Does Working Capital Management Influence Operating and Market Risk of Firms?

Extant empirical studies have predominantly focused on the nexus between working capital management (WCM) and corporate profitability. While there is a dearth of literature WCM firm’s risk, present study examines Pakistani-listed firms coming from 12 diverse industrial segments to observe this association for time span ten years (2005–2014). To ensure robustness, we employed System Generalized Method Moments (SGMM) regression estimation investigate influence operational market risk firms. Empirical testing revealed that higher levels were associated with lower volatility in firms’ stock price, which shows shareholders prefer conservative policy. Moreover, better cash positions subject lesser volatility. In contrast, excess larger net trade cycle increased operating income. Besides, relative their respective industry experienced fewer fluctuations profits. Our findings assert short-term financial has important ramifications fundamentals. Practical implications are discussed managers relevant stakeholders.