The impact of corporate governance on working capital management efficiency of American manufacturing firms (original) (raw)
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2020
The main aim of conducting this research work is to explore the impact of Corporate Governance (CG) on the Working Capital Management Efficiency (WCME) for the Manufacturing firms in Palestine. The Data for this study was collected from secondary data sources; annual reports for manufacturing firms, 15 Palestinian manufacturing firms have been selected for this purpose for three years from (2016 to 2018). The result shows that a significant relationship exists between Cash Conversion Cycle and (firm size, and sales growth), Sales Growth & Firms Size explains 42% of the variation in the Working Capital Management component (Cash Conversion Cycle). Current Ratio as the second dimension of Working Capital Management has a significant correlation with CEO Duality, Firm Size and Firm Performance. CEO Duality & Firms Performance explains 25.9% of the variation in the Working Capital Management component (Current Ratio). The researcher recommended that the manufacturing companies need to i...
Effect of Corporate Governance on Working Capital Management and Financial Performance
الفکر المحاسبى, 2015
This research investigates the impact of corporate governance monitoring practices on the efficiency of working capital management and on improving the corporate financial performance. This research is based on a sample of 57 listed manufacturing firms in the Egyptian Stock Exchange for the period 2006-2010. Results were analyzed by using the multiple regression and Pearson correlation techniques. The result indicates that working capital management efficiency is critical for maintaining balance between liquidity and profitability. Findings show that return on assets and current ratio is negatively correlated with the Cash Conversion Cycle (CCC). This means that by shortening CCC, firms' profitability and liquidity improves. The results implies that firms can create value for their shareholders by keeping the CCC to minimum and through effective working capital management managers can promotes increase in firm profitability and liquidity. In addition, the results revealed that there is a significant impact of corporate governance practices on the efficiency of working capital management.
Sage, 2023
This article aims to evaluate the connection between corporate governance and working capital efficiency of manufacturing companies in India by providing evidence on the composition of board and its leadership structure on working capital efficiency. This article covers the top companies listed on the Bombay Stock Exchange (BSE) from 2014 to 2019 (498 firm-year observations). The study utilizes panel econometric methodology based on Generalized Least Squares (GLS) to check the interplay between corporate governance and working capital efficiency. The empirical results produce that audit committee meetings are very effective in the efficient management of working capital. Surprisingly, the authors found that CEO duality does have a significant impact on working capital efficiency. Overall, the findings highlight that corporate governance is an effective tool for monitoring working capital efficiently. The conclusion of this study may be utilized to offer management information if their working capital decisions are efficient or not and how they could increase the scope of their working capital decisions in light of corporate governance.
Information and Knowledge Management www.iiste.org ISSN 2224-5758 (Paper) ISSN 2224-896X (Online) Vol.3, No.2, 2013
The main objective of the study is to find out the significant difference between corporate governance practices on working capital management efficiency in listed manufacturing firms in SriLanka. Secondary literature reviews and Secondary data collection methods were used to conduct the study. Twenty five listed manufacturing firms were selected as sample size in Colombo Stock Exchange for the periods . Independent sample oneway Anova (f-test) and Independent sample t-test have been utilized to find out the significant difference between corporate governance practices on working capital management efficiency. The results revealed that there is no significant mean different between the levels of working capital management efficiency among corporate governance practices as board committees, board meetings and proportion of non executive director except board leadership structure. Based on the findings, we recommended that the effective policies in the working capital management must be formulated through the corporate governance practices in the listed manufacturing firms in SriLanka.
Corporate governance and management of working capital are seen as two main fields of corporate finance. The purpose of the research study is to examine the interrelationships between corporate governance, working capital management and performance of the firm. Design/Methodology/Approach: Sample consists of 140 non-financial firms listed on the Pakistan Stock Exchange from 2008 to 2015. Data has been analyzed by using structural equation model. Mediating effects of managing working capital have been tested by using the approach suggested by Preacher and Hayes (2008). Findings: The findings revealed that current ratio partially mediates the effect of size of the board and CEO role duality. For the other relationship the study found that board size affects firm performance positively whereas CEO duality and audit committee independence have negative impact on profitability of firms. For the relationship of working capital management on firm Performance, the study identified substantial negative and positive impacts on firm performance of the cash conversion period and current ratio, respectively. Implications/Originality/Value: The current study was based on least considered variables and the pioneer in testing the complex relationship through SEM-AMOS.
International Journal of Advanced Research (IJAR), 2019
The main objective of this study was to analyze and explain the implementation of corporate governance mechanism which includes board characteristics and audit committee characteristics as independent variables, the Working Capital Management Efficiency as mediating variable on the firm performance. This research was conducted at corporates in food and beverage, construction, botsudan, animal feed and gas industries located in Makassar. This study used survey method in the collection of primary data. Purposive sampling was utilized in this study with a total sample of 90 respondents. Data were analyzed using regression analysis with Partial Least Square (PLS) - SEM technique. The results showed that board characteristics had directly significant effect on firm performance while Audit committee characteristics had insignificant effect on firm performance. Indirectly, board characteristics have insignificant effect on firm performance through efficiency working capital management while audit committee characteristics have significant effect on firm performance through working capital management efficiency.
Working Capital Management Efficiency and Corporate Governance in Manufacturing Sector of Pakistan
2018
Efficiency in “Working Capital Management” (WCM) has been the key factor of many profitable firms. The purpose of this paper is to examine the impact of characteristics of corporate governance on the WCM efficiency of firms in context of Pakistan. A total of 40 firms listed at Pakistan Stock Exchange (PSX, previously known as Karachi Stock Exchange (KSE)) are selected for the period of 5 years which lead to a total of 200 observations. Cash conversion cycle and current ratio are the main measures of WCM efficiency whereas Chief Executive Officer (CEO) Tenure, CEO Duality, Audit Committee and Board Size are the main measure of corporate governance characteristics. The results state that governance characteristics have significant impact on WCM efficiency. Except CEO Duality, all other independent variables have significant role in explaining WCM efficiency. This paper suggests the management to set policies that favors maintaining the optimal level of working capital. Firms can creat...
Research Journal of Finance and Accounting, 2013
The aim of the study was to examine the relationship between corporate governance and working capital management efficiency. The population of the study comprised all the forty two firms which had been consistently listed at the Nairobi Securities Exchange from 2006-2012. Data was collected from secondary sources. Independent one-way ANOVA test and independent t-tests were used to determine the level of significance. The results of the study indicated that there was no statistical significant relationship between corporate governance and working capital management efficiency. This study contributes to the literature on the relationship between corporate governance and working capital management efficiency.
Efficient working capital management is necessary to achieve both profitability and liquidity of a company. Working capital management involves managing the firm's current assets and current liabilities by optimizing financing its net working capital needs from the difference between current assets and current liabilities . This paper aims to conceptualize corporate governance mechanism as an interaction between working capital management practices and firm's profitability. Six built hypothesis testing are used to achieve the paper's objectives. This paper uses empirical studies from the previous researches that are relevant to the hypothesis testing. In this paper, the variables of working capital management are accounts receivable, inventories, accounts payable and cash conversion cycle. In terms of profitability, the firms need to use return on assets to measure their profit position and efficiency. Subsequently, the interaction of corporate governance has to consider the board size and CEO tenure.
Journal of Commerce & Accounting Research, 2018
The present study shows that the impact of corporate governance and working capital management on the corporate profitability of Indian manufacturing companies. A sample of 50 manufacturing companies for a period of 6 year has been examined (from 2010-11 to 2015-16). The corporate governance has been measured by CEO duality, board committee, board size, non executive directors, board meeting, audit committee members and directors remuneration. The working capital management has been measured by inventory, accounts receivable period, accounts payable period and cash holding. The profitability has been measured by the profit after tax. The correlation matrix and regression model has been used in study for analysis purpose. The finding of study shows that the corporate governance and working capital management may be helpful in improvement of corporate profitability. The findings of study may be helpful for managers, investors and stakeholders.