Capital investment, working capital management, and firm performance: Role of managerial ability in US logistics industry

This paper studies the interlinkage between capital investment, efficiency in working capital management, managerial ability, and firm performance, for a sample of transportation and logistics firms from US between the period 1988 to 2018. The authors results indicate that able managers increase the investment in CAPEX and also concurrently engage in more efficient working capital management. They also show these managers help achieve greater firm performance through visible mediation effects of enhanced CAPEX and optimum use of working capital. They posit that managers with higher ability are in continuous pursual of optimizing firm performance, which motivates them to engage in higher levels of CAPEX vide a trade-off with short-term investment in working capital. Given the challenges and costs of raising external funds, able managers contemporaneously engage in more efficient working capital management to release excess working capital funds, and utilize them for enhancing CAPEX levels. Additionally, they show that the efficiency in working capital management emanates from efficiency in managing inventory, managing receivables as well as managing payables simultaneously. Their results are robust and remains unaltered after controlling for several firm-specific and macroeconomic parameters as well as potential endogeneity concerns.

• Record URL:
  • https://doi.org/10.1016/j.tre.2023.103224
• Record URL:
  • http://www.sciencedirect.com/science/article/pii/S1366554523002120
• Availability:
  • Find a library where document is available. Order URL: http://worldcat.org/issn/13665545
• Supplemental Notes:
  • © 2023 Elsevier Ltd. All rights reserved. Abstract reprinted with permission of Elsevier.
• Authors:
  • Banerjee, Pradip
  • Deb, Soumya G
• Publication Date: 2023-8

Language

• English

Media Info

• Media Type: Web
• Features: References;
• Pagination: 103224
• Serial:
  • Transportation Research Part E: Logistics and Transportation Review
  • Volume: 176
  • Issue Number: 0
  • Publisher: Elsevier
  • ISSN: 1366-5545
  • Serial URL: http://www.sciencedirect.com/science/journal/13665545

Subject/Index Terms

• TRT Terms: Capital investments; Management; Performance; Third party logistics providers
• Geographic Terms: United States
• Subject Areas: Administration and Management; Finance; Highways; Planning and Forecasting;

Filing Info

• Accession Number: 01888847
• Record Type: Publication
• Files: TRIS
• Created Date: Jul 26 2023 3:59PM