment stages of generation Y. There is a significant difference between males and females in career establishment strategy (i.e. creating career opportunities) and self-directedness career.

Research limitations/implications

This paper explains self-directedness career based on the review of related career literatures whereby some may not specifically referring to Generation Y.

Practical implications

Such insights are useful for HRD practitioners dto develop relevant HRD interventions to assist individuals and organizations in career development.

Originality/value

This paper offers new insight into the predictors of self-directedness career and the moderating role of gender on the relationships.

Moderating Effects of Firm Size and Leverage on the Working Capital Finance–Profitability Relationship: Evidence from China

We evaluated the moderating effects of firm size and leverage on the working capital finance (WCF)–profitability relationship among Chinese companies during 2000–2017. Applying the generalized method of moments (GMM) technique on panel data, we observed that firm size and leverage have strong moderating roles in the WCF–profitability relationship. We observed that small or low-leverage firms have an inverted U-shaped WCF–profitability relationship. However, this relationship is U-shaped for large or high-leverage firms. We report break-even points in these relationships that show the portion of short-term debt in working capital financing. The results reveal that the break-even point for all subgroups (small, large, low-leverage, and high-leverage firms) decreases compared to the break-even point of the full sample. This study shows how the break-even point of the WCF–profitability relationship shifts when a company expands or its leverage level changes. Managers can use this information for profit maximization.