Working capital management and corporate governance: A new pathway for assessing firm performance
Working capital management and corporate governance: A new pathway for assessing firm performance
Kayani, UN De Silva, Tracy-Anne Gan, Christopher
Kayani, UN
De Silva, Tracy-Anne
Gan, Christopher
Date
2018-09-25
Type
Journal Article
Collections
Fields of Research
ANZSRC::3502 Banking, finance and investment , ANZSRC::3801 Applied economics , ANZSRC::3899 Other economics
Abstract
This study reports the relationship of working capital management (WCM) and corporate governance (CG) on firm performance (FP) using system generalized method of moments (SGMM). SGMM controls potential sources of endogeneity. This study uses US listed firms and includes two stages. In the first stage, the individual impact of WCM and CG on FP is examined. In the second stage, the collective effect of WCM and CG on FP is examined. The study finds that efficient WCM and good CG practices do affect FP on both an individual basis and on a collective basis. Therefore, this study recommends that the impact of WCM, being a short-term performance indicator, and CG, being a long-term indicator should be considered collectively in the future while investigating financial FP.