Evaluating the Super-Efficiency of Working Capital Management Using Data Envelopment Analysis: Does COVID-19 Matter?

Abstract

This study evaluates the working capital management (WCM) super-efficiency in UAE firms and determines how the COVID-19 crisis may affect WCM super-efficiency from a statistical perspective. Data envelopment analysis (DEA), difference tests, and Tobit regression techniques are used. Integration of DEA with Tobit regression is required to recognize the potential statistical consequence of COVID-19 on the super-efficiency of WCM. The results show that WCM super-efficiency is moderate and requires decision-makers' corrective measures to attain best practices. The study results show no significant difference in WCM super-efficiency, and COVID-19 does not significantly influence WCM super-efficiency. The results would rouse decision-makers' interests, who would look into the firm's efficiency and weak spots. They would then take major steps to improve efficiency and achieve the best practices. Stakeholders such as managers, financiers, and investors may need these results to monitor how firms manage their assets and liabilities. We contribute to the literature by investigating and evaluating firms' WCM super-efficiency pre and post the COVID-19 pandemic employing a unique technique based on DEA super-efficiency and examining whether COVID-19 has affected WCM super-efficiency to extend the scope of knowledge and stressing the importance of sound WCM, especially in periods of economic distress.