Corporate Governance and Working Capital Policy: An Unobserved Influence

2020 ◽  
Vol 6 (1) ◽  
pp. 106-122
Author(s):  
Martha Coleman ◽  
Mengyun Wu ◽  
Mark Baidoo
Keyword(s):  
Corporate Governance ◽  
Policy Implementation ◽  
Control Mechanism ◽  
Stock Exchange ◽  
Mixed Result ◽  
Working Capital ◽  
Working Capital Management ◽  
Financial Report ◽  
Total Observation ◽  
Ghana Stock Exchange

This study examines the effect of corporate governance on working capital policy; Aggressive and Conservative of 103 firms listed on Nigeria and Ghana Stock Exchange from 2012 to 2016. This study used a panel data of nonfinancial companies listed on Nigeria and Ghana stock exchange for the period 2012–2016. Data extracted from the annual financial report. Companies with missing data were dropped given a total of 103 companies from both countries (Nigeria and Ghana) with total observation of 510. We discovered that corporate governance on implemented aggressive/conservative working capital policy by firms produced a mixed result. Aggressive working capital policy implementation calls for strict control mechanism to ensure less investment in current assets. Therefore, there is strong corporate governance influence on working capital management of firms that operate aggressive working policy than firms which have implemented conservative working capital policy.

scholarly journals Manajemen Modal Kerja Dan Dampaknya Terhadap Nilai Perusahaan Dengan Corporate Governance Sebagai Variabel Pemoderasi

2014 ◽  
Vol 6 (1) ◽  
pp. 68
Author(s):  
Adrianus Dhimas Setyanto ◽  
Ika Permatasari
Keyword(s):  
Corporate Governance ◽  
Firm Value ◽  
Stock Exchange ◽  
Capital Management ◽  
Working Capital ◽  
Corporate Values ◽  
Working Capital Management ◽  
Enterprise Value ◽  
Cash Conversion Cycle ◽  
The Relationship

AbstractThis study aims to determine the effect of working capital management on firm value. Corporate governance is used as a moderating variable in this study to explore the role of corporate governance in the relationship between working capital management with corporate values. Program participants of Corporate Governance Perception Index (CGPI) are used as a sample during the period from 2003 to 2011 and listed on the Indonesian Stock Exchange (IDX). We were using simple linear regression and the testing of moderating effects were calculated by Moderated Regression Analysis (MRA). The results showed that the working capital management has an influence on the value of the firm. However, corporate governance variables failed to moderate the relationship between working capital management and enterprise value. It shows that companies and investors in the market still lack concern for the program response and Corporate Governance Perception Index (CGPI) as an assessment of the application of the principles of corporate governance that has been done by the company .Keywords: Working Capital Management, Cash Conversion Cycle, Corporate Governance, Firm Values

scholarly journals Working Capital Management Policies and Returns of Listed Manufacturing Firms in Ghana

2017 ◽  
Vol 64 (2) ◽  
pp. 255-269 ◽  
Author(s):  
Anokye M. Adam ◽  
Edward Quansah ◽  
Seyram Kawor
Keyword(s):  
Stock Exchange ◽  
Manufacturing Firms ◽  
Capital Management ◽  
Working Capital ◽  
Working Capital Management ◽  
Financing Policies ◽  
Current Asset ◽  
Investment And Financing ◽  
Management Policies ◽  
Ghana Stock Exchange

Abstract This study sought to determine the effects aggressive/conservative current asset investment and financing policies have on firms′ return for six manufacturing firms listed at Ghana Stock Exchange for a period of 2000-2013. Data were obtained from the annual reports of the firms and the Ghana Stock Exchange. The study adopted longitudinal explanatory non-experimental research design applied to dynamic panel ARDL framework in analyzing the data. The results revealed that the current asset investment and financing policies have highly significant positive effects on returns to equity holders in the long-run. The empirical evidence suggests that conservative current asset investment policies increase firms return while conservative financing policies yields negative returns. The study therefore would enable finance managers to be able to fashion out the appropriate working capital management policies. A firm pursuing conservative current asset investment policy should balance it with aggressive current asset financing policy in order to enhance profitability and create value for their investors.

scholarly journals Does Working Capital Management Affect Profitability of Ghanaian Manufacturing Firms?

2020 ◽  
Vol 23 (1) ◽  
pp. 1-18
Author(s):  
Kwadwo Boateng Prempeh ◽  
Godfred Peprah-Amankona
Keyword(s):  
Developing Economies ◽  
Stock Exchange ◽  
Optimal Level ◽  
Manufacturing Firms ◽  
Management Policy ◽  
Capital Management ◽  
Working Capital ◽  
Working Capital Management ◽  
Dynamic Panel Regression ◽  
Ghana Stock Exchange

AbstractThis paper analyses the link between working capital management and profitability of firms in the context of developing economies. A balanced panel consisting of eleven (11) manufacturing firms listed on the Ghana Stock Exchange covering the period of 2011-2017 was used. The link between working capital management and profitability was examined using dynamic panel regression (Arellano-Bond Estimation) technique. The study revealed that there is a significant positive linear relationship between working capital management and firms’ profitability. The findings also reveal the existence of a concave quadratic relationship between working capital management and firms’ profitability. There is an optimal level at which working capital management maximises firm’s profitability, therefore, managers need to ensure that they operate within the limits of the optimal level by implementing an effective and efficient working capital management policy. The study concludes that, the practice of an aggressive working capital management policy maximises a firm’s profitability.

scholarly journals PENGARUH UKURAN PERUSAHAAN, FINANCIAL LEVERAGE, MANAJEMEN MODAL KERJA TERHADAP PROFITABILITAS PERUSAHAAN SEKTOR INDUSTRI BARANG KONSUMSI

2019 ◽  
Vol 8 (8) ◽  
pp. 5325
Author(s):  
Ni Luh Ayu Megawati ◽  
Ida Bagus Panji Sedana
Keyword(s):  
Stock Exchange ◽  
Participant Observation ◽  
Company Size ◽  
Capital Management ◽  
Working Capital ◽  
Financial Leverage ◽  
Working Capital Management ◽  
Financial Report ◽  
Report Data ◽  
Observation Method

This study aims to analyze the significance of the influence of company size, financial leverage, and working capital management on profitability. This research was conducted at the Consumer Goods Industry Sector Company listed on the Indonesia Stock Exchange (IDX) for the 2015-2017 period. The number of samples of this study were 27 companies, using the purposive sampling method. Data collection is done by non-participant observation method, namely through published financial report data. Based on the results of the analysis it was found that the size of the company had a positive and significant effect on profitability. Financial leverage has a negative and significant effect on profitability. Working capital management has a positive and not significant effect on profitability. This shows that companies must pay attention to company size and financial leverage in making investment decisions and funding decisions. Keywords: profitability, company size, financial leverage, working capital management

scholarly journals Effects of working capital management policies on shareholders’ value: Evidence from listed manufacturing firms in Ghana

2019 ◽  
Vol 66 (5) ◽  
pp. 659-686
Author(s):  
Anokye Adam ◽  
Edward Quansah
Keyword(s):  
Stock Exchange ◽  
Manufacturing Firms ◽  
Capital Management ◽  
Working Capital ◽  
Working Capital Management ◽  
Investment Policies ◽  
Financing Policies ◽  
Current Asset ◽  
Management Policies ◽  
Ghana Stock Exchange

This study has sought to determine the effects of working capital management policies on shareholder value creation for six manufacturing firms listed at the Ghana Stock Exchange for the period of 2000-2013. Data were gathered from the annual reports of the firms and the publication of Ghana Stock Exchange. The study employed a longitudinal explanatory non-experimental research design applied to a dynamic panel Autoregressive Distributed Lags methodology framework for analysing the data. The results indicated that conservative current asset investment policies increase economic value added (EVA), whereas aggressive current asset investment policies enhance market-to-book ratio and Tobin?s Q in the long-run. On the other hand, conservative current asset financing policies enhance market-to-book ratio, Tobin?s Q, and EVA in the longrun. Thus, investors discount aggressive current assets? financing policies. A firm pursuing an aggressive current asset investment policy should balance it with a conservative current asset financing policy to create value for its shareholders.

Does corporate governance influence the efficiency of working capital management of listed firms

2016 ◽  
Vol 7 (4) ◽  
pp. 482-496 ◽  
Author(s):  
Vera Fiador
Keyword(s):  
Corporate Governance ◽  
Stock Exchange ◽  
Capital Management ◽  
Working Capital ◽  
Firm Level ◽  
Working Capital Management ◽  
Content Type ◽  
Growth And Survival ◽  
Listed Firms ◽  
Cash Conversion Cycle

Purpose The purpose of this paper is to explore the relevance of corporate governance in the quest to attain organizational efficiency in the working capital management of listed firms. There is a consensus that efficiency of working capital management is vital for firm’s growth and survival, yet another consensus is the role of corporate governance in limiting managerial self-serving behavior and ultimately improving firm’s efficiency. If the foregoing views hold, then the empirical question “Is corporate governance important for firm-level working capital efficiency?” becomes important. Design/methodology/approach Panel data on 13 non-financial firms listed on the Ghana Stock Exchange were employed in a pooled OLS regression. Findings The results of the study indicate mostly a negative effect of internal governance mechanisms on the cash conversion cycle, the inventory, receivables’ periods and payables’ periods, implying that governance structures do affect the efficiency of working capital management. Firm characteristics like age, size and profitability also emerged as relevant influences on the efficiency of working capital management. Research limitations/implications Data for the study cut across several sectors thus limiting the specificity with which findings can be applied. Originality/value These findings have implications for board composition in the quest for firm-level efficiency while raising the need for more industry-specific enquiries.

scholarly journals WORKING CAPITAL MANAGEMENT EFFECT ON RETURN ON EQUITY- EVIDENCE FROM LISTED MANUFACTURING FIRMS ON GHANA STOCK EXCHANGE (GSE)

2020 ◽  
Vol 5 (1) ◽  
pp. 47
Author(s):  
Michael Amoh Asiedu ◽  
David Kwabla Adegbedzi ◽  
Richard Oduro ◽  
Sulemana Iddrisu
Keyword(s):  
Negative Correlation ◽  
Stock Exchange ◽  
Manufacturing Firms ◽  
Net Income ◽  
Capital Management ◽  
Working Capital ◽  
Working Capital Management ◽  
Return On Equity ◽  
Ghana Stock Exchange ◽  
Management Effect

Purpose: This paper seeks to assess working capital management effect on Return on Equity (net income (EAITP)/Equity) of listed manufacturing firms on the Ghana Stock Exchange (GSE). Methodology: The research design employed was descriptive as well as referential analysis. A panel data of thirteen (13) listed manufacturing firms on the Ghana Stock Exchange (GSE) for periods 2010 to 2019 was used for the study. Data which were the audited annual financial reports were accessed from Ghana Stock Exchange Fact Book and the web portals of the firms. Statistical Package for Social Sciences (SPSS, version 20) and Microsoft Excel were used in data analyses and presentations. Descriptive statistics was used to summarize the data in terms of measures of central tendency (mean), measures of dispersion (standard deviation) as well as minimum and maximum values. Pearson’s Product-Moment Correlation and Ordinary Least Square (OLS) multiple regression techniques were employed to establish the relationship and effect of working capital management on Return on Equity respectively.    Findings: Results showed that INV has statistically significant and negative correlation with ROE(r= -0.287 and p<0.05) as AR and ROE have statistically significant and negative correlation(r= -0.287, p<0.05). AP also has statistically significant and negative association with ROE(r= -0.407, p<0.05). The regression analysis showed that INV has a negative (β = -.01) and significant (p<0.05) effect on ROE as AR also has a negative (β = -.002) and significant (p<0.05) effect on ROE. Again, AP has negative (β = -.002) but insignificant (p>0.05) effect on ROE as CCC has statistically significant (p<0.05> and negative (-0.021) effect on ROE. Also, R and R-Sq. showed 59.5 % and 35.4% respectively, implying that the model is fit for predicting the criterion variable at any given levels of the predictor variables. Contribution to theory, practice and Policy: This work adds to working capital management literature by adopting ROE (Net Income (EAITP)/Total Equity) that responds to call by CFI (2015), and therefore addresses the pitfalls in prior studies. It is therefore a sine qua non for management, policy makers and practitioners to fashion strategies to ensure that working capital is managed to the core by reducing number of days inventory, number of days accounts receivable, number of days accounts payables and cash conversion cycle in order to create wealth for shareholders as well as expand operation of the firms.

scholarly journals ANALISIS PENGARUH MANAJEMEN MODAL KERJA, PERTUMBUHAN PENJUALAN DAN KEBIJAKAN HUTANG TERHADAP PROFITABILITAS PERUSAHAAN

2020 ◽  
Vol 4 (2) ◽  
pp. 299-309
Author(s):  
Afriyanti Hasanah
Keyword(s):  
Sampling Method ◽  
Stock Exchange ◽  
Secondary Data ◽  
Financial Statements ◽  
Sales Growth ◽  
Capital Management ◽  
Working Capital ◽  
Working Capital Management ◽  
Testing Method ◽  
Total Observation

This study aims to examine the effect of working capital management, sales growth and leverage on profitability. This study uses secondary data with data collection techniques using the annual financial statements of property and real estate companies listed on the Indonesia Stock Exchange (IDX) for the period 2013-2017. Through the purposive sampling method, 20 companies have met the criteria of a total population of 61 companies, so that the total observation for 5 years is 100 samples. The testing method in this study uses multiple regression analysis with panel data. The results of this study indicate that working capital management does not have an effect on profitability, sales growth variable has an influence on profitability, and leverage variables show no influence on profitability.  

scholarly journals Location, Working Capital, Corporate Governance, and Profitability: The Case of Indonesian Manufacturing Firms

2021 ◽  
Vol 22 (2) ◽  
pp. 881-900
Author(s):  
Irene Rini Demi Pangestuti ◽  
Komang Yuli Pridarsanti ◽  
Robiyanto Robiyanto
Keyword(s):  
Corporate Governance ◽  
Significant Influence ◽  
Stock Exchange ◽  
Manufacturing Firms ◽  
Working Capital ◽  
Return On Assets ◽  
Current Ratio ◽  
Working Capital Management ◽  
Cash Conversion Cycle ◽  
Good Corporate Governance

This study scrutinizes the effect of location, working capital and corporate governance toward return on assets (ROA) in Indonesian manufacturing firms. 61 manufacturing firms listed on the Indonesia Stock Exchange were taken as samples in this study. The results show that location does not affect manufacturing firms’ profitability. Furthermore, this study proves that working capital management, as measured by current ratio (CR) and quick ratio (QR), has a positive and significant influence on return on assets (ROA), but cash ratio (CR) and the cash conversion cycle does not have a significant influence on return on assets (ROA). This study also found that the Good Corporate Governance Index (GCGI) has a positive and significant influence on return on assets (ROA) in Indonesian manufacturing firms.

scholarly journals The impact of Working Capital Management on shareholders’ wealth and profitability: evidence from Colombo Stock Exchange

2018 ◽  
Vol 15 (2) ◽  
pp. 104-115
Author(s):  
Wasantha Perera ◽  
Pradeep Priyashantha
Keyword(s):  
Firm Size ◽  
Regression Models ◽  
Stock Exchange ◽  
Negative Relationship ◽  
Least Square ◽  
Capital Management ◽  
Working Capital ◽  
Working Capital Management ◽  
Holding Period ◽  
The Impact

The Working Capital Management (WCM) has an important role for the firm’s success or failure, because it directly affects the overall business health of the firm. This study examined the impact of WCM on profitability and shareholders’ wealth using 50 companies listed in different sectors on the Colombo Stock Exchange (CSE) for the period from 2010 to 2015. This sample represents 47% of the selected sectors of CSE. The profitability of the company is measured using gross operating profit (GOP) and shareholders wealth measured by Tobin’s Q (TQ) ratio. The WCM is measured using five independent variables namely stock holding period (SHP), debtors’ collection period (DCP), creditors’ settlement period (CSP), cash conversion circle (CCC) and current assets ratio (CAR). Further, three additional variables such as firm size (SIZE), leverage (LEV) and earning yield (EY) are employed as controlling variables to capture the impact of other performance of the companies.The data were analyzed using ordinary least square (OLS) and panel data regression models. These regression models reveal that there is a significant negative relationship between CCC and dependent variables (GOP &amp;amp; TQ). Further, this relationship has been confirmed by the major components of CCC such as SHP, DCP. Firm size also positively and significantly effects on the firm GOP while negatively effects on the TQ. Further, they revealed that there is a significant positive relationship between LEV and TQ. The study finds that the shareholders’ wealth and profitability can be increased through the efficiency of WCM.

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