چکیده:

این مطالعه به بررسی تاثیر مدیریت سود (EM) بر کارایی مدیریت سرمایه در گردش (WCM) ‏و مولفه‌ های آن می‌پردازد. این مطالعه از M-Score، براساس مدل Beneish، به عنوان نماینده ‌ای برای EM استفاده می‌کند و روش تعمیم ‌یافته لحظات و روش ‌های رگرسیون چارک پنل را برای یک نمونه از ۴۶۱ شرکت فهرست ‌شده هندی به کار می‌گیرد. ما دریافتیم که EM ممکن است به طور معکوس بر بهره‌ وری WCM شرکت ‌های هندی تاثیر بگذارد. مدیرانی که در EM درگیر می‌شوند تمایل دارند که در چرخه تبدیل پول نقد طولانی‌تر عمل کنند و موجودی را به طور زیر بهینه مدیریت کنند. این یافته ‌ها با استفاده از یک پروکسی EM جایگزین براساس مدل اصلاح ‌شده جونز تایید شده ‌است.

Abstract

This study investigates the impact of earnings management (EM) on the efficiency of Working Capital Management (WCM) and its components. The study uses M-Score, based on the Beneish Model, as a proxy for EM and applies generalized method of moments and panel quantile regression methods to a sample of 461 Indian-listed firms. We find that EM may inversely influence the WCM efficiency of Indian firms. Managers who engage in EM tend to operate on longer cash conversion cycle and manage inventory sub-optimally. These findings have been further confirmed by using an alternative EM proxy based on the Modified Jones Model.

Introduction

Working capital management (WCM) is closely linked with companies’ fundamental business activities, namely, procurement or production, revenue generation, collection of receivables, and payment management (Wang, 2019). Since operating cash inflows and outflows are mostly the consequences of working capital (WC) decisions, the cash conversion cycle (CCC) is often used to evaluate the efficiency of WCM (Prasad et al., 2018). The CCC reveals the number of days firms have blocked funds in WC (Tarkom, 2022). More sustainable companies operate on shorter CCC (Barros, et al., 2022). Many studies (Deloof, 2003; Sawarni et al., 2020; Lin & Wang, 2021; Akgun & Karataş, 2021) report that reducing the CCC can increase profitability and improve valuation. Hence, managers are expected to strive for shortening the CCC to improve the company’s financial performance.

However, there may be instances when managers are not as motivated as expected or may lack the urgency to put in the necessary effort to efficiently manage the resources of their organizations. For example, such a situation may arise if managers are involved in earnings management (EM) to create a desired perception of their firm instead of presenting its actual condition to the stakeholders (Orazalin & Akhmetzhanov, 2019). Such managers may mask their inefficiency by reporting higher earnings through EM.