Capital (architecture)

Working capital

Chromatography

Accounts payable

Accounting

Archaeology

Economics

Enterprise value

Computer science

Payment

Business

Value (mathematics)

Demographic economics

Chemistry

Sample (material)

Finance

Machine learning

History

Journal of Behavioral and Experimental Finance

The existing literature provides strong evidence that working capital management affects a firm’s performance and value. In this paper, we examine how CEO age affects firms’ working capital decisions. Using a sample of 28,243 firm-year observations of U.S. firms from 1993 to 2018, we find that net operating working capital increases with CEO age, and firms with younger CEOs hold lower levels of inventory and higher levels of payables. The results are robust to various model specifications and variable definitions, providing strong and robust evidence that younger CEOs tend to implement more aggressive working capital management policies (Aggressive strategy hypothesis). The findings provide important insights to the board of directors, investors, and various monitoring groups.

Working capital management and CEO age