Working Capital Management and Working Capital Policies on Firm’s Value: A Special Reference to the Listed Companies in Sri Lanka

Vianny Jeniston Delima *

Department of Business and Management Studies, Trincomalee Campus, Eastern University, Sri Lanka.

*Author to whom correspondence should be addressed.


The aim of this paper is to investigate the influence between working capital management and firm value in the Sri Lankan context. This research has used pooled panel data of 475 observations from 95 listed firms across 18 sectors. Secondary data which are gathered from the annual report published by the CSE for the five years period from 2018/2019 to 2022/2023. The findings states that this model in the study explains a rise in the number of days in the cash conversion period decreased the firm's valuation by 43%. Further, working capital investment policy increases, or in other terms, the degree of WCIP’s aggressiveness rises, the firm value decreases, and increases in financing policy leads to decreases in firm value. This study includes both working capital investment policy and working capital financing policy with control variables in Sri Lanka. This research provides limited literature on working capital management, working capital policies, and firm value in Sri Lanka.

Keywords: Firm value, working capital management investment, financing policies, working capital management, aggressive policy, conservative policy, market value addition

How to Cite

Delima , V. J. (2023). Working Capital Management and Working Capital Policies on Firm’s Value: A Special Reference to the Listed Companies in Sri Lanka. Asian Journal of Economics, Business and Accounting, 23(20), 122–137.


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