Capital Management Research Articles

Sustainable growth, financial flexibility and working capital management in family firms: An empirical study in Indonesia

Family firms play an important role in the economies of developing countries such as Indonesia. Proper working capital management is necessary to support the sustainable growth of family firms. This study aims to analyze the characteristics of sustainable growth and working capital management of family firms. The study analyzes family firms by comparing them with non-family firms listed in the LQ45 index of the Indonesian capital market. Using quantitative methods, logistic regression is used to test the hypotheses. The survey sample covers 280 companies from 2015 to 2022. The results of the study show that the elements of sustainable growth of family firms differ from non-family firms only in the leverage element. Family firms tend to have lower leverage than non-family firms. Family firms tend to have more conservative working capital management policies for investment and financing than non-family firms. Family firms also have longer days of accounts payable outstanding than non-family firms, while days of inventory outstanding and days of sales outstanding are not significantly different. This study suggests that family firms should implement a moderate working capital policy to strengthen sustainable growth rates. AcknowledgementsThe authors would like to thank the Head of Research and Community Service at AKI University who has supported funding for this research. Thank you also to fellow Faculty of Economics and Business lecturers, AKI University who have helped provide the facilities needed for this research.

Decoding decision-making: The interplay of cognitive processes and working capital management constraints in new ventures

ABSTRACT This research delves into the relationship between managerial cognitive frameworks, particularly construal levels, working capital management constraints, and new venture performance. We posit that higher construal levels positively influence venture performance, while working capital management constraints have a detrimental effect, reflecting challenges in resource allocation and cash flow. Our study also suggests that these constraints can temper the benefits of high construal levels on performance. Using a mixed-method approach, we gather data from recently IPOed firms (Study 1) and an MBA cohort experiment (Study 2). Our findings elucidate the intricate interplay between cognitive orientation and financial constraints, offering novel insights into new venture operational management. This research enriches venture financing literature and offers valuable insights for decision-makers navigating the entrepreneurial realm.

Evaluation of Capital Utilization Efficiency in Agricultural Listed Firms Based on a Three-Stage Data Envelopment Analysis

Rural revitalization is intricately tied to national prosperity, with listed companies in agriculture, forestry, animal husbandry, and fisheries playing pivotal roles in driving this transformative agenda. However, these sectors face critical challenges, notably resource constraints and environmental pressures, which underscore the necessity of evaluating capital utilization efficiency. This study employs a combined three-stage DEA model and Malmquist index to analyze capital utilization efficiency across 85 listed companies within China’s agriculture, forestry, animal husbandry, and fishery industries over the period 2018–2022. The primary objectives are to quantify capital utilization efficiency, identify pathways for industry optimization, advance ecological agricultural sustainability, and offer valuable insights to investors and policymakers. Key findings include: (1) When grouped by sub-sector and adjusted to account for external environmental factors and random disturbances, the initial comprehensive capital utilization efficiency in agricultural companies was found to be significantly overestimated. Subsequent third-stage adjustments revealed decreases in average comprehensive efficiency, technical efficiency, and scale efficiency by 29.79%, 3.03%, and 27.37%, respectively, largely driven by a marked decline in scale efficiency, ultimately diminishing overall efficiency. (2) The capital utilization efficiency in agricultural trading firms remains suboptimal, with scale efficiency posing a critical limitation. High dependency on government subsidies and excess specialized personnel further constrain efficiency improvements. (3) Dynamic analysis using the DEA-Malmquist model indicates low total factor productivity in the agricultural sub-sector, primarily due to inefficiencies in capital management and suboptimal scale allocation. These findings underscore the need for targeted strategies to enhance resource allocation and management, bolster talent development and financial management frameworks, and drive technological research and development, innovation, and efficient capital allocation across the agriculture, forestry, animal husbandry, and fishery sectors.

The impact of innovation and differentiation strategy on financial performance with emphasis on the role of risk management and intellectual capital

Purpose The purpose of this study is to investigate the impact of innovation and differentiation strategy on financial performance with a focus on the role of risk management and intellectual capital of companies listed on the Tehran Stock Exchange. Design/methodology/approach In this research, differentiation and innovation strategy criteria are the independent variables, performance criteria are the dependent variables and risk management effectiveness and intellectual capital are the moderating variables. The statistical population of this research includes all the companies listed in the Tehran Stock Exchange during the 10-year period, and 127 companies were selected as a statistical sample using the systematic elimination method. The research model fitting and hypothesis testing were carried out using structural equation modeling and SPSS, Smart PLS software. Findings The results of the hypothesis testing showed a positive and significant relationship between the innovation and differentiation strategy and the firm performance. In addition, effective management of risk and intellectual capital also had a significant and positive impact on this relationship. Research limitations/implications Given that this research was conducted at the Tehran Stock Exchange, it was difficult for the researchers to collect data. Also, since the Tehran Stock Exchange is a new market, a lot of research needs to be done in different areas of this market to identify the existing problems and shortcomings and to provide reasons for its growth and development. Practical implications According to the results of the research on the impact of intellectual capital and risk management on corporate performance and the impact of strategy on this relationship, this paper can expect to see an improvement in corporate performance and an increase in shareholder wealth as a result of applying the results of this research. Social implications Considering that corporate strategy, intellectual capital criteria and risk management to increase the financial performance of companies have informational content; therefore, according to the results of this research, an increase in the performance of listed companies is expected, and naturally, this increase in performance will lead to the prosperity of the economic sector, increase in job creation and as a result, improve the quality of social life. Originality/value In the Tehran Stock Exchange, by properly evaluating the financial performance criteria of companies and identifying the factors that increase intellectual capital and risk management, they provide the means to improve knowledge in this area of research.

Harnessing Artificial Intelligence (AI) and Blockchain Technology for the Advancement of Finance Technology (FinTech) in Businesses

This brief investigation seeks to explore the significant impact and offer a thorough analysis of the transformative potential of artificial intelligence (AI) and blockchain technology in revolutionizing financial technologies (FinTech) within the context of African business environments. Central to this study is an examination of how AI-driven solutions and blockchain technology can improve efficiency, accessibility, and innovation in financial services. Currently, African businesses face numerous challenges that hinder their overall success. Among these are the prevalence of fraud in Africa’s economy and the absence of credit scoring and reliable risk management, leading to bad debts and poor capital management. The businesses also lack data infrastructure, regulatory compliances, customer engagement and personalisation data privacy, cybersecurity and volatile currencies. Through intensive evaluation, we will be venturing into and showcasing how applications of AI and blockchain technology address these hurdles via techniques involving fraud detection, risk mitigation, advanced credit assessments and scoring for underserved communities, loan origination systems, and automated customer support utilising tools like chatbots, bolstered market analytics, streamlined regulation conformance, and augmented financial inclusivity encompassing digital payment platforms, saving mechanisms, loans, investments, and insurance products. By leveraging AI, African businesses can propel FinTech innovation and progression, foster economic prosperity, and drive sustainable development. The paper comprehensively analyses the current state of AI-driven FinTech solutions in Africa, identifying key factors that can unlock a new era of financial innovation, potential challenges businesses may face in implementing these technologies and our comprehensive research on their solutions.

Working Capital Management and Financial Sustainability of Small and Medium Enterprises

The study examined the nexus between working capital management and sustainability of small and medium enterprises (SMEs) in Bayelsa State. A quantitative design was adopted and the population of the study was 1256 SMEs and a sample of 303 SMEs was selected through a stratified sampling procedure. The data were collected through a structured questionnaire while content validity and Cronbach alpha was applied to determine the internal consistency of the measurement of the instruments. The data was analysed through structural equation modelling using a process-based approach of Smart PLS. The study found that account receivable management had a significant positive effect on financial sustainability of SMEs while cash management and inventory management had a positive but non-significant effect on the financial sustainability of SMEs in Bayelsa State. It was recommended that there should be a robust policy framework to promote effective receivable collection process and minimize bad debts. Further, managers should improve access to financing options for SMEs and facilitate cash inflows and inventory management. There should also be an integrative working capital management process to ensure financial sustainability of SMEs.

What are the ‘most influential people in accounting’ saying about the ‘most important issues currently facing the accounting profession’?

Drawing on theories of influence derived from social psychology, this article studies Accounting Today’s 2023 list of The Top 100 Most Influential People in Accounting (‘the List’). For many reasons the List is controversial, but it is also a window into the profession, providing readers insights into where key players think it is, where it is going, and what it aspires to be. This article analyzes what those on the List consider to be the most important issues currently facing the accounting profession, and what they think the solutions are. A number of core themes emerge as salient, namely: (a) the pipeline problem, (b) the adoption and application of new technologies, (c) the struggle for relevance of (some) accounting work, and (d) the accounting workplace and human capital management. The solutions presented include: (i) accounting needs better branding and marketing, (ii) need to adopt and use new technologies in a range of creative, thoughtful, and compassionate ways, (iii) accounting workplaces and work conditions need to be improved, not least compensation for new entrants. Ultimately, this article’s core thesis is that the key challenges (opportunities) are fundamentally inter-related and inter-connected. Thus, a strategy which involves one group sitting back and hoping that another will fix a stand-alone issue while they watch on is a strategy that seems destined to fail and will cost us dearly. As such, holistic, ‘big tent’, consensus-garnering solutions are required.

Management Research on Online Recruitment CompaniesBased on Case Analysis of SEEK

This paper explores the study of management research on online recruitment companies, especially to provide a deeper understanding of the management practices of SEEK, Australias largest online recruitment company, through a case analysis focusing on challenges related to corporate governance, cost of capital, and company structure. With the development of the internet and information technology, online recruitment platforms offer efficient and convenient hiring methods for businesses and job seekers, but they also bring unique management challenges. By analysing SEEKs corporate governance structure, including its board composition and compensation policies, this study reveals key issues online recruitment companies face in governance and capital management. Furthermore, the paper examines SEEKs capital structure and its impact on its operations and growth. Through this case sing of the complexities of managing online recruitment platforms. It highlights both the opportunities created by technological advancements and the governance and financial challenges they face.

Long-Term Impact of Mergers and Acquisitions on Firm Performance: A Panel Data Study

Purpose - This study aims to examine the long-term impact of mergers and acquisitions (M&As) on firm performance, particularly within the pharmaceutical industry. Using a panel data regression model, the study assesses how key financial ratios such as Net Profit Margin, Return on Capital Employed (ROCE), Debt to Equity Ratio, and Enterprise Value influence postmerger firm performance over time. Design/methodology/approach - A panel data approach has been conducted using data from 10 pharmaceutical companies from their post-merger period, focusing on the effects of M&As on firm performance as measured by Net Profit Margin. Financial ratios related to profitability, liquidity, and valuation were used as independent variables. Findings - The study finds that M&As have a positive long-term impact on firm performance, particularly in companies with strong Earnings per Share (EPS), efficient capital management, and good liquidity. ROCE, Debt to Equity Ratio, and Current Ratio were significant predictors of improved Net Profit Margin, highlighting the importance of financial efficiency and debt management in the post-merger phase. Research limitations/implications - The focus on the pharmaceutical industry limits the generalizability of the findings to other sectors. Future studies should examine a broader range of industries to better understand the effects of M&As across different contexts

FINANCING THE IMPLEMENTATION OF HR ENGINEERING IN MANUFACTURING ENTERPRISES IN THE CONTEXT OF THE COUNTRY'S DIGITAL ECONOMY FORMATION

The article is devoted to the study of possible prospects for financing the implementation of HR engineering at manufacturing enterprises in the conditions of the formation of a digital economy. In the process of research, the authors considered the possibilities of implementing HR engineering at production enterprises and focused attention on the main directions of implementation. The principles of financing enterprises that implement changes and transform are revealed. Approaches and strategies aimed at optimizing human capital management in the company are proposed. The authors noted the following main tools of HR engineering for the development and improvement of HR processes, which are key to building effective human capital management strategies in the organization and require funding: organizational management structure, strategic maps, creation of a portrait of personnel competencies, modelling of the human resources management process resources, development of a goal tree, increased flexibility of HR management processes, implementation of a balanced system of indicators. The authors' comprehensive analysis of the implementation of digital HR solutions by manufacturing enterprises in previous years made it possible to identify the most important obstacles to the successful implementation and financing of innovations and digital solutions, the main of which are: insufficient financial resources for the implementation of innovative projects; lack of sufficient financial assistance and stimulation from the state; large financial costs associated with changes in the infrastructure and introduction of new technologies; low interest of investors, which may limit access to external sources of financing; some innovations may require a long payback period, which becomes a challenge for companies; high interest rates on loans can make it difficult to finance innovative projects. Considering these financial factors, it is important to develop comprehensive strategies and tools to overcome obstacles and stimulate the innovative and digital development of manufacturing enterprises.

A comprehensive review of treasury management practices and their impact on corporate sustainability in emerging economies: Strategic insights from the oil and gas sector

Treasury management practices are critical for ensuring financial stability and fostering corporate sustainability, particularly in the volatile oil and gas sector of emerging economies. This comprehensive review examines the relationship between treasury management practices and corporate sustainability, focusing on strategic insights that can be drawn from the oil and gas industry. The review highlights the importance of effective cash management, risk assessment, and liquidity optimization as key components of successful treasury operations. The study categorizes treasury management practices into several essential areas, including cash flow forecasting, working capital management, investment strategies, and risk management frameworks. Each category is analyzed concerning its contribution to corporate sustainability, emphasizing the need for a holistic approach that aligns financial objectives with environmental and social considerations. The findings indicate that robust treasury management practices can significantly enhance operational resilience, improve resource allocation, and support long-term sustainability initiatives. Furthermore, the review discusses the challenges faced by oil and gas companies in emerging economies, such as economic instability, regulatory uncertainty, and fluctuating commodity prices. These challenges necessitate the adoption of innovative treasury strategies that not only safeguard financial assets but also promote sustainable business practices. By integrating sustainability metrics into treasury decision-making, companies can better manage risks associated with environmental regulations and stakeholder expectations. Additionally, the role of technology in modernizing treasury management is examined, particularly in terms of digital tools and platforms that enhance data analysis and decision-making capabilities. The review underscores the potential for fintech solutions to streamline treasury operations and improve transparency, thereby contributing to enhanced corporate sustainability. In conclusion, this review provides strategic insights into the interplay between treasury management practices and corporate sustainability in the oil and gas sector of emerging economies. The insights presented herein are intended to guide industry practitioners in developing effective treasury strategies that foster sustainable growth while addressing the unique challenges of the emerging market context.

Pengaruh Working Capital Management terhadap Profitabilitas Perusahaan Manufaktur Indeks LQ-45

Every organization that is profit-oriented or non-profit, regardless of the size and nature of its business, requires a number of working capital. Working capital is the most important factor for maintaining liquidity, survival, solvency and profitability of the business. Working capital management is one of the most important areas when making comparisons between a company's liquidity and profitability, which involves a decision on the number of current assets and asset financing. The efficiency of working capital management is very important especially for manufacturing companies, where most of its assets consist of current assets. This directly affects the profitability and liquidity of the company. The trade off between liquidity and profitability is important because if working capital management is not given, companies tend to fail and face bankruptcy. The importance of efficient working capital management is undoubted. Because working capital provides strength for each economic and management unit which is considered to be one of the most important functions of corporate management. Therefore, given the importance of working capital management management this research was focused on evaluating the effect of working capital on profitability, in the LQ45 index manufacturing company for the 2003-2007 period. Key Words: working capital management, profitability, manufacturing LQ45Y index

Private equity buyouts & firm exporting in crisis periods: Exploring a new channel

This paper examines whether private equity (PE)-backed companies are better able to remain active on export markets compared to similar non-PE firms, when hit by a negative shock. We look at two such recent shocks, namely the global financial crisis (GFC) and COVID-19 pandemic. We construct two matched samples, one for each crisis period, to assess the resilience of exporting under PE ownership in recessionary periods. We then explore how improvements in working capital management allow PE-backed firms to engage in international activities and maintain their export relationships relative to similar, non-PE-backed firms. Our results show that the export activities of PE-backed firms are significantly more resilient to the effects of the GFC but less pronounced following COVID-19. PE investment enhances working capital management, which in turn improves the persistence in export markets at the onset of the crises.

FranchiseGlobal.com Business Development Strategy: Analysis Using Financial Planning at FranchiseGlobal.com

This research aims to analyze the business development strategy of FranchiseGlobal.com through a comprehensive financial planning approach. As a digital platform offering franchise and business opportunities, FranchiseGlobal.com aspires to become the leading and innovative online franchise media. The research analyzes short-, medium-, and long-term financial planning to achieve profitability and business sustainability. A qualitative descriptive method and thematic analysis were employed for data analysis. The study examines key financial planning elements, including revenue planning, cost management, capital requirements, and five-year financial projections. The results show that sound financial planning can help the company achieve profitability targets within five years, indicated by a positive NPV, IRR above 10%, and a payback period of less than four years. The company's projected revenue growth is expected to remain stable through diversification of revenue streams and efficient capital management. The study concludes that appropriate financial strategies will be a crucial foundation for FranchiseGlobal.com to become Indonesia's leading digital franchise platform.

An integrated approach using discrete event simulation and design of experiments for working capital management in the fuel retail trade

ABSTRACT This study introduces an innovative approach to Working Capital Management (WCM) in the fuel retail sector, using Discrete Event Simulation (DES) and Design of Experiments (DOE). Efficient WCM is essential for small businesses, particularly in fuel retailing with its tight margins and intense competition. Unlike static financial tools relying on historical data, DES interacts with indicators such as Working Capital Requirement (WCR) and Liquidity Ratios, providing stochastic and accurate information. The study examined three variables (Supplier Payment Deadline, Credit Card Receipt Deadline, and Customer Payment Profile) across 16 experimental scenarios. The Payment Term to Suppliers emerged as the key factor in reducing WCR. Despite lower liquidity potential, the company balanced short-term obligations, identifying optimal WCM scenarios. The study shifts WCM analysis from static data to forecasted, real-time data, supporting dynamic business decision-making. It concludes that DES is a valuable tool for effective WCM in fuel retail, encouraging further research.

Effects of Working Capital Management on Small-Sized Businesses in Competitive Environments with Economic Policy Uncertainty—A Case Study Applied to Chilean Companies

Working capital is a strategic resource that not only enhances financial performance but also ensures the long-term sustainability of organizations, especially SMEs. In the context of evolving economic policies and the challenges of gender equity affecting Chilean companies, this study explores how economic policy risk (EPU) and CEO characteristics influence working capital, which are essential investments for sustainable growth. The analysis covers 12,839 SMEs from 2014 to 2019. Using a fixed-effects panel data model, the findings reveal that firms tend to increase their investment in working capital in response to rising economic policy uncertainty. However, the relationship follows a non-linear inverted U-shaped pattern, which suggests the existence of an investment optimum between working capital and the EPU. Considering the level of competition, companies increase their investment in working capital when the level of competition is higher. Regarding the gender and age of CEOs, it is observed that women invest less in working capital, as do young CEOs. These results underscore the importance of EPU, along with the gender and age of CEOs, as key factors in promoting sustainable working capital management.

Working capital analysis optimises business management efficiency-young aspiring entrepreneurs’ perspective

The study aims to explain the relationship between the effectiveness of a business and its management through the analysis of working capital. The findings prove the complementary relationship. The analysis of working capital will always have a significant impact on the effectiveness of business management. The main objective of any corporation is to be effective in business, which can be achieved by analyzing the working capital. The result shows that analysis of working capital based on factors like operational efficiency, the company’s earnings and profitability, cash management, corporate receivable management, and corporate inventory management creates room for improvement and effectiveness in business management. Firms might enhance finances for business expansion by lowering their working capital requirements. It has also been revealed that there is a considerable difference in industries across time. It was observed that there is a high association between working capital efficiency and firm profitability. A highly efficient corporation is less vulnerable to liquidity risk and is also self-sufficient in terms of external finance. Numerous studies have been done to regulate the true rapport between working capital investments and their impact on financial presentation. It demonstrates that effective investment in working capital management may boost profitability and business value. The relationship between accounting and finance was explained by measuring working capital management in demand to illustrate the status of profitability. It was suggested that accountants take a more professional approach to updating their accounting and finance skills in their organization through effective working capital management.

Measurement of development level of digital transformation of banks in Northwest China

Abstract. In the current era, the digital economy has become an important opportunity for commercial banks. In order to keep up with the pace of The Times, build a solid foundation of science and technology finance, and promote the economic development of the Northwest region, this paper adopts the analytic hierarchy process and fuzzy comprehensive evaluation method to explore the influential factors of the digital transformation of banks in the Northwest region. The analysis shows that net capital, operating income and loan-to-deposit ratio have the greatest impact on the digital transformation of banks. In terms of digital transformation of banks in Northwest China, Shaanxi Province and Gansu Province have a better development level, Qinghai Province and Ningxia Hui Autonomous Region are relatively average, and Xinjiang Uygur Autonomous Region Province is relatively backward. Based on this, the paper puts forward suggestions to improve the level of capital management, optimize the structure of deposits and loans, and promote income diversification.

Tracking Research Trends in Working Capital Management: A Ten-Year Bibliometric Review Based on Dimensions AI Database

This study examines trends in working capital management (WCM) research over the past decade, focusing on key contributors and significant themes. Utilizing data from the Dimensions AI database, we provide an overview of WCM from 2015 to 2024. A systematic review methodology guided our literature gathering, beginning with a keyword search on October 18, 2024, using terms like "working," "capital," "management," and "trend." The final dataset comprised 198 peer-reviewed articles and conference proceedings, ensuring the robustness of our findings. Our analysis reveals fluctuating publication trends, peaking at 35 publications in 2021, followed by a decline in recent years. Key authors, including Pais et al. and Parker et al., emerged as influential figures, with substantial contributions from institutions such as the Ghulam Ishaq Khan Institute and Hamad Bin Khalifa University. The United States and Pakistan lead in research output. Additionally, bibliographic coupling networks highlight clusters focusing on profitability, gaps in empirical research, digitalization in supply chain finance, and practices in family firms. The findings underscore the growing importance of effective WCM in enhancing organizational performance while identifying gaps, particularly in developing economies. Future research should address these gaps to improve both academic discourse and practical applications in the field.

The Role of Managerial Competencies in Higher Education: Navigating Current Transformational Trends

Objective: This study investigates the managerial competencies required in the field of higher education in response to contemporary transformational trends. The main goal is to explore how these competencies are shaped by the ongoing digital transformation, strategic management approaches, and the shift towards entrepreneurial university models. Theoretical Framework: The research draws on key concepts related to digital leadership, human capital development, and Agile management. Theories of educational management and models of intellectual capital are employed to frame the investigation and provide a comprehensive understanding of the changing dynamics in higher education. Method: A qualitative and mixed-methods approach was utilized, incorporating data from reports, surveys, and contemporary studies on digital competencies, hybrid learning, and leadership in educational institutions. The study includes both theoretical analysis and empirical data collection through case studies and expert assessments. Results and Discussion: The findings reveal that digitalization and the transition to blended learning environments are driving the need for new managerial skills. These skills include digital leadership, strategic decision-making, and the ability to balance traditional and online educational models. The discussion highlights the importance of flexible management approaches, such as Agile, in addressing these emerging challenges. Research Implications: The study provides practical and theoretical insights into how higher education institutions can adapt their leadership strategies to meet the demands of digitalization. These findings have implications for educational policy, institutional governance, and the development of leadership training programs. Originality/Value: This research contributes to the growing body of literature on higher education management by offering a fresh perspective on the evolving competencies required in today’s digital age. The value lies in its focus on the intersection of digital transformation and managerial competencies, offering practical solutions for enhancing leadership in higher education.