Temporal dynamics of working capital management: evidence from the Indian textile sector across COVID-19 eras
Mohini Mehta, Shveta SinghPurpose
This study examines the impact of firm-specific drivers on working capital management (WCM) across distinct economic conditions among BSE-traded textile firms in India, particularly against the backdrop of the coronavirus disease (COVID-19) pandemic.
Design/methodology/approach
This study employs static panel regression analysis on a sample of 116 textile firms by segmenting the study period into three distinct economic eras: pre-pandemic (2015–2019), during pandemic (2020–2021), and post-pandemic (2022–2024). The cash conversion cycle and working capital requirements are used as representative measures of WCM.
Findings
The findings reveal that operational cash flow and leverage are consistent drivers of WCM, irrespective of the economic era. The effects of other firm-specific drivers vary by economic context, suggesting a dynamic and era-sensitive association between firm attributes and WCM.
Practical implications
Analysts, prospective investors, and other stakeholders should emphasize crucial firm-specific drivers not only in determining liquidity management policy but also as a strategic tool for safeguarding firm's operational resilience, irrespective of the economic era.
Social implications
Effective management of WCM enhances workforce employment opportunities.
Originality/value
This study enriches the existing literature by providing a longitudinal perspective on WCM in India, an emerging economy. By conducting a segment-based analysis, this study provides valuable insights into how firms adapt their WCM strategies to dynamic business contexts. This is a pioneering study that explores segment-based analysis in the Indian context.