Determinants of working capital management: Evidence from Malaysia

Zariyawati, Mohd Ashhari; Taufiq, H; Annuar, M. N.; Sazali, A.

doi:10.1109/icfte.2010.5499399

Cited by 43 publications

(77 citation statements)

References 13 publications

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“…Furthermore, Banos-Caballero et al (2010a) argue that as return on working capital is low, firms try to avoid investment of high cost funds in working capital cycle. This negative relationship between leverage and working capital is further confirmed by Raheman and Nasr (2007), Zariyawati et al (2009Zariyawati et al ( , 2010, Mathuva (2010), and Erasmus (2010) for different countries.…”

Section: Leveragesupporting

confidence: 57%

Working capital management in Chinese firms: an empirical investigation of determinants and adjustment towards a target level using dynamic panel data model

Kabiraj

Rehman

Wang

2017

AAJFA

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Satisfactory and timely working capital investment policy is a prerequisite for better performance of any firm. Hence, this study analysed not only the determinants of working capital investment policy but also the time taken by firms to adjust their working capital management policies with special reference to Chinese state-owned and non-state-owned enterprises. For this purpose, an extensive dataset of 760 firms, over a period of 12 years (2001 to 2012) is taken for analysis. For robustness's purpose, four models are used to estimate the parameters. The study finds that bigger sized, highly levered and tangible firms invest less in their working capital. Firms with immediate sales growth and asymmetric information invest more in working capital. Board size and board independence are found to have a monitoring role in curtailing working capital investment. Finally, the study highlights an active working capital management policy by Chinese non-state-owned enterprises by reporting a lower adjustment coefficient compared to state-owned enterprises.

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Section: Leveragesupporting

confidence: 57%

Working capital management in Chinese firms: an empirical investigation of determinants and adjustment towards a target level using dynamic panel data model

Kabiraj

Rehman

Wang

2017

AAJFA

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“…This is further confirmed by Chiou et al (2006), where they also reason that because larger firms have easy access to capital, cash would be kept at a minimum and there would then be a negative relationship between working capital management and size. Nazir and Afza (2008) and Zariyawati et al (2010) also find this negative relationship in their study.…”

Section: Size or Capital Market Accessmentioning

confidence: 81%

“…In this study, however, for both board characteristics, insignificant relationships are found. Zariyawati et al (2010) too find insignificant relationships between these two variables and working capital for the Malaysian case. The signs of the variables are as expected, i.e.…”

Section: Discussion Of Resultsmentioning

confidence: 99%

“…However, they point out that the relationship between the other component of working capital, which is inventory, and sales growth is not clear from previous literature. Erasmus (2010), Zariyawati et al (2009) and Zariyawati et al (2010) demonstrate this negative relationship between working capital and growth rate of a firm.…”

Section: Immediate Growth Opportunitiesmentioning

confidence: 99%

“…Hence, working capital investment may be kept high in order to ensure smooth daily operations. In their study on Malaysia, using GDP growth, Zariyawati et al (2010) confirm that Malaysian firms' investment in net operating working capital increased with better economic conditions. However, Lamberson (1995) finds that small firms seem to act in a different manner compared to larger firms when it comes to economic conditions.…”

Section: Economic Conditionmentioning

confidence: 99%

See 2 more Smart Citations

Determinants of Working Capital Investment: A Study of Malaysian PublicListed Firms

Wasiuzzaman¹,

Arumugam²

2013

AABFJ

114

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The paper examines the determinants of the level of investment in net operating working capital by firms in Malaysia. Data from 192 companies spanning a period of 8 years (2000)(2001)(2002)(2003)(2004)(2005)(2006)(2007) are analysed using the OLS regression technique for this purpose. The study finds that in times of economic expansion, younger and smaller firms with less tangible assets, low leverage, high immediate sales growth, high operating cash flows, less volatile revenues and low levels of asymmetric information are likely to have the highest investments in operating working capital. Board characteristics, namely size and the independence of the board, are not found to have any significant influence on the working capital investment of firms. KeywordsWorking capital investment, pecking order theory, asymmetric information, board characteristics The paper examines the determinants of the level of investment in net operating working capital by firms in Malaysia. Data from 192 companies spanning a period of 8 years (2000)(2001)(2002)(2003)(2004)(2005)(2006)(2007) are analysed using the OLS regression technique for this purpose. The study finds that in times of economic expansion, younger and smaller firms with less tangible assets, low leverage, high immediate sales growth, high operating cash flows, less volatile revenues and low levels of asymmetric information are likely to have the highest investments in operating working capital. Board characteristics, namely size and the independence of the board, are not found to have any significant influence on the working capital investment of firms.

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Determinants of Working Capital Management of Manufacturing Firms in Ghana Under Innovative Work Behaviour Perspective

Yakubu

Kapusuzoğlu

Ceylan

2020

Contributions to Management Science

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Determinants of working capital management: Evidence from Malaysia

Cited by 43 publications

References 13 publications

Working capital management in Chinese firms: an empirical investigation of determinants and adjustment towards a target level using dynamic panel data model

Working capital management in Chinese firms: an empirical investigation of determinants and adjustment towards a target level using dynamic panel data model

Determinants of Working Capital Investment: A Study of Malaysian PublicListed Firms

Determinants of Working Capital Management of Manufacturing Firms in Ghana Under Innovative Work Behaviour Perspective

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