Working Capital Management and Corporate Cash Holdings, Comparative Analysis between Industrial, Commercial and Service Sectors in Egypt

This research examines the impact of working capital management (WCM) on corporate cash holdings, with a sectoral comparison across the industrial, commercial, and service sectors in Egypt. By analyzing financial data from listed non-financial firms between 2011 and 2023, the study investigates how key components of WCM—such as the cash conversion cycle (CCC), inventory management, receivables, and payables—affect the level of cash reserves held by firms. The research employs panel data regression and structural equation modeling to test the direct relationship and explores how macroeconomic variables (inflation, growth opportunities, and exchange rate volatility) and corporate governance practices moderate this relationship. Findings reveal that WCM practices significantly influence cash holdings, but the strength and direction of this impact vary by sector. Industrial firms, characterized by high capital intensity, exhibit stronger sensitivity to WCM inefficiencies, particularly in inventory turnover. Commercial firms, operating with narrow margins and high competition, are most influenced by receivables and payables management. In contrast, service firms—driven by intangibility and seasonal demand—prioritize liquidity buffers, with CCC playing a central role. The study also shows that inflation and governance exert a significant moderating effect, particularly after the 2016 currency flotation. These insights offer theoretical and practical contributions to liquidity strategy optimization in volatile and emerging market environments like Egypt.