Analyzing the impact of sustainable performance on working capital management: Evidence from emerging markets

IF 4.8 2区经济学 Q1 BUSINESS, FINANCE

Pacific-Basin Finance Journal Pub Date : 2025-04-25 DOI:10.1016/j.pacfin.2025.102791

Shobhana Dewangan, M. Kannadhasan

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Abstract

This study examines the relationship between sustainable performance and working capital management in emerging markets. Using cash conversion cycle (CCC) as a measure for working capital management, we find that firms with better ESG performance have lower cash conversion cycles (CCC). Additionally, we examine the impact of ESG on individual components of CCC (account receivables, inventory, and account payables) and find a negative relationship. Furthermore, we also investigate how each dimension of ESG, i.e., Environmental, Social, and Governance, affects each component of CCC separately. Our finding shows that environmental (E) and social (S) dimensions negatively affect each component of CCC, whereas the governance (G) dimension only affects inventory days. This shows that consistent with signalling and stakeholder theories, firms' stakeholders prioritise environmental and social dimensions over the governance dimension of ESG. We further document that the negative relationship between ESG and CCC is due to decreased financial constraints and the probability of default. Apart from this, we also performed various robustness tests and found consistent results. Overall, the study emphasises that allocating resources towards sustainability initiatives has the potential to enhance the efficiency of managing working capital.

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分析可持续绩效对营运资本管理的影响：来自新兴市场的证据

本研究考察了新兴市场中可持续绩效与营运资本管理之间的关系。以现金转换周期（CCC）作为营运资金管理的衡量指标，我们发现ESG绩效较好的企业，其现金转换周期（CCC）较低。此外，我们研究了ESG对CCC各个组成部分（应收账款、存货和应付账款）的影响，并发现了负相关关系。此外，我们还研究了ESG的每个维度，即环境、社会和治理，如何分别影响CCC的每个组成部分。我们的研究结果表明，环境(E)和社会(S)维度负向影响CCC的每个组成部分，而治理(G)维度仅影响库存天数。这表明，与信号和利益相关者理论一致，公司的利益相关者优先考虑环境和社会维度，而不是ESG的治理维度。我们进一步证明，ESG和CCC之间的负相关关系是由于财务约束和违约概率的降低。除此之外，我们还进行了各种稳健性测试，并发现了一致的结果。总体而言，该研究强调，将资源分配给可持续发展举措有可能提高管理营运资金的效率。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

Pacific-Basin Finance Journal BUSINESS, FINANCE-

CiteScore

6.80

自引率

6.50%

发文量

157

期刊介绍： The Pacific-Basin Finance Journal is aimed at providing a specialized forum for the publication of academic research on capital markets of the Asia-Pacific countries. Primary emphasis will be placed on the highest quality empirical and theoretical research in the following areas: • Market Micro-structure; • Investment and Portfolio Management; • Theories of Market Equilibrium; • Valuation of Financial and Real Assets; • Behavior of Asset Prices in Financial Sectors; • Normative Theory of Financial Management; • Capital Markets of Development; • Market Mechanisms.