Purpose The purpose of this paper is to examine the impact of working capital management (WCM) on profitability under different financial conditions (constraint/unconstraint) and WCM policy (aggressive/conservative). Furthermore, the study investigates the existence of optimal working capital levels under different financial conditions and WCM policy. Design/methodology/approach Two-step system generalized method of moments and fixed effect models are used to analyze the data collected from Prowess database from 2011 to 2020 for a sample of 1,104 Indian manufacturing companies. Findings The study finds an inverted U-shaped relationship between working capital and profitability in all financial conditions and working capital policy. This finding advocates the existence of an optimal level of working capital that equates the costs and benefits of holding working capital to maximize the companies’ profitability. However, holding working capital beyond the optimal level negatively affects profitability. Companies under financial constraints with aggressive working capital policies have the lowest optimal cash conversion cycle (CCC). Furthermore, the relationship of working capital with profitability and the optimal CCC varies owing to firm age and industry group. Originality/value To the best of the authors’ knowledge, this is the first paper that incorporates the impact of working capital on firm’s performance from both financial constraint (unconstraint) and aggressive (conservative) working capital policy perspectives in the Indian context. Furthermore, this study also contributes in terms of reflecting the effect of firm age and industry in determining the optimum CCC of the firms.

Cash holding is an important area of recent debate in corporate finance due to its growing significance in the changing corporate settings. Further, the varying significance of cash holdings across industries is also adding another dynamic to corporate finance literature. Under these backdrops, this paper investigates the influence of firm characteristics on cash holdings in Indian Iron & Steel industry over 2007 -2019. To mitigate the potential endogeneity problem in the data, the study uses dynamic panel regression i.e., Generalized Method of Moments (GMM). The regression result documents that firm characteristics viz cash flow, dividend, assets tangibility, and profitability positively influence the cash holdings while firm size, leverage, net working capital, and R&D expenditure negatively influence cash holdings. However, the influence of growth opportunities is insignificant. Further, the study reveals that leverage, cash flow, and R&D expenditure are the prominent firm characteristics influencing cash holdings in the Iron & Steel industry. This paper adds to the present literature concerning cash holdings by tracing out the firm-level factors affecting cash holdings in the Iron & Steel industry.

This paper examines the effect of Covid-19 on currency exchange rate behaviour by taking a sample of 37 countries over a period from 4th January 2020 to 30th April 2021. Three variables, such as daily confirmed cases, daily deaths, and the world pandemic uncertainty index (WPUI), are taken as the measure of Covid-19. By applying fixed-effect regression, the study documents that the exchange rate behaves positively to the Covid-19 outbreak, particularly to daily confirmed cases and daily deaths, which implies that the value of other currencies against the US dollar has been depreciated. However, the impact of WPUI is insignificant. On studying the time-varying impact of the pandemic, the study reveals that the Covid-19 has an asymmetric impact on exchange rate over different time frames. Further, it is observed that though daily confirmed cases and daily deaths show a uniform effect, WPUI puts an asymmetric effect on the exchange rate owing to the nature of economies.

This study aims at analyzing whether ownership structure (i.e., if a firm is a group affiliate or standalone) affects cash holdings of manufacturing firms in India. It also makes a comparative analysis of the drivers of cash holdings such as firm size, growth opportunities, leverage, cash flow, dividend, net working capital, R&D, tangibility, profitability, and firm age for group affiliated and standalone firms. By applying a fixed-effect model with a sample of 500 firms over a period from 2007 to 2019, the study reveals that group affiliates accumulate less cash than standalone firms. Further, this paper demonstrates that the impact of drivers of cash holdings also differs between the group affiliate and standalone firms.The study carries a lot of significance to the managers in understanding the dynamics between ownership structure and cash holdings and deciding the appropriate level of cash by considering firm characteristics in the light of ownership structure. The findings are also useful for bankers, regulators, credit rating agencies, investors in assessing the cash holding behavior of firms with respect to the ownership structure.