WORKING CAPITAL MANAGEMENT AND FIRM PERFORMANCE OF HIGH-GROWTH ENTERPRISES: EVIDENCE OF CORPORATE FINANCIAL MANAGEMENT IN EMERGING ECONOMIES

Abstract

This study examines the relationship between working capital management (WCM) and profitability among high-growth firms (HGFs) in Nigeria, utilizing a comprehensive panel dataset spanning 2002 to 2023. Employing fixed effects and system GMM estimations, the analysis reveals a significant inverted U-shaped relationship between the cash conversion cycle (CCC) and firm profitability, indicating that both insufficient and excessive investment in working capital adversely affect financial performance. Subsample analyses across industries and time periods further highlight sectoral heterogeneity and increased sensitivity of WCM post-2015 amid macroeconomic volatility. These findings underscore the critical need for balanced, dynamic working capital policies tailored to firm-specific and macroeconomic contexts. The study contributes to the understanding of financial management strategies in emerging markets and offers actionable insights for corporate managers, financial institutions, and policymakers aiming to enhance firm resilience and economic development