Português
Ciência-IUL
Publications
Publication Detailed Description
Are more sustainable firms able to operate with lower working capital requirements?
Journal Title
Finance Research Letters
Year (definitive publication)
2022
Language
English
Country
United States of America
More Information
Web of Science®
Scopus
Google Scholar
Abstract
This study provides evidence on the relationship between working capital management (WCM) and firms’ sustainability level covering 1,394 US publicly-listed firms in the period 2002-2020. We find that firms with higher ESG scores operate with lower working capital requirements and a shorter cash conversion cycle, although the effect comes entirely from the environmental and social pillars. The inconclusive result for the governance pillar reinforces the role of sustainability on WCM. Outperforming firms in sustainability scores have a lesser need for cash than the industry average. Overall, our findings highlight that WCM optimization may be attained following investment in firms’ sustainability.
Acknowledgements
--
Keywords
Working capital management,Cash conversion cycle,Sustainability,ESG
Fields of Science and Technology Classification
- Economics and Business - Social Sciences
Funding Records
| Funding Reference | Funding Entity |
|---|---|
| UIDB/00315/2020 | Fundação para a Ciência e a Tecnologia |
| UIDB/04521/2020 | Fundação para a Ciência e a Tecnologia |
Contributions to the Sustainable Development Goals of the United Nations
With the objective to increase the research activity directed towards the achievement of the United Nations 2030 Sustainable Development Goals, the possibility of associating scientific publications with the Sustainable Development Goals is now available in Ciência-IUL. These are the Sustainable Development Goals identified by the author(s) for this publication. For more detailed information on the Sustainable Development Goals, click here.
