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

Working Capital Management Policies and Returns of Listed Manufacturing Firms in Ghana AbstractThis 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. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Scientific Annals of Economics and Business de Gruyter

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

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Publisher
de Gruyter
Copyright
© 2017
eISSN
2501-3165
DOI
10.1515/saeb-2017-0017
Publisher site
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Abstract

AbstractThis 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.

Journal

Scientific Annals of Economics and Business – de Gruyter

Published: Jun 27, 2017

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    Onwumere
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    Mwangi
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    Weinraub
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    Stimpert
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    Shubiri
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    Javid
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    Shin
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    Korankye
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    Mohamad
  • To survey the effect of working capital policies ( investing and financing ) on profitability risk ( evidence from Tehran stock exchange of Investment Management http dx org
    Hassani
  • Determinants of target dividend payout ratio panel Autoregressive Distribution Lag analysis of and Financial Issues
    Demirgunes
  • Panel cointegration : Asymptotic and finite sample properties of pooled time series tests with an application to the PPP hypothesis http dx org
    Pedroni
  • Working Capital India Publishers
    Agarwal
  • failure bankruptcy survey of the literature http dx org
    Berryman
  • Pooled mean group estimation of dynamic heterogeneous panels of the http dx org
    Pesaran
  • The impact of working capital management policies on firm s profitability and value : Evidence from Iranian Companies International Research of and
    Vahid
  • To survey the effect of working capital policies ( investing and financing ) on profitability risk ( evidence from Tehran stock exchange of Investment Management http dx org
    Hassani
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    Pirashanthini
  • Impact of Working Capital Policy on Firm s Profitability case of Pakistan cement industry Research of and Accounting
    Javid
  • Working capital management and profitability : Evidence from Ghanaian listed manufacturing firms of http dx org
    Akoto
  • The relationship between working capital management and profitability of listed manufacturing companies in
    Agyemang
  • Unit root tests in panel data : Asymptotic and finite - sample properties of http dx org
    Levin
  • Empirical analysis of working capital management and its impact on the profitability of listed manufacturing firms in Research of Accounting
    Korankye
  • An Empirical Analysis of the Capital Structure of Selected Quoted Companies in Nigeria The of http dx doi org
    Salawu
  • The effect of working capital practices on risk management : Evidence from Jordan Global
    Shubiri
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    Maddala
  • Corporate finance and practice th ed ed
    Watson
  • Efficiency of working capital and corporate profitability Financial Practice
    Shin