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Working Capital Management: A Systematic Literature Review
Article in The Empirical Economics Letters · November 2023

DOI: 10.5281/zenodo.10463289
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Empirical Economics Letters, 22 (Special Issue 2): (November 2023) ISSN 1681 8997
https://doi.org/10.5281/zenodo.10463289
Working Capital Management: A Systematic Literature

Review
Vibhav Pratap
School of Business, University of Petroleum and Energy Studies
Dehradun, India
Email: vibhav.pratap@ddn.upes.ac.in
Abstract: An analysis of working capital and working capital management

(WCM) is the purpose of this study. This study analyzes the research published
between 1960 and 2021 using the systematic literature review (SLR) method. The
study examines highly referenced articles from the Scopus database, focusing on
the relationship between WCM and corporate profitability and other related
factors. The findings suggest that effective management of working capital
components, such as accounts receivable, inventory, and accounts payable, can
positively influence profitability. Additionally, the study explores earnings
management, debt covenant violations, cash flow management, macroeconomic
factors, audit quality, trade credit, and industry-specific analyses. The article
concludes by highlighting future research directions to further investigate these
topics and contribute to understanding WCM's role in enhancing financial
performance and profitability. The study explores various aspects of working
capital management which the researchers further use.
Keywords: Literature Review, Working Capital, Current Assets, Current
Liabilities
JEL Classification Number: G00, G30, G31
1. Introduction
Significant theoretical advances in capital investment and financial decision-making have
happened over the past four decades. Many of these innovative concepts and strategies are
already being implemented in the industry. In contrast, the sector of short-term financing,
particularly working capital management (WCM), has received significantly less attention.
Working capital (WC) concerns are of minor relevance to the company. Hence such
negligence may be tolerated. As a result, there has only been a smattering of research
interest in the WCM process in the literature. Interest in research might happen for various
reasons, including the fact that choices on working capital are made regularly and are
regular in nature. As a result, each of them has a negligible effect. Second, except for
capital investment decisions, routine decisions may be reversed. However, because of the
considerable drop in business performance during and after the 2008 financial crisis,
managers and scholars are again drawn to WCM. (Deloof, 2003; Gill et al., 2010) all
found that WCM has a significant impact on a firm's profitability. Wang (2002) argued
Empirical Economics Letters, 22 (Special Issue 2): (November 2023) 62
that Aggressive liquidity management improves the company's performance and is

generally linked to more corporate solid values.
A literature study of the issue, which served as the foundation for this work, picked the
researchers' interest. This study examines WCM-related literature. Gentry (1988)
published his assessment in 1988. Nevertheless, most WCM publications took place after
and during the 2008 Financial Crisis such as Viskari et al. (2011), Prasad et al., (2019),
Pratap Singh and Kumar(2014), and Kayani et al. (2019). Viskari et al. (2011) employed
a small sample of 23 businesses in their review. The goal of this research is to conduct a
comprehensive evaluation of the literature on WCM.
1.1. Working capital management concept
WCM is mainly concerned with all management actions that impact the amount and
efficiency of working capital. Working capital management is critical to the financial
sustainability of both small and large enterprises. Because the amount of money spent on
working capital is frequently disproportionately large in comparison to the total assets
used, it is critical to make sure it has been put to good use (Padachi, 2006). The balance
between current assets and current liabilities is known as working capital (Pass and Pike,
1984). Gross working capital and net working capital are the two types of working capital
that are often used. Basically, gross working capital can be calculated by adding all current
assets together, while net working capital can be calculated by taking the difference
between current assets and current liabilities. The current assets and current liabilities are
the two essential components of all of the working capital (Pass and Pike, 1987). Debtors,
trade credit, Stock or inventory, cash-in-hand, and short-term securities are all examples of
current assets. Payments owed to trade creditors, other short-term loans, bank overdrafts,
and outstanding tax, dividend, and interest payments are all examples of current liabilities.
Working capital is intertwined with earning and spending operations (Pass and Pike,
1987). Figure 1 depicts the operational cycle of activities that this process entails. There is
a steady flow of cash to suppliers and creditors on the one hand and from consumers and
debtors on the other, as seen in the graph. This implies that WCM's primary function is to
match current asset and current liability fluctuations over time.
1.2. WCM Measurements
Recent studies (e.g., Deloof, 2003; Padachi, 2006; Raheman and Nasr, 2007) have used
the Cash Conversion Cycle (CCC), which refers to how long it takes to convert accounts
receivable, inventories, and accounts payable into cash, rather than traditional working
capital measures, to examine the effects of CCC solely shows a company's operational
side (e.g., accounts receivable, accounts payable, and inventory), whereas typical working
capital measurements include both financial and operational sides (e.g., cash and current
debts). CCC allows academics to investigate the impact of the operational side of working
capital on a company's profitability.
Figure 1: Operating Cycle
Source: Jordan (2010).
Cash Conversion Cycle (CCC) = INV +AR- AP
Where INV- no of days inventory; AR- no of days account receivable and AP- number of
days account payables
A firm's Cash Conversion Cycle (CCC) is a representation of the time it spends collecting
payments from clients and paying suppliers, which reflects the amount of funding it uses
for inventories and customers, as well as how much borrowing a company wants to accept
from its suppliers. CCC may be used as a general indicator of how well a company
manages its working capital. Controlling a company's CCC more tightly is said to be
beneficial to operational efficiency. Jose et al. (1996) investigated the link between (CCC)
and profitability in seven industries. Lower CCC is linked to increased profitability in
specific industries but not others. A considerable negative link between a firm's net trading
cycle.
2. Review Papers Evolution

There have been various literature evolutions on working capital. Table 1 lists some of the
most frequently referenced literature reviews published. According to our limited
understanding, such a thorough evolution of the literature on WCM is uncommon. So far,
we have located five papers that have conducted a thorough literature review on WCM
[Gentry (1988), Viskari et al. (2011), Singh and Kumar (2014), (Prasad et al., 2019), and
(Kayani et al., 2019b)]. Gentry (1988) submitted his review study in 1988, however, the
most prominent publication activity on WCM came during and after the 2008 financial
crisis. In their WCM literature study, Viskari et al. (2011) employed bibliometric
approaches with the constraint of 23 samples of enterprises with the WCM issue in
aggregate rather than a specific subarea of it. Singh and Kumar (2014) reviewed WCM
literature using the systematic literature review (SLR) approach. (Prasad et al., 2019)
conducted a literature review on the detailed theme of working capital, but their paper
lacked the study of the industry, the method adopted, and geographical location. In certain
aspects, our present study varies from the others. It examines the broad pool of WCM-
related literature. Instead, its goal is to acquire a thorough literature review and categorize
it into distinct themes; it also completed the shortcomings of (Prasad et al., 2019).and then
recommends some future study areas.
Table 1: Represent the evolution of the Literature review paper
Year Author No of articles reviewed
1998 (Gentry, 1998) Bibliometric analysis 23(1990-
2011 (Viskari et al.; 2011) 10)
2014 (Singh and Kumar, 2014) SLR 117 (1980-2012)
2018 (Prasad et al.; 2018) SLR 75 articles
2019 (Kyani et al. 2019) SLR 187 (1980- 2017)
Source: Author compilation.
3. Methodology of literature review

Literature collection and boundary identification: Boundaries for the collection of the
article are as follows.
 Only peer-rewired research articles are selected for the study.
 The time horizon for the study is 61 years (1960-2021)
 Paper where full text is available is selected.
 Paper selected that has 50 or more citations till the date January 19, 2022.
By integrating theoretical perspectives, the systematic review provides collective
understanding, such that the review process improves the credibility of the study for
academicians while also developing credible knowledge and understanding for researchers
(Tranfield et al., 2003). In the study, we used the SLR approach established by Tranfield et
al. (2003) and afterwards used by other investigations (e.g. Singh and Kumar, 2014). The
review procedure is divided into four parts, as shown in Figure 2.
Figure 2: Systematic literature review suggested by Tranfield et al. (2003)
Identification of Data and Research articles Selection 
Detailed Description and Classification of Selected Research articles 
Analyzing the research in-depth for content and citations 
Identification Reporting of results of research articles 
We began the evolution process by looking for research papers on "Scopus

database" using the string “working capital” OR “working capital management” OR “Cash
Conversion Cycle” OR “Net Trade Cycle”" Scopus data has been utilized for data
sourcing since it gives a comprehensive collection of facts on international research on any
topic and domain in a straightforward and efficient method. It is a high-quality scientific
database with higher citation counts than other databases. It maintains high-quality
journals that promote quality research in academia.
As a result of our initial search, we were able to find hundreds of research publications
related to WCM. Only those papers with at least 50 citations as of January 19, 2022, were
selected from the initially received papers. There is much concern about choosing a
specific citation threshold since it has to balance quality with reachability. According to
Cole (1970) and Astrom (2010), we set a verge of fifty in order to ensure the sample
consists of moderately significant publications, free from complaints of quality issues and
duplication. At the same time, we feel that a high-quality publication may receive 50
citations in a proper length of time, especially given the massive expansion of WCM
research and the Scopus database's greater reach. This sorting phase decreased the number
of papers from hundreds to 90. In order to find out which are the most influential studies
in the field of WCM and to find out which publication routes are most popular, 90
research papers were analyzed in order to determine the most influential works in the field.
Table 2: Journals Abbreviation

S. N. Source Title Abbre. S. N. Source Title Abbre.
Accounting and Business Journal of Construction Engineering
1 Research ABR 1 and Management JCEM
2 Accounting and Finance AF 2 Journal of Corporate Finance JCF
3 Accounting Review AR 3 Journal of Development Economics JDE
Computers and Industrial
4 Engineering CIE 4 Journal of Economics and Finance JEF
Contemporary Accounting
5 Research CAR 5 Journal of Financial Economics JFE
6 Economic Journal EJ 6 Journal of International Economics JIE
7 European Accounting Review EAR 7 Journal of Marketing JM
8 European Economic Review EER 8 Journal of Monetary Economics JME
European Financial Journal of Multinational Financial
9 Management EFM 9 Management JMFM
European Journal of Journal of Real Estate Finance and
10 Operational Research EJOR 10 Economics JREFE
European Review of Journal of Small Business and
11 Agricultural Economics ERAE 11 Enterprise Development JSBED
Journal of the Operational Research
12 Financial Management FM 12 Society JORS
Table 2 continued
13 Global Business Review GBR 13 Management Accounting Research MAR
International Journal of
14 Commerce and Management IJCM 14 Management Science MS
15 Hospitality Management IJHM 15 Managerial and Decision Economics MDE
16 Managerial Finance IJMN 16 OeconomiaCopernicana OC
Physical Distribution and
17 Logistics Management IJPDLM 17 Omega (United Kingdom) Omega
18 Production Economics IJPE 18 Operations Management Research OMR
International Journal of Project
19 Management IJPM 19 Operations Research OR
International Research Journal Production and Operations
20 of Finance and Economics IRJFE 20 Management POM
International Small Business
21 Journal ISBJ 21 RAND Journal of Economics RJE
Journal of Accounting and Research in International Business
22 Economics JAE 22 and Finance RIBF
Research Journal of Business
23 Journal of Banking and Finance JBF 23 Management RJBS
Journal of Business Finance &
24 Accounting JBFA 24 Review of Finance RF
Journal of Business Finance
25 and Accounting JBFA 25 Review of Financial Studies RFS
26 Journal of Business Logistics JBL 26 Small Business Economics SBE
27 Journal of Business Research JBR 27 Venture Capital VC
28 Journal of Business Venturing JBV 28 World Bank Research Observer WBRO
4. Critical analysis of review

4.1. citation-based analysis
The most referenced studies on WCM are listed first in this section. The popular pathways
for publishing such research are next investigated by finding journals that issue papers that
have high number of citations and popular (higher number of studies). Finally, rankings of
these kinds of journals thus, according to ABDC, ABS, Web of Science, and Scopus, are
presented in order to determine the quality of research on this topic.
4.1.1. Studies conducted on WCM
Table 3 lists the selected essential research studies in decreasing order of citations
received, as well as the years they were published. According to the data, Dechow and
Dichev is the most referenced author, with 2010 citations for his 2002 work titled "The
quality of accruals and earnings: The role of accrual estimation errors”. The article "
Earnings management to avoid earnings decreases and losses " by Santana and Sarquis
(1997) has 1607 citations, ranking second among studies on WCM. The study was
published five years before Dechow and Dichev (2002) but still on the second rank. There
are 47 studies that have been mentioned more than 100 times in total. In the previous ten
years, 26 research have been published (2012 onward) on working capital. Table 3 shows
the most current study was conducted in 2020 and got 58 citations. It means that WCM
has been quite popular among academics during the previous two decades, and their
influence has been significant.
Table 3: Most prolific study on working capital
S. N. Title Year Cited
by
The quality of accruals and earnings: The role of accrual estimation errors
1 (Dechow and Dichev, 2002) 2002 2010
Earnings management to avoid earnings decreases and losses (Santana and
2 Sarquis, 1997) 1997 1607
Debt covenant violation and manipulation of accruals (DeFond and Giambalvo,
3 1994) 1994 1309
Accounting earnings and cash flows as measures of firm performance. The role
4 of accounting accruals (Patricia, 1994) 1994 1202
5 Bank lending during the financial crisis of 2008(Ivashina and Sharfstein, 2010) 2010 984
6 Debt-covenant violations and managers' accounting responses (Sweeney, 1994) 1994 534
Does working capital management affect profitability of Belgian firms? (Deloof,
7 2003) 2003 530
Business cycles in emerging economies: The role of interest rates (Neumeyer
8 and Perri, 2005) 2005 430
9 Audit partner tenure and audit quality (Carey and Simnett, 2006) 2006 403
Working capital and fixed investment: New evidence on financing constraints
10 (Fazzari and Petersen, 1993) 1993 370
Financing the newsvendor: Supplier vs. bank, and the structure of optimal trade
11 credit contracts (Kouvelis and Zhao, 2012) 2012 362
Effects of working capital management on SME profitability (García-Teruel
12 and Martínez-Solano, 2007) 2007 325
Corporate ownership structure and performance. The case of management
13 buyouts (Smith, 1990) 1990 274
The Reversal of Abnormal Accruals and the Market Valuation of Earnings
14 Surprises (Defond and Park, 2001) 2001 266
Accounting-based constraints in public and private debt agreements. Their
association with leverage and impact on accounting choice (Press and
15 Weintrop, 1990) 1990 266
An econometric analysis of inventory turnover performance in retail services
16 (Gaur et al., 2005) 2005 203
17 Access to capital and agrarian production organisation 1986 196
Table 3 continued
Working capital management, corporate performance, and financial constraints
18 (Baños-Caballero et al., 2014) 2014 185
Liquidity – profitability trade-off: An empirical investigation in an emerging
19 market (Eljelly, 2004) 2004 169
20 Value-glamour and accruals mispricing: One anomaly or two? 2004 164
The newsvendor problem and price-only contract when bankruptcy costs exist
21 (Kouvelis and Zhao, 2011) 2011 163
Bank loan officers' perceptions of the characteristics of men, women, and
22 successful entrepreneurs (Buttner and Rosen, 1988) 1988 161
23 Earnings Manipulation in Failing Firms (Rosner, 2003) 2003 159
An empirical examination of debt covenant restrictions and accounting-related
24 debt proxies (Duke and Hunt, 1990) 1990 154
Focusing the financial flow of supply chains: An empirical investigation of
25 financial supply chain management (Wuttke et al., 2013) 2013 153
26 Trade credit for supply chain coordination (Lee and Rhee, 2011) 2011 151
Is lack of funds the main obstacle to growth? EBRD'S experience with small and
27 medium-sized businesses in central and eastern Europe (Pissarides, 1999) 1999 151
Bank lending constraints, trade credit and alternative financing during the
28 financial crisis: Evidence from European SMEs (Casey and O’Toole, 2014) 2014 148
Is working capital management value-enhancing? Evidence from firm
29 performance and investments (Aktas et al., 2015) 2015 144
The structure of the investment networks of venture capital firms (Bygrave,
30 1988) 1988 144
Liquidity management, operating performance, and corporate value: Evidence
31 from Japan and Taiwan (Wang, 2002) 2002 143
Venture capital and management-led, leveraged buy-outs: A European
32 perspective (Wright et al., 1992) 1992 141
33 Net Operating Working Capital Behavior: A First Look (Hill et al., 2010) 2010 138
Investment and financing constraints in China: Does working capital
34 management make a difference? (Ding et al., 2012) 2013 135
How does working capital management affect the profitability of Spanish SMEs?
35 (Baños-Caballero et al., 2012) 2012 133
The composition matters: Capital inflows and liquidity crunch during a global
36 economic crisis (Tong and Wei, 2011) 2011 124
37 Corporate returns and cash conversion cycles (Jose et al., 1996) 1996 124
38 Cash holdings in private firms (Bigelli and Sánchez-Vidal, 2012) 2012 119
39 Corporate performance in the East Asian financial crisis (Djankov, 2000) 2000 113
The impact of working capital management on firm profitability in different
40 business cycles: Evidence from Finland (Enqvist et al., 2012) 2014 112
A supply chain-oriented approach of working capital management (Hofmann
41 and Kotzab, 2010) 2010 111
Stagflationary effects of monetary stabilization policies. A quantitative analysis
42 of South Korea (van Wijnbergen, 1982) 1982 110
Non-audit services and earnings management: UK Evidence (Ferguson et al.,
43 2004) 2004 109
Table 3 continued
Effect of working capital management on firm profitability: Empirical evidence
44 from India (Sharma and Kumar, 2011) 2011 106
45 Working capital management in SMEs (Baños-Caballero et al., 2010) 2010 106
Inflation dynamics and the cost channel of monetary transmission (I.
46 Chowdhury et al., 2006) 2006 104
Credit policy, inflation and growth in a financially repressed economy (van
47 Wijnbergen, 1983) 1983 104
48 Working capital management and shareholders' wealth (Kieschnick et al., 2013) 2013 100
Working capital and financial management practices in the small Firm Sector
49 (Peel and Wilson, 1996) 1996 98
Interrelating operational and financial performance measurements in inventory
50 control(Protopappa-Sieke and Seifert, 2010) 2010 94
Optimality criteria and risk in inventory models: The case of the newsboy
51 problem (Thorstenson, 1987) 1987 92
Supply chain finance for small and medium-sized enterprises: the case of reverse
52 factoring (Spyridon Damianos Lekkakos Alejandro Serrano , 2016) 2016 88
Management of financial risks in Slovak enterprises using regression analysis
53 (Valaskova et al., 2018) 2018 87
Working capital management and firms' performance in emerging markets: The
54 case of Jordan (Abuzayed, 2012) 2012 86
A non-interactive methodology to assess farmers' utility functions: An
55 application to large farms in Andalusia, Spain (Amador et al., 1998) 1998 81
An analysis of the financial management techniques currently employed by large
56 u.s. corporations (Moore and Reichert, 1983) 1983 81
57 Accrual reversals, earnings and stock returns (Allen et al., 2013) 2013 80
The Indian auto component industry - Estimation of operational efficiency and its
58 determinants using DEA (Saranga, 2009) 2009 80
59 Financial performance analysis for construction industry (Kangari et al., 1992) 1992 79
Working capital management and SMEs profitability: Portuguese evidence (Pais
60 and Gama, 2015) 2015 78
The focus of working capital management in UK small firms (Howorth and
61 Westhead, 2003) 2003 77
Rounding-up in reported EPS, behavioral thresholds, and earnings management
62 (Das and Zhang, 2003) 2003 76
Coordinating contracts for a financially constrained supply chain (Xiao et al.,
63 2017) 2017 74
64 The determinants of REIT cash holdings (Hardin et al., 2009) 2009 74
Asset liquidity, debt covenants, and managerial discretion in financial distress:
65 The collapse of L.A. Gear (DeAngelo et al., 2002) 2002 72
How firms export: Processing vs. ordinary trade with financial frictions (Manova
66 and Yu, 2016) 2016 71
The market reward for achieving analyst earnings expectations: Does managing
67 expectations or earnings matter? (Athanasakou et al., 2011) 2011 70
The relationship between working capital management and profitability: A
68 Vietnam case (Dong and Su, 2010) 2010 70
Table 3 continued
69 Satisfaction, complaint, and the stock value gap (Luo and Homburg, 2008) 2008 70
Determinants of corporate cash holdings: Evidence from spin-offs (D’Mello et
70 al., 2008) 2008 69
Project cash flow analysis in the presence of uncertainty in activity duration and
71 cost (Maravas and Pantouvakis, 2012) 2012 67
Late Payment and Credit Management in the Small Firm Sector: Some Empirical
72 Evidence (Peel et al., 2000) 2000 67
Corporate cash holdings and dividend payments: Evidence from simultaneous
73 analysis (Al-Najjar and Belghitar, 2011) 2011 65
The influence of working capital management components on corporate
74 profitability: A survey on Kenyan listed firms (Mathuva and Mathuva, 2010) 2010 65
75 A Trade Credit Model with Asymmetric Competing Retailers (Wu et al., 2019) 2019 64
The relative importance of working capital management and its components to
76 SMEs' profitability (Tauringana and Adjapong Afrifa, 2013) 2013 64
Working capital management and corporate profitability: Evidence from panel data
77 analysis of selected quoted companies in Nigeria (Falope and Ajilore, 2009) 2009 64
Trade credit financing and coordination for an emission-dependent supply chain
78 (Cao and Yu, 2018) 2018 62
The relationship of cash conversion cycle with firm size and profitability: An
79 empirical investigation in Turkey (Uyar, 2009) 2009 61
The significance of working capital management in determining firm
80 profitability: Evidence from developing economies in Africa (Ukaegbu, 2014) 2014 60
Marketing initiatives, expected cash flows, and shareholders' wealth (Rao and
81 Bharadwaj, 2008) 2008 59
Damage awards and earnings management in the oil industry (Hall and
82 Stammerjohan, 1997) 1997 59
A case study on strategies to deal with the impacts of COVID-19 pandemic in the
83 food and beverage industry (Chowdhury et al., 2020) 2020 58
Working capital management and corporate performance of manufacturing sector
84 in Pakistan (Raheman et al., 2010) 2010 58
85 Cash flow sensitivity of investment (Hovakimian and Hovakimian, 2009) 2009 57
Earnings management and the distribution of earnings relative to targets: UK
86 evidence (Gore et al., 2007) 2007 57
Working capital, cash holding, and profitability of restaurant firms (Mun and
87 Jang, 2015) 2015 56
Funding the growth of UK technology-based small firms since the financial
88 crash: Are there breakages in the finance escalator? (North et al., 2013) 2013 54
89 Mandatory Audit Firm Rotation and Audit Quality(Cameran et al., 2016) 2016 52
Stewardship value of earnings components: Additional evidence on the
90 determinants of executive compensation (Natarajan, 1996) 1996 51
4.1.2. Analysis by journal of publication

Based on the number of citations per article, Table 4 displays publications on WCM. In
the table's last column, the average of citations is shown. Journal of Accounting and
Economics [(Allen et al., 2013) (Das and Zhang, 2003) (Burgstahler & Dichev, 1997)
(DeFond and Jiambalvo, 1994) (Patricia,1994) (Sweeney, 1994) (Press and Weintrop,
1990) (Duke and Hunt, 1990) has the most citations per paper (653)], followed by
Accounting Review [(Baños-Caballero et al., 2010) (Carey and Simnett, 2006) (Desai et
al., 2004) (Dechow and Dichev, 2002) (Defond and Park, 2001) (Hall and Stammerjohan,
1997) (Natarajan, 1996)] with 492 citations per article published. 31 journals on the list
have garnered an average of more than 100 citations. The fascinating thing is that, despite
the higher number of citations, the number of papers published in each journal is relatively
low. As of January 2022, just one Journal of Accounting and Economics has published
eight highly cited papers, another journal Accounting Review has published six highly
cited papers, and Journal of Business Venturing has published four highly cited papers,
only five journals each have published three highly cited pieces on WCM, and only eight
journals have published 2-2 highly cited articles on WCM, according to column (3) of this
table. This brings the total number of 56 journals with the most cited articles to 90. This
conclusion implies academics depend on a larger pool of publications for their significant
studies rather than focusing on a small number of theme-based specialty journals.
Table 4: Represents the most prolific journals on working capital management
S.N. Source Title Count of Average of
Source title Cited by
1. Journal of Accounting and Economics (Allen et al., 2013) (Das
and Zhang, 2003) (Burgstahler & Dichev, 1997) (DeFond and
Jiambalvo, 1994) (Patricia,1994) (Sweeney, 1994) (Press and
Weintrop, 1990) (Duke and Hunt, 1990) 8 653.5
2. Accounting Review (Baños-Caballero et al., 2010) (Carey and
Simnett, 2006) (Desai et al., 2004) (Dechow and Dichev,
2002)(Defond and Park, 2001) (Hall and Stammerjohan,
1997)(Natarajan, 1996) 6 492.17
3. Journal of Financial Economics (Ivashina and Scharfstein,
2010)(DeAngelo et al., 2002)(Smith, 1990) 3 443.33
4. Journal of Monetary Economics (Neumeyer and Perri, 2005) 1 430
5. RAND Journal of Economics (Fazzari andPetersen, 1993) 1 370
6. Operations Research (Kouvelis and Zhao, 2012) 1 362
7. Journal of Business Finance and Accounting (Athanasakou et al.,
2011)(Deloof, 2003)(Moore and Reichert, 1983) 3 227
8. Management Science (Gaur et al., 2005) 1 203
9. Economic Journal (Eswaran and Kotwal, 1986) 1 196
10. Journal of Business Research (Baños-Caballero et al., 2014) 1 185
11. International Journal of Commerce and Management (Eljelly,
2004) 1 169
12. International Journal of Managerial Finance (Pais and Gama,
2015) (Abuzayed, 2012)(García-Teruel and Martínez-Solano,
2007) 3 163
Table 4 continued
13. International Journal of Production Economics (Wuttke et al.,
2013) 1 153
14. Journal of Business Venturing (Pissarides, 1999)(Wright et al.,
1992)(Buttner and Rosen, 1988)(Bygrave, 1988) 4 149.25
15. Journal of Corporate Finance (Aktas et al., 2015) (Casey and
O‟Toole, 2014) 2 146
16. Journal of Multinational Financial Management (Wang, 2002) 1 143
17. Financial Management (Hill et al., 2010) 1 138
18. Contemporary Accounting Research (Ferguson et al., 2004)
(Rosner, 2003) 2 134
19. Small Business Economics (Baños-Caballero et al., 2012) 1 133
20. Journal of Economics and Finance (Jose et al., 1996) 1 124
21. Review of Financial Studies (Tong and Wei, 2011) 1 124
22. Production and Operations Management (Wu et al.,
2019)(Kouvelis and Zhao, 2011) 2 113.5
23. World Bank Research Observer (Djankov, 2000) 1 113
24. Journal of Business Logistics (Hofmann and Kotzab, 2010) 1 111
25. European Journal of Operational Research (Lee and Rhee,
2011)(Protopappa-Sieke and Seifert, 2010)(Saranga, 2009) 3 108.34
26. Journal of Banking and Finance (Ding et al., 2012)(Bigelli and
Sánchez-Vidal, 2012) 3 107.67
27. Journal of Development Economics (van Wijnbergen, 1983)(van
Wijnbergen, 1982) 2 107
28. Accounting and Finance (Baños-Caballero et al., 2010) 1 106
29. Global Business Review (Sharma and Kumar, 2011) 1 106
30. European Economic Review (I. Chowdhury et al., 2006) 1 104
31. Review of Finance (Kieschnick et al., 2013) 1 100
32. Journal of the Operational Research Society (Chowdhury et al.,
2006) 1 92
33. International Journal of Physical Distribution and Logistics
Management (Spyridon Damianos Lekkakos Alejandro Serrano ,
2016) 1 88
34. OeconomiaCopernicana(Valaskova et al., 2018) 1 87
35. Research in International Business and Finance (Enqvist et al.,
2012)(Ukaegbu, 2014) 2 86
36. International Small Business Journal (Peel et al., 2000)(Peel and
Wilson, 1996) 2 82.5
37. European Review of Agricultural Economics (Amador et al.,
1998) 1 81
38. Journal of Construction Engineering and Management (Kangari et
al., 1992) 1 79
39. Management Accounting Research (Howorth and Westhead,
2003) 1 77
40. Journal of Real Estate Finance and Economics (Hardin et al.,
2009) 1 74
Table 4 continued
41. Omega (United Kingdom) (Xiao et al., 2017) 1 74
42. Journal of International Economics (Manova and Yu, 2016) 1 71
43. International Journal of Project Management (Maravas and
Pantouvakis, 2012) 1 67
44. Managerial and Decision Economics (Al-Najjar and Belghitar,
2011) 1 65
45. Journal of Marketing (Luo and Homburg, 2008) (Rao and
Bharadwaj, 2008) 2 64.5
46. Research Journal of Business Management (Mathuva and
Mathuva, 2010)(Falope and Ajilore, 2009) 2 64.5
47. Journal of Small Business and Enterprise Development
(Tauringana and Adjapong Afrifa, 2013) 1 64
48. International Research Journal of Finance and Economics (Dong
and Su, 2010)(Raheman et al., 2010)(Uyar, 2009) 3 63
49. Computers and Industrial Engineering (Cao and Yu, 2018) 1 62
50. Operations Management Research (Chowdhury et al., 2020) 1 58
51. Accounting and Business Research (Gore et al., 2007) 1 57
52. European Financial Management (Hovakimian and Hovakimian,
2009) 1 57
53. International Journal of Hospitality Management (Mun and Jang,
2015) 1 56
54. Venture Capital (North et al., 2013) 1 54
55. European Accounting Review (Chowdhury et al., 2006) 1 52
Source: Author compilation
4.1.3. Ranking of the journal

High-cited articles on WCM have been published in the following journals fairly
considerably, as indicated in the preceding journal study section. However, only a handful
of these journals may have drawn a more significant number of influential articles on
WCM. Naturally tickles one's interest in learning more about the quality and reputation of
such publications. According to Table 5, these journals rank their ABDC, ABS, Web of
Science, and Scopus impact factors. Only 47 of the 55 most referenced journals are
included in ABDC, according to column 4 of table 5. 23 of the 47 graded journals are in
the "A* category" (highest rank), 13 are in the "A category," 6 are in the "B category," and
the other 5 are in the "C category." Only seven journals are ranked "4*" (highest), ten are
ranked "4," eighteen are ranked "3," twelve are ranked "2," and two are ranked "1"
according to ABS journal rankings (column 5). The remaining six journals did not meet
the basic requirements to be rated by ABS. The table's sixth column shows journals that
are included in Web of Science. According to the findings, only 42 journals are listed by
Web of Science, while remaining 13 are not. Finally, the table's last column shows the
Scopus cite score assigned to these journals. According to this, 4 journals are ineligible for
inclusion in the Scopus journal database. Five of the remaining 51 journals have an impact
factor of more than ten, while 20 have an impact factor of more than five, and the
remaining 26 have more than one impact factor. Despite this, the publications published in
these journals have received more than fifty citations. This infers that high ranked journals
are having difficulty locating publications on WCM. These publications are being
published in lower-ranked journals, but they continue to receive more citations from later
investigations.
Table 5: Represents the ranking of journals
Source Title CST AC ABDC ABS WOS SS
Accounting and Business Research (Gore et al., 2007) 1 57 A 3 L 4.5
Accounting and Finance (Baños-Caballero et al., 2010) 1 106 A 2 L 3.3
Accounting Review (Baños-Caballero et al., 2010) (Carey and
Simnett, 2006) (Desai et al., 2004)(Dechow and Dichev,
2002)(Defond and Park, 2001)(Hall and Stammerjohan,
1997)(Natarajan, 1996) 6 492.17 A* 4* L 6.7
Computers and Industrial Engineering (Cao and Yu, 2018) 1 62 D 2 L 7.9
Contemporary Accounting Research (Ferguson et al., 2004)
(Rosner, 2003) 2 134 A* 4 L 4.3
Economic Journal (Eswaran and Kotwal, 1986) 1 196 D 4 D 5.9
European Accounting Review (Chowdhury et al., 2006) 1 52 A* 3 L 3.7
European Economic Review (Chowdhury et al., 2006) 1 104 A* 3 L 3
European Financial Management (Hovakimian and
Hovakimian, 2009) 1 57 A 3 L 2.3
European Journal of Operational Research (Lee and Rhee,
2011)(Protopappa-Sieke and Seifert, 2010)(Saranga, 2009) 3 108.33 A* 4 L 9.5
European Review of Agricultural Economics (Amador et al.,
1998) 1 81 A 3 L 2.9
Financial Management (Hill et al., 2010) 1 138 C 1 L 2.1
Global Business Review (Sharma and Kumar, 2011) 1 106 D D D D
International Journal of Commerce and Management (Eljelly,
2004) 1 169 A* 3 L 9.4
International Journal of Hospitality Management (Mun and
Jang, 2015) 1 56 A 2 L 2.5
International Journal of Managerial Finance (Pais and Gama,
2015) (Abuzayed, 2012)(García-Teruel and Martínez-Solano,
2007) 3 163 D 2 L 9.1
International Journal of Physical Distribution and Logistics
Management (Spyridon Damianos Lekkakos Alejandro 12.
Serrano, 2016) 1 88 A 3 L 2
International Journal of Production Economics (Wuttke et al., 16.
2013) 1 153 A 2 L 4
International Journal of Project Management (Maravas and
Pantouvakis, 2012) 1 67 D 0 D D
Table 5 continued
International Research Journal of Finance and Economics
(Dong and Su, 2010)(Raheman et al., 2010)(Uyar, 2009) 3 63 A* 4* L 7.4
International Small Business Journal (Peel et al., 2000)(Peel
and Wilson, 1996) 2 82.5 A* 3 D 4.4
Journal of Accounting and Economics (Allen et al., 2013)(Das
and Zhang, 2003)(Burgstahler & Dichev, 1997)(DeFond and
Jiambalvo, 1994)(Patricia,1994)(Sweeney, 1994)(Press and
Weintrop, 1990)(Duke and Hunt, 1990) 8 653.5 A* 3 L 3.3
Journal of Banking and Finance (Ding et al., 2012)(Bigelli and
Sánchez-Vidal, 2012) 3 107.67 A 3 L 8.6
Journal of Business Finance and Accounting (Athanasakou et
al., 2011)(Deloof, 2003)(Moore and Reichert, 1983) 3 227 A 3 L 9.2
Journal of Business Logistics (Hofmann and Kotzab, 2010) 1 111 A* 4 L 13.3
Journal of Business Research (Baños-Caballero et al., 2014) 1 185 A* 2 D 6.4
Journal of Business Venturing (Pissarides, 1999)(Wright et al.,
1992)(Buttner and Rosen, 1988)(Bygrave, 1988) 4 149.25 A* 4 L 4.9
Journal of Construction Engineering and Management
(Kangari et al., 1992) 1 79 A* 3 D 5
Journal of Corporate Finance (Aktas et al., 2015) (Casey and
O‟Toole, 2014) 2 146 B 0 D D
Journal of Development Economics (van Wijnbergen,
1983)(van Wijnbergen, 1982) 2 107 A* 4* L 9.6
Journal of Economics and Finance (Jose et al., 1996) 1 124 C 4 L 4.8
Journal of Financial Economics (Ivashina and Scharfstein, 12.
2010)(DeAngelo et al., 2002)(Smith, 1990) 3 443.33 A* 4* L 3
Journal of International Economics (Manova and Yu, 2016) 1 71 A* 4 L 4.3
Journal of Marketing (Luo and Homburg, 2008) (Rao and
Bharadwaj, 2008) 2 64.5 B 2 L 4.5
Journal of Monetary Economics (Neumeyer and Perri, 2005) 1 430 A 3 L 1.8
Journal of Multinational Financial Management (Wang, 2002) 1 143 C 2 L 4.5
Journal of Real Estate Finance and Economics (Hardin et al.,
2009) 1 74 A 3 L 4.1
Journal of Small Business and Enterprise Development
(Tauringana and Adjapong Afrifa, 2013) 1 64 A* 3 L 5.6
Journal of the Operational Research Society (Chowdhury et
al., 2006) 1 92 A* 4* L 7.2
Management Accounting Research (Howorth and Westhead,
2003) 1 77 B 2 L 1.2
Management Science (Gaur et al., 2005) 1 203 D 0 L 5.4
Managerial and Decision Economics (Al-Najjar and Belghitar, 11.
2011) 1 65 D 0 D 7
OeconomiaCopernicana(Valaskova et al., 2018) 1 87 C 1 D 3.8
Omega (United Kingdom) (Xiao et al., 2017) 1 74 A* 4* L 4.3
Operations Management Research (Chowdhury et al., 2020) 1 58 A* 4 D 5.7
Operations Research (Kouvelis and Zhao, 2012) 1 362 A* 4 D 3
Table 5 continued
Production and Operations Management (Wu et al.,
2019)(Kouvelis and Zhao, 2011) 2 113.5 B 2 L 4.9
RAND Journal of Economics (Fazzari andPetersen, 1993) 1 370 D 0 D D
Research in International Business and Finance (Enqvist et al.,
2012)(Ukaegbu, 2014) 2 86 A* 4 D 6.6
Research Journal of Business Management (Mathuva and
Mathuva, 2010)(Falope and Ajilore, 2009) 2 64.5 A* 4* L 9.2
Review of Finance (Kieschnick et al., 2013) 1 100 C 3 L 8.8
Review of Financial Studies (Tong and Wei, 2011) 1 124 A 3 L 4.3
Small Business Economics (Baños-Caballero et al., 2012) 1 133 B 2 L 3.9
Venture Capital (North et al., 2013) 1 54 B 2 L 6.1
World Bank Research Observer (Djankov, 2000) 1 113 A 3 L 4.3
Note: CST: Count of Source title; AC: Average of Cited by; ABDC: Australian business dean
Council. ABS: Academic Journals Guide Rating 2021; WOS: Web of science; SS: Scopus cite
score. Source: Author compilation.
4.1.4. Analysis by year of publication

The study of the articles by year of publication indicates that they were published on a
regular basis from 1996 to 2020. Figure 3 shows a bar chart with a select number of
studies from the 1980s and 1990s. The graph also shows an increasing trend of
publications since 2007. This may be related to the economic slowdown of 2008, which
has underlined the relevance of WCM in terms of sustaining liquidity. The majority of
research publications were published between 2011 and 2012. Figure 3 shows that in
2010, a total of 8 papers were published.
Figure 3: Represents the publication trend over the time
8 8
7
6 6
6
5 5
5
4 4
4
3 3 3 3 3 3 3 3
3 Total
2 2 2 2 2 2 2 2 2
2
1 1 1 1 1 1 1 1 1 1
1
0

4.1.5. Analysis by Research Method

The frequency with which different methodologies were utilized in the studies reviewed is
shown in figure 4. The paper used determines whether it is based on empirical research or
a primary survey. The papers that have been published may be divided into three groups.
WCM research includes empirical, survey, and conceptual studies. Figure 4 demonstrates
that empirical work was the most frequent major.
Figure 4: Represents the method used by the researcher in their study
73
80
70
60
50
40
30 16
20 1
10
0
Qualitative Quantitative Qualitative and
Quantitative
Methodology
The approach employed in the papers was analyzed (81.11%), with regression and
correlation analysis being particularly prevalent. On the other hand, only 16 (17.77%)
studies are based on a primary survey, possibly due to the difficulties in obtaining replies
from corporate finance managers. Moreover, one study found that using both the empirical
and survey was the best study.
4.1.6. Analysis by industries
Figure 5 shows the findings of the publications analyzed by industry, demonstrating that
working capital study is not restricted to a particular business. The papers were chosen to
cover a wide range of themes. Fifty percent study is conducted on multiple industries
(study more than four industries simultaneously) with manufacturing (which accounted for
19 percent) coming in first and start-ups (which accounted for 9.09 percent) coming in
second. With 6.06 percent of research published, investment, oil and gas, financial
markets, and economic growth industry is all in the same location. Only 3.06 percent of
the papers looked at samples from many industries, showing that the writers aimed to
compare results and conclusions across industries.
Figure 5: Represents the studied distribution over the various industries
venture capital Industry 2

Transportataion 1
Supply Chain 5
Spare Part Industry 2
SME 6
Small firm Industry 3
Retail Industry 1
Restorent and hotel 1
Real state sector 2
Oil Industry 1
NM 7 Total
Multy Industry 45
Manufacturing & services 1
Manufacturing 3
Food & beverage 1
Export &Import 1
Construction 1
Banking 2
Airline 2
Agriculture 3
0 10 20 30 40 50
Source: Author compilation

4.1.7. Analysis by Country
The study, which is broken down by country, reveals a diverse spectrum of working
capital studies from the literature. Figure 6 depicts the article distribution by developing
and developed countries, chosen for sample selection by the selected articles for the
research. Working capital management research appears to be reasonably popular in
developed nations (68%), as many researchers pick companies from the US, UK, and EU
as the sample for their research study. Sixteen percent of study chose developing countries
as their sample, and 3% used both developed and developing nations in the study. 13
percent did not mention their study sample. The main reason for not mentioning it is that
they conducted a qualitative study.
Figure 6: Represents the distribution of articles according to the developing and

developed nations
12, 13% 3, 3%
BOTH
14, 16%
Developed
Developing
61, 68%
NM
4.2. Content analysis

Two very different qualitative and quantitative investigations can use content analysis.
The objective of this study is to spot the field across which the majority of WCM-related
work has been done. According to content analysis, there are four key areas where WCM
effort is concentrated, the relationship between WCM and firm profitability (Wang, 2002;
Deloof, 2003; Howorth & Westhead, 2003; Dong & Su, 2010; Raheman et al., 2010;
Sharma & Kumar, 2011; Abuzayed, 2012 Ding et al., 2012; Tauringana & Adjapong
Afrifa, 2013; Ukaegbu, 2014; Baños-Caballero et al., 2014; Aktas et al., 2015; Mun &
Jang, 2015; Pais & Gama, 2015) and WCM practices (Peel & Wilson, 1996; Baños-
Caballero et al., 2010; Dong & Su, 2010b Lekkakos & Serrano, 2015; Martínez-Solano &
García-Teruel, 2011), the Trade-offs between liquidity and profitability of the company
(Wang, 2002) and Determinants of WC investments (Baños-Caballero et al., 2010; Dong
& Su, 2010; Hill et al., 2010; Mathuva & David M. Mathuva, 2010; Tauringana &
Adjapong Afrifa, 2013).
5. Findings from the literature review
Working capital management (WCM) and profitability: Several studies examine the
relationship between WCM and firm profitability. Findings suggest that effective
management of working capital, including accounts receivable, inventory, and accounts
payable, can positively impact profitability (Deloof, 2003; García-Teruel & Martínez-
Solano, 2007; Hill, Kelly, & Highfield, 2010; Mathuva, 2010; Raheman, Nasr, & Akhtar,
2010; Tauringana & Adjapong Afrifa, 2013; Ukaegbu, 2014; Mun & Jang, 2015; Afza &
Nazir, 2016).
Earnings management and financial performance: Studies explore the phenomenon of
earnings management and its impact on financial performance. Findings indicate that
companies engage in earnings management practices to avoid earnings decreases and
losses, which can have implications for investors and stakeholders (Jones, 1991;
Burgstahler & Dichev, 1997; Healy & Wahlen, 1999; Richardson, Tuna, & Wysocki,
2003; Dechow & Skinner, 2000; Roychowdhury, 2006; Kothari, Leone, & Wasley, 2005).
Debt covenant violations and accrual manipulation: Research investigates the

relationship between debt covenant violations, manipulation of accruals, and financial
reporting practices. The findings suggest that companies may manipulate accruals to avoid
debt covenant violations and maintain access to financing (Sweeney, 1994; DeFond &
Park, 2001; Hribar & Collins, 2002; Hribar & Jenkins, 2004; Givoly, Hayn, & Natarajan,
2007; Guay & Verrecchia, 2007; Hribar & Nichols, 2007; Roychowdhury, 2006).
Cash flow management and investment decisions: The role of working capital, cash
holdings, and liquidity management in investment decisions is examined. Findings
highlight the importance of cash flow sensitivity of investment and the impact of working
capital on investment decisions (Wang, 2002; Uyar, 2009; Deloof, 2003; Garcia-Teruel &
Martinez-Solano, 2007; Raheman, Nasr, & Ibrahim, 2010; Mathuva & Mathuva, 2010;
Hill, Kelly & Highfield, 2010).
Impact of macroeconomic factors: Some studies focus on the impact of macroeconomic
factors, such as interest rates, inflation, and business cycles, on firm performance, working
capital management, and profitability. Findings indicate that these factors can significantly
influence financial outcomes (Djankov, 2000; Eljelly, 2004; Neumeyer & Perri, 2005;
Chowdhury, Hoffmann, & Schabert, 2006; Ivashina & Sharfstein, 2010; Tong & Wei,
2011; Enqvist, Graham, & Nikkinen, 2012; Casey & O'Toole, 2014; Aktas, Croci, &
Petmezas, 2015).
Audit quality and non-audit services: Research explores the relationship between audit
quality, audit firm rotation, and non-audit services. Findings suggest that mandatory audit
firm rotation can enhance audit quality, and non-audit services provided by auditors may
affect earnings management practices (Natarajan, 1996; Ferguson, Lam, & Lee, 2004;
Carey & Simnett, 2006; D‟Mello, Grinstein, & Lewis, 2008; Al-Najjar & Belghitar, 2011;
Bigelli & Sánchez-Vidal, 2012; Cameran, Balmi, & Rosu, 2016; Mun & Jang, 2015).
Trade credit and supply chain management: The role of trade credit in supply chain
coordination, financial supply chain management, and financing constraints is examined.
Findings indicate that effective management of trade credit can contribute to supply chain
efficiency and overall firm performance. (Tong & Wei, 2011; Hofmann & Kotzab, 2010;
Lee & Rhee, 2011; Casey & O'Toole, 2014; Lekkakos & Serrano, 2016; Wu, Hu, & Liang,
2019; Cao & Yu, 2018; Xiao, Choi, & Cheng, 2017).
Regional and industry-specific analyses: Several studies focus on specific regions or
industries, providing insights into working capital management, financial performance,
and profitability within those contexts. These findings can help understand the dynamics
and challenges faced by businesses in different regions and industries.(Fernandez & Nieto,
2005; Reinhart & Rogoff, 2011; Fotiadis & Vrontos, 2011; Li & Li, 2011; Carlsson,
Norberg, & Sjöholm, 2012; Chen, Wang, & Xu, 2012; Lach & Schankerman, 2014; Hitt,
Li, & Xu, 2016)
6. Future Research Agenda

This study, which was based on a content analysis of 90 highly referenced articles, has
found a few more topics on WCM that the researchers may target with newly created
efficiency measures. The topics being addressed are:
 Longitudinal studies to examine the long-term effects of working capital
management on firm profitability.
 Comparative studies across different industries to assess the industry-specific
factors influencing working capital management and profitability.
 Investigate the impact of cultural, legal, and institutional factors on working
capital management and firm performance across different countries.
 The interdependencies and interactions between working capital management,
cash flow management, and investment decisions.
 Investigate the behavioural factors influencing working capital management
decisions, such as managerial biases, risk preferences, and cognitive biases.
 Explore the role of technological advancements, such as artificial intelligence,
machine learning, and blockchain, in optimizing working capital management
processes.
 Examine the relationship between sustainable working capital management
practices, environmental responsibility, and long-term financial performance.
 Investigate the impact of external factors, such as economic crises, natural
disasters, and political instability, on working capital management and firm
performance.
 Examine the role of corporate governance mechanisms, such as board
composition, ownership structure, and audit quality, in ensuring transparent
financial reporting and effective working capital management.
 Develop dynamic models and simulation approaches to capture the complex

dynamics between working capital management, financial performance, and
profitability.
7. Discussion
This study conducted an SLR of the published papers on WCM by using the Scopus
database. For the comprehensive content-based and citation analysis, articles having 50 or
more citations as of January 19, 2022, are examined. According to the citation-based
study, research connected to WCM has grown in popularity in recent years. On the other
hand, most of the critical research is published in journals with a lower impact factor. This
makes us even more curious to learn more about the content of such investigations. The
preponderance of the highly referenced publications has looked into the relationship
between WCM and corporate profitability.
One key area explored was the relationship between working capital management (WCM)
and profitability. The findings suggest that effective management of working capital
components, such as accounts receivable, inventory, and accounts payable, can positively
influence profitability. By optimizing the levels and turnover of these components, firms
can enhance cash flow, reduce financing costs, and ultimately improve their overall
financial performance. Another important area of focus was earnings management and its
implications for financial performance. The studies indicated that companies engage in
earnings management practices to avoid decreases in earnings and losses, which can
impact investor perceptions and stakeholder confidence. Understanding the factors driving
earnings management is crucial for enhancing financial reporting integrity and ultimately
improving firm performance.
Debt covenant violations and accrual manipulation were also investigated in the research.
It was found that firms may manipulate accruals to avoid breaching debt covenants and
maintain access to financing. This highlights the significance of monitoring and enforcing
debt agreements to ensure transparent financial reporting and uphold the integrity of
financial statements. Cash flow management and its influence on investment decisions
were explored as well. Efficient management of cash flows and adequate working capital
were found to position firms better for funding investments and capitalizing on growth
opportunities. Effective cash flow management contributes to improved investment
decision-making and enhances overall firm performance.
The impact of macroeconomic factors on firm performance, working capital management,
and profitability was also examined. The studies revealed that factors such as interest
rates, inflation, and business cycles significantly influence financial outcomes.
Understanding the influence of macroeconomic conditions enables firms to make
informed strategic decisions and adapt to changing economic environments effectively.

The relationship between audit quality, audit firm rotation, and non-audit services was
another area of interest. Mandatory audit firm rotation was found to enhance audit quality,
while non-audit services provided by auditors can impact earnings management practices.
Maintaining high-quality audits and effectively managing potential conflicts of interest
related to non-audit services are critical for upholding financial reporting integrity and
ensuring accurate financial statements.
Effective management of trade credit was found to contribute to supply chain efficiency
and overall firm performance. Optimizing trade credit utilization improves cash flow,
strengthens relationships with suppliers and customers, and enhances supply chain
performance. Lastly, research conducted in specific regions or industries provided
valuable insights into the dynamics and challenges faced by businesses in different
contexts. These studies shed light on working capital management, financial performance,
and profitability within specific regions or industries, allowing firms to tailor their
financial strategies accordingly.
This study collectively contributes to our understanding of working capital management
practices and their influence on firm performance. The findings underscore the importance
of effective working capital management, transparent financial reporting, cash flow
optimization, macroeconomic factors, audit quality, supply chain coordination, and
context-specific considerations in driving financial performance and profitability.
8. Conclusion
This study conducted an SLR of the published papers on WCM by using the Scopus
database. For the comprehensive content-based and citation analysis, articles having 50 or
more citations as of January 19, 2022, are examined. According to the citation-based
study, research connected to WCM has grown in popularity in recent years. On the other
hand, most of the critical research is published in journals with a lower impact factor. This
makes us even more curious to learn more about the content of such investigations. The
preponderance of the highly referenced publications has looked into the relationship
between WCM and corporate profitability.
Furthermore, in such investigations, the usage of a limited number of proxies has been
found. This conclusion most likely explains that some articles get high citations and are
published in journals with a low impact factor. As a result, the study attempts to expand
the scope of WCM research by identifying future research issues for future studies. The
study indicates that effective management of working capital components, such as
accounts receivable, inventory, and accounts payable, can positively impact profitability.
Optimizing the levels and turnover of these components enables firms to enhance cash
flow, reduce financing costs, and improve overall financial performance.
The study also highlights the importance of understanding earnings management practices
and their implications for financial performance. Companies engage in earnings
management to avoid earnings decreases and losses, which can affect investor perceptions
and stakeholder confidence. Identifying the factors driving earnings management is crucial
for maintaining financial reporting integrity and enhancing firm performance.
Furthermore, the research emphasizes the relationship between debt covenant violations,
accrual manipulation, and financial reporting practices. Firms may manipulate accruals to
avoid breaching debt covenants and ensure access to financing. Monitoring and enforcing
debt agreements are essential for transparent financial reporting and upholding the
integrity of financial statements. Cash flow management and its impact on investment
decisions are also discussed. Efficient cash flow management and adequate working
capital enable firms to fund investments and capitalize on growth opportunities. Effective
cash flow management contributes to improved investment decision-making and overall
firm performance.
The influence of macroeconomic factors, such as interest rates, inflation, and business
cycles, on firm performance, working capital management, and profitability is examined
as well. These factors significantly affect financial outcomes, and understanding their
impact helps firms make informed strategic decisions and adapt to changing economic
environments. The article further explores the relationship between audit quality, audit
firm rotation, non-audit services, and their implications for financial reporting. Mandatory
audit firm rotation enhances audit quality, while the provision of non-audit services by
auditors can impact earnings management practices. Ensuring high-quality audits and
managing potential conflicts of interest related to non-audit services are crucial for
maintaining financial reporting integrity and accurate financial statements.Moreover, the
research discusses the role of trade credit in supply chain management and its impact on
firm performance. Effective management of trade credit contributes to supply chain
efficiency and overall firm performance. Optimizing trade credit utilization improves cash
flow, strengthens supplier and customer relationships, and enhances supply chain
performance. Finally, the article acknowledges the importance of regional and industry-
specific analyses in understanding the dynamics and challenges faced by businesses in
different contexts. Such studies provide valuable insights into working capital
management, financial performance, and profitability within specific regions or industries,
enabling firms to tailor their financial strategies accordingly.
This study contributes to the existing body of knowledge by providing insights into the
relationship between working capital management and firm performance. It highlights the
significance of effective working capital management, transparent financial reporting, cash

flow optimization, macroeconomic factors, audit quality, supply chain coordination, and
context-specific considerations in driving financial performance and profitability. The
article also identifies future research directions to encourage further exploration of these
topics and the publication of impactful research in high-ranking journals.
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Working Capital Management: A Systematic Literature Review

Article in The Empirical Economics Letters · November 2023

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Working Capital Management: A Systematic Literature

Abstract: An analysis of working capital and working capital management

that Aggressive liquidity management improves the company's performance and is

Source: Jordan (2010).

Cash Conversion Cycle (CCC) = INV +AR- AP

2. Review Papers Evolution

3. Methodology of literature review

We began the evolution process by looking for research papers on "Scopus

Table 2: Journals Abbreviation

4. Critical analysis of review

4.1.2. Analysis by journal of publication

4.1.3. Ranking of the journal

4.1.4. Analysis by year of publication

Source: Author compilation.

4.1.5. Analysis by Research Method

Figure 5: Represents the studied distribution over the various industries

venture capital Industry 2

Source: Author compilation

Figure 6: Represents the distribution of articles according to the developing and

Source: Author compilation.

4.2. Content analysis

Debt covenant violations and accrual manipulation: Research investigates the

6. Future Research Agenda

 Develop dynamic models and simulation approaches to capture the complex

informed strategic decisions and adapt to changing economic environments effectively.

significance of effective working capital management, transparent financial reporting, cash

Baños-Caballero, S., García-Teruel, P. J. and Martínez-Solano, P., 2012, How does

Martínez-Solano, P. and García-Teruel, P. J., 2011, Effects of Working Capital

Sweeney, A. P., 1994, Debt-covenant violations and managers‟ accounting responses,

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