scholarly journals Effect of Working Capital Management on Firm Performance: The Role of Ownership Structure

2019 ◽  
Vol IV (I) ◽  
pp. 75-83
Author(s):  
Shams ur Rahman ◽  
Khurshed Iqbal ◽  
Aamir Nadeem
Keyword(s):  
Firm Performance ◽  
Ownership Structure ◽  
Negative Relationship ◽  
Fixed Effect Model ◽  
Managerial Ownership ◽  
Capital Management ◽  
Working Capital ◽  
Working Capital Management ◽  
Inventory Turnover

Current study investigates the effect of working capital management on firm performance with the moderating role of ownership structure. A random sample of 77 firms for the period 2011-2015 was selected. By using fixed effect model the study demonstrated statistically significant negative relationship of leverage, average collection period and quick ratio on firm performance, while current ratio, account payable and inventory turnover found with positive significant effect on Firm Performance. Further, the effect of working capital on firm performance was positively affected by Institutional ownership and negatively affected by Managerial ownership. Thus, the results suggest that the owner/manager needs to manage their limited resources efficiently for the improvement of profitability. It is also advised that investor and shareholder pay attention to the level of institutional and managerial ownership at the time of investment..

scholarly journals An empirical analysis of the impact of working capital management on the firm performance in cement and ceramics industry of Pakistan- A panel approach

2019 ◽  
Vol 3 (1) ◽  
pp. 79-90
Author(s):  
Rashida Bibi ◽  
Fayaz Ahmad ◽  
Muhammad Aamir
Keyword(s):  
Firm Performance ◽  
Empirical Analysis ◽  
Fixed Effect Model ◽  
Fixed Effect ◽  
Capital Management ◽  
Working Capital ◽  
Working Capital Management ◽  
Effect Model ◽  
Inventory Turnover ◽  
Ceramics Industry

The real impact of Working Capital management is captured through its constituent policies such as Inventory, Receivable, and Payable managements. The aim of this study is to analyze the effects of Working Capital management i.e. inventory turnover period, the cycle of cash conversion, accounts receivable and payable periods, on the firm performance of cement and ceramics industry of Pakistan. The target population of the current research work is the whole cement and ceramics industry of Pakistan. The fixed-effect model was used for empirical analysis and incorporated by using the Stata software. The model parameters were tested at 1% and 5% level of significance. The outcomes of the fixed-effect model indicated that the account receivable period (AR) in days, inventory turnover (IT) in days and cash conversion cycle (CC) has an inverse nexus with the firm value of cement and ceramics industry of Pakistan. However, the account payable period has a positive relationship with the profitability of the cement and ceramics industry of Pakistan.

Working capital management and firm performance in China

2019 ◽  
Vol 27 (4) ◽  
pp. 546-562 ◽  
Author(s):  
Ting Ren ◽  
Nan Liu ◽  
Hongyan Yang ◽  
Youzhi Xiao ◽  
Yijun Hu
Keyword(s):  
Firm Performance ◽  
Negative Relationship ◽  
Manufacturing Firms ◽  
Chinese Economy ◽  
Chinese Government ◽  
Capital Management ◽  
Working Capital ◽  
Working Capital Management ◽  
Content Type ◽  
Ownership Structures

Purpose The purpose of this paper is to examine the relationship between working capital management (WCM) and firm performance in the context of the Chinese economy. Specifically, it investigates the effects of ownership structures as an internal factor and of institutional environments (IE) as an external factor shaping this relationship. Design/methodology/approach The study applies two-way fixed effect regression models to a sample of Chinese listed manufacturing firms for the period of 2010 to 2017. WCM is measured by cash conversion cycles (CCC); profitability is measured by core profit ratios; ownership structures are classified based on state-owned enterprises (SOEs) and non-SOEs; and IEs are measured from dimensions of factor markets (FM) and legal systems (LS). Findings First, the results show a negative relationship between CCC and firm performance. Second, the negative relationship between CCC and profitability is significant for non-SOEs but not for SOEs. Third, both the FM and LS strengthen the negative association between CCC and profitability. Fourth, the moderating effect of FMs and LSs is evident for non-SOEs only. The results hold when using alternative measures of WCM and profitability and while controlling for additional variables. Originality/value The current study shows that while WCM has a significant effect on the profitability of Chinese firms, such an effect greatly depends on the ownership structures and IE involved. The results thus offer important implications in helping the Chinese government create better IEs and in allowing manufacturing firms to improve upon their WCM practices.

scholarly journals The mediating role of board size, philanthropy and working capital management between basic corporate governance factors and firm's performance

2020 ◽  
Vol 27 (2) ◽  
pp. 135-151 ◽  
Author(s):  
Muhammad Naeem Shahid ◽  
Aamir Abbas ◽  
Khalid Latif ◽  
Ayesha Attique ◽  
Safwan Khalid
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Ownership Structure ◽  
Independent Directors ◽  
Capital Management ◽  
Working Capital ◽  
Working Capital Management ◽  
Content Type ◽  
Sugar Mills ◽  
The Relationship

PurposeThis study aims to identify the impact of corporate governance on performance of sugar mills. In order to study this relation, a model is constructed in which ownership structure and independent directors are taken as independent variables. Whereas firm performance is analyzed by using proxy variables such as return on asset (ROA), return on equity (ROE) and sales growth. Moreover, size of board, working capital management (WCM) and philanthropy are taken as mediating variables between governance variables and firm performance.Design/methodology/approachThe data of 32 sugar mills listed at Pakistan Stock Exchange for the period of four years (i.e. 2014–2017) is used for this research. Moreover, to investigate the model, generalized least squares statistical method is used to measure the relationship between variables.FindingsThe results revealed that there is significant but positive relationship between independent directors and ROA while ownership structure and ROE have significant but negative relationship. Thus, the board of directors should make it sure that all stakeholders and organizations should increase the nonfamily ownership in firms for better corporate performance. Moreover, philanthropy and WCM mediate the relationship between corporate governance and firms' performance.Practical/implicationsThis research work will be helpful in the corporate governance, and further researchers can conduct their study by considering executive/nonexecutive director and institutional owners as governance variables.Originality/valueThis paper fulfills an identified need to study how Corporate Governance effect the performance of firm.

scholarly journals Effects of Working Capital Management on Firm’s Profitability: A Study on the Firms Listed Under DSE in Bangladesh

2020 ◽  
pp. 130-138
Author(s):  
Md. Shakhaowat Hossin ◽  
Sohana Begum
Keyword(s):  
Financial Performance ◽  
Asset Allocation ◽  
Management Practice ◽  
Negative Relationship ◽  
Secondary Data ◽  
Capital Management ◽  
Working Capital ◽  
Working Capital Management ◽  
Conversion Period ◽  
Inventory Turnover

This paper investigates the relationship between working capital management and financial performance of Pharmaceuticals and Textile firms listed at the Dhaka Securities Exchange in Bangladesh. The data analysis was carried on ten Pharmaceuticals and Textile firms for a period of 2013 to 2017. Secondary Data was analyzed by applying Descriptive Statistics, Regression and Correlation analysis to findthe relationship of current ratio, inventory conversion period and average payment period with Return on Asset. The findings indicate that the Pharmaceuticals and Textile firms’ performance is influenced by the variables relating to working capital. There is a positive relationship between profitability and current ratioand Inventory Turnover period shows a negative relationship with profitability but Average payment period shows insignificant impact on profitability. The study concludes that there exists a relationship between working capital managementand financial performance of Pharmaceuticals and Textile firms in Bangladesh. The study recommends that for the Pharmaceuticals and Textile firms to remain profitable, they should employ working capital management practice that will help in making decisions about investment mix and policy, matching investment to objective, asset allocation for institution and balancing risk against profitability.

scholarly journals The Impact of Working Capital Management on Profitability: The Case of Small and Medium-Sized Export Companies in Tunisia

2011 ◽  
Vol 15 (3) ◽  
pp. 71-88 ◽  
Author(s):  
Meryem Bellouma
Keyword(s):  
Negative Relationship ◽  
Capital Management ◽  
Working Capital ◽  
Working Capital Management ◽  
Random Effects Models ◽  
Accounts Receivable ◽  
Cash Conversion Cycle ◽  
Fixed And Random Effects ◽  
Financial Decision ◽  
The Impact

Working capital is an important component in the financial decision of the company. An optimal working capital management is reached through a trade off between profitability and liquidity. This study aims to provide empirical evidence about the effects of working capital management on the profitability of 386 Tunisian export SMEs observed from 2001 to 2008. The results of fixed and random effects models show a negative relationship between corporate profitability and the different working capital components. This reveals that Tunisian export SMEs should shorten their cash conversion cycle by reducing the number of days of accounts receivable and inventories to increase their profitability.

scholarly journals WORKING CAPITAL MANAGEMENT - IT’S IMPACT ON LIQUIDITY AND PROFITABILITY - A STUDY OF COAL INDIA LTD

2016 ◽  
Vol 4 (12) ◽  
pp. 178-187
Author(s):  
Shiva Kumar ◽  
N Babitha Thimmaiah
Keyword(s):  
Negative Relationship ◽  
Ranking Method ◽  
Statistical Techniques ◽  
Capital Management ◽  
Working Capital ◽  
Weak Correlation ◽  
Working Capital Management

The present paper makes an attempt to give a conceptual insight on working capital management and assess its impact on liquidity and profitability of Coal India Ltd. The liquidity and profitability tradeoff has become an important aspect for all the organizations. The attempt also has been made to test the liquidity and profitability position. For this correlation and spearman’s rank method has been applied. The correlation and spearman’s ranking method indicates weak correlation and negative relationship between liquidity and profitability. The Motaal’s test has also been applied to test the liquidity performance. It indicates liquidity position of the firm has improved over the study period. The study covers five year data from 2010-11 to 2014-15. For the analysis ratios indicating working capital performance and some statistical techniques are employed.

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 & 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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