Working Capital Management and Firm Performance in the G-7 and E-7 Countries During Extreme Events Such as COVID-19

We explore the impact of working capital management, firm-specific and country-specific variables on firm performance in several developed and emerging economies. We analyse panel data from a non-arbitrary sample of developed (G-7) and emerging (E-7) countries over the period 2010 to 2023 -a timeframe that includes an extreme event, the COVID-19 pandemic, marking the first study in the literature, to our knowledge, to analyse its impact within this group of emerging countries. We present three main novel findings: First, with respect to the components of the cash conversion cycle, firms in both emerging and developed countries exhibit lower performance as days sales of inventory increase. Second, higher economic growth is associated with improved firm performance across both country groups. Third, firm performance declined in both emerging and developed countries during the post-COVID-19 period. Our results provide useful guidance for risk management, investment decisions, and policy interventions, as well as for future research on working capital management or financial strategies that optimise firm profitability in different economic contexts.