CEO age and working capital management: evidence from China
by Md. Jahidur Rahman; Wanting Gui; Naznin Sultana Chaity; Md. Moazzem Hossain
International Journal of Corporate Governance (IJCG), Vol. 13, No. 2, 2022

Abstract: Previous literature uncovered the important relationship between working capital management (WCM) and top executives' personal characteristics. This study explores the impact of chief executive officers' age on firms' WCM choices in China. This study uses 2,154 firm-year observations of Chinese firms as the sample, which is collected from 2010 to 2020. Net operating working capital (NOWC) is used to measure WCM. CEO age is measured with the natural logarithm of CEO age. This study uses fixed-effects regressions to explore the connection between CEO age and working capital management in Chinese firms. Result reveals that young managers are inclined to offer customers large trade credits but fail to uncover robust corroborations where entities with young executives are inclined to choose conservative corporate WCM strategies (conservative strategy hypothesis). Although the result is unexpected, this study provides novel insights to future researchers who are interested in this area, including investors and directors who are interested in the Chinese market.

Online publication date: Thu, 02-Feb-2023

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