The Determinant of Working Capital Management. An Empirical Investigation from the Pakistan Sugar Industry
Keywords:Working capital, firm-specific, firm stability, macroeconomic, firm value.
Working capital management is considered one of the main financial streams of financial literacy. This paper examines the factors. That could define the fluctuation in working capital investment level. Mainly this research focuses on the firm-specific and macroeconomic determinants of working capital in the context of the Pakistan sugar industry. This study used a panel data set of 22 listed sugar firms from the Pakistan stock exchange for a duration of 6 years from 2013 to 2018. Cash conversion cycle (CCC) and working Capital ratio act as WCM proxy. The factors, firm value, growth opportunity, financial stability, and firm size as a firm-specific determinant and real GDP used as a macroeconomic determinant of working capital. For analysis, Panel least square with random effect used for regression analysis. The finding shows that firms size, firm value, growth opportunity, real GDP significantly correlated with the duration length period of the Cash conversion cycle. The finding also suggests that firm leverage, firm value, and growth opportunities significantly impact WCR. The implications are proposed for the industry and directions are provided for the policymakers.