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Working capital (mis)management – impact of executive age
Author(s) -
Adhikari Hari P.,
Krolikowski Marcin W.,
Malm James,
Sah Nilesh B.
Publication year - 2021
Publication title -
accounting and finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.645
H-Index - 49
eISSN - 1467-629X
pISSN - 0810-5391
DOI - 10.1111/acfi.12591
Subject(s) - upper echelons , working capital , argument (complex analysis) , business , risk aversion (psychology) , accounting , loss aversion , cash , executive summary , economics , finance , marketing , strategic management , financial economics , expected utility hypothesis , biochemistry , chemistry
Several recent studies have used the upper echelons theory to explain the impact of personal traits of top executives on various corporate policies. In this, first of its kind, study we find that older executives invest more in working capital; take longer to convert inventories to cash; and pay their suppliers sooner. These findings are consistent with the argument that risk aversion increases with executive age. Our findings indicate that executive age has significant bearing on working capital management policies. This study also initiates new avenues in research relating behavioral aspect of executives with short‐term financial management.