Suzan Dsouza

This paper investigates the determinants of working capital management in the Indian hotel sector, focusing on factors influencing financial efficiency and sustainability. Using a dynamic panel model, the study analyzes data from 67 publicly listed Indian hotels over ten years from 2013 to 2022. The data were obtained from the Refinitiv database, the World Bank, and the Sustainable Development Index. The system generalized method of moments estimator was applied to ensure the robustness of results. The study results indicate that firm-specific factors, including return on assets, leverage, asset tangibility, and board structure, significantly impact working capital needs. Additionally, macroeconomic elements such as GDP play a crucial role in shaping working capital management. A notable positive relationship was identified between return on assets and working capital requirements. Conversely, leverage exhibited a strong negative association with working capital needs. These results emphasize the importance of both internal financial characteristics and broader economic conditions in effective working capital management. The study highlights the importance of integrating governance and economic conditions into working capital management strategies.