Investment and financial constraints in Indian firms: Does working capital smoothen fixed investment?

Altaf, Nufazil; Shah, Farooq Ahmad

doi:10.1007/s40622-018-0178-8

Cited by 23 publications

(47 citation statements)

References 33 publications

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“…In addition, maintaining larger investments in inventories can increase various expenses like warehouse rent, warehouse security expenses etc. (Altaf and Shah, 2018b). Since there are costs and benefits attached to maintaining working capital investments, there are prior reasons to believe that firms may have target working capital requirement that balances the costs and benefits.…”

Section: Literature Review 21 Target Cash Conversion Cyclementioning

confidence: 99%

Financial constraints and speed of working capital adjustment

Ahangar

2020

APJBA

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PurposeThe study examines the existence of target level of working capital and the speed of adjustment toward the target for eight manufacturing sectors of Indian economy. In addition, this study examines the impact of financial constraints on the speed of adjustment.Design/methodology/approachThis study is based on secondary financial data of 1936 Indian manufacturing companies from eight sectors for a period of 18 years (2000–2018). This study employs two-step GMM techniques to arrive at results.FindingsResults of the study confirm that firms do have target working capital, but the speed of adjustment from the current level of working capital to the target working capital is slow, and the speed of adjustment varies across sub-sectors. Moreover, we found that firms that are likely to be less constrained adjust their working capital quickly compared to firms facing high financial constraints.Originality/valueThis study contributes to working capital management literature by examining the speed with which the firms move toward their target and also the impact of financial constraints on the speed of adjustment across eight manufacturing sectors of Indian economy. Further, the study examines the impact of financial constraints on the speed of adjustment.

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Section: Literature Review 21 Target Cash Conversion Cyclementioning

confidence: 99%

Financial constraints and speed of working capital adjustment

Ahangar

2020

APJBA

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“…While financing of working capital might be an important determinant of firm performance, the prior literature on working capital management has largely remained focused on asserting the impact of investment in working capital on firm performance (see e.g. Altaf and Shah, 2018a, b; Singhania and Mehta, 2017; Bhatia and Srivastava, 2016; Tahir and Anuar, 2016). However, few studies have tried to examine the impact of working capital management policies on firm performance (see e.g.…”

Section: Introductionmentioning

confidence: 99%

Working capital financing, firm performance and financial constraints

Altaf

Ahmad

2019

IJMF

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Purpose The purpose of this paper is to examine the relationship between working capital financing and firm performance for a sample of 437 non-financial Indian companies. In addition, this study examines the impact of financial constraints on working capital financing–performance relationship. Design/methodology/approach The study is based on secondary financial data of 437 non-financial Indian companies obtained from Capitaline database, pertaining to a period of 10 years (2007–2016). This study employs two-step generalized method of moments techniques to arrive at results. Findings Results of the study confirm the inverted U-shape relationship between working capital financing and firm performance. In addition, the authors also found that the firms that are likely to be less financially constrained can finance greater proportion of working capital using short-term debt. Originality/value This study contributes to the scant existing literature by testing the impact of financial constraints on the relationship between working capital financing and firm performance, representing a typical emerging market in India.

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“…Pela relevância no cotidiano financeiro empresarial, o gerenciamento do capital de giro foi objeto de estudos que o associam: (i) ao desempenho financeiro das empresas; (ii) à competitividade de mercado advinda da disponibilidade de capital para financiar a concessão de prazos para clientes e (iii) à capacidade de geração de valor para investidores (Altaf & Shah, 2018a;Kabuye, Kato, Akugizibwe, & Bugambiro, 2018;Altaf & Shah, 2018b;Jana, 2018;Altaf, 2018;Nyeadi, Sare & Aawaar, 2018;Tsuruta, 2018;Baker et al, 2017;Gorondutse et al, 2017;Respatia, 2017;Bruni, 2013;Carvalho & Schiozer, 2012).…”

Section: Revisão Da Literaturaunclassified

Avaliação do resultado de produtos de pequena indústria considerando as despesas financeiras oriundas da duração do ciclo financeiro e da respectiva necessidade de capital de giro

Wernke¹

2022

Exacta

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O objetivo da pesquisa foi propor uma equação que permita medir a lucratividade do produto considerando a duração do ciclo financeiro e a respectiva necessidade capital de giro no contexto de uma pequena indústria de artefatos de cimento. Foi utilizada metodologia com abordagem qualitativa, tipologia exploratória e o procedimento de estudo de caso. O principal resultado do estudo é a proposição de metodologia que possibilita considerar, na avaliação da lucratividade de cada produto, as despesas financeiras decorrentes do capital de giro necessário para suportar o ciclo financeiro de cada item faturado no período. Portanto, esta pesquisa contribui teoricamente com a proposta de computar as despesas financeiras associadas ao capital de giro necessário para financiar o ciclo financeiro dos produtos na avaliação do resultado destes segmentos.

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Investment and financial constraints in Indian firms: Does working capital smoothen fixed investment?

Cited by 23 publications

References 33 publications

Financial constraints and speed of working capital adjustment

Financial constraints and speed of working capital adjustment

Working capital financing, firm performance and financial constraints

Avaliação do resultado de produtos de pequena indústria considerando as despesas financeiras oriundas da duração do ciclo financeiro e da respectiva necessidade de capital de giro

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