Jiyang Cheng, Ajay Kumar Patel, Hawazen Almugren, Varun Chotia, Bhumika Gupta. Role of capital structure in moderating working capital management relation on valuation and risk. Finance Research Letters, 2026, 107, pp.110229. ⟨10.1016/j.frl.2026.110229⟩.

The objective of the study is to examine the relationships among working capital management (WCM), firm valuation, and risk in companies listed in G-7 countries from 2015 to 2024. The study evaluates the capital structure as a moderator of WCM’s impact on firm value and risk. The result shows operational efficiency, as measured by receivable and payable turnover, significantly impacts firm value. The moderating effect of capital structure weakens the liquidity, receivables, and payables’ impact on firm risk and has a minimal impact on the firm’s value, especially in pre-crisis periods. Thus, the study suggests formulating strategies to optimise liquidity, improve the efficiency of managing receivables and payables, and use debt to maximise the firm’s stability, especially during crises.