Preprint Article Version 1 Preserved in Portico This version is not peer-reviewed

Do Peer Influence Corporate Firms? Evidence from Working Capital Management Practices

Version 1 : Received: 24 September 2020 / Approved: 24 September 2020 / Online: 24 September 2020 (18:04:37 CEST)

How to cite: Farooq, U.; Ahmed, J. Do Peer Influence Corporate Firms? Evidence from Working Capital Management Practices. Preprints 2020, 2020090586 (doi: 10.20944/preprints202009.0586.v1). Farooq, U.; Ahmed, J. Do Peer Influence Corporate Firms? Evidence from Working Capital Management Practices. Preprints 2020, 2020090586 (doi: 10.20944/preprints202009.0586.v1).

Abstract

Working capital management requires a careful attention by the corporate managers because it plays an important role in corporate stability. Social belongingness of managers induced them to learn from their society, colleagues and from overall industrial movement. They also learn from their peers which have more strategical efficiency. In line with these arguments, the objective of current study is to explores the peer influence on corporate working capital management practices. To making analysis, ten-years data (2009-2018) of non-financial publicly listed firms at PSX were collected and the cash conversion cycle (CCC) uses as a proxy variable of working capital management (WCM). To estimate the regression, an econometric technique named the Generalized Method of Moments (GMM) was used. The empirical findings suggest the significant impact of peer WCM on corporate WCM. It also suggests the significant impact of other variables that determine the WCM. This study recommends social learning policy to corporate managers. They can learn from their peers to manage the working capital. Most previous studies discuss the peer influence on investment decisions, corporate cash holding and financing policy, etc., but no study explores such a relationship specifically in the Pakistani non-financial sector data set.

Subject Areas

working capital management; peer influence; cash conversion cycle; macro-economic factors; generalized method of moments

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