Working Capital Management Policy: Female Top Managers and Firm Profitability

Nastiti, Pambayun Kinasih Yekti; Atahau, Apriani Dorkas Rambu; Supramono, Supramono

doi:10.7206/cemj.2658-0845.5

Cited by 5 publications

(9 citation statements)

References 43 publications

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“…This provides strong support for the argument that female executives, who are generally characterized by greater risk aversion and lower confidence levels, make less risky policies, including conservative policies, in their WCM. Our results are consistent with Nastiti et al (2019) and Khan et al (2022), who find that female top managers are likely to implement more conservative WCM policies.…”

Section: Regression Analyses and Discussionsupporting

confidence: 91%

“…Further studies support evidence that women as top managers are associated with less overconfident behavior (Nastiti et al, 2019;Schopohl et al, 2021). Behavioral finance literature argues that less overconfident managers tend to adopt more conservative policies (Faccio et al, 2016).…”

Section: Executive Rolesmentioning

confidence: 71%

“…Looking in particular at female executives' impact on a firm's WC, existing studies find that firms run by female executives are more likely to use more conservative WCM strategies (conservative strategy hypothesis). In this respect, Nastiti et al (2019) contend that female top managers try to prevent their firms from stock out and ensure that firms' liquidity enables them to repay their due short-term liabilities by choosing more conservative WCM policies. Khan et al (2022) report that WOB are more concerned about stock-out or liquidity risk.…”

Section: Executive Rolesmentioning

confidence: 99%

“…As part of top management characteristics, gender is an important characteristic that is worth considering, because gender difference likely leads to different perspectives and strategic preference that will be implemented in firms (Nastiti et al , 2019). However, the few previous studies that have addressed the effect of corporate governance on the WCM decisions have mostly focused on board characteristics such as board size, board independence and CEO duality, with little attention to board gender diversity (BGD).…”

Section: Introductionmentioning

confidence: 99%

“…Another mechanism through which female directors could influence the decision-making of the board is through gender differences in risk propensity (Lenard et al , 2014). For instance, from the gender diversity doctrine, Palvia et al (2015) and Nastiti et al (2019) argue that women are more conservative and risk averse than their men counterparts denoting that females make low-risk decisions, whereas men make high-risk decisions. In a similar vein, Bernile et al (2018) posit that firms with gender-diverse boards adopt more persistent and less risky financial policies.…”

Section: Introductionmentioning

confidence: 99%

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Female directors and working capital management: aggressive vs. conservative strategy

Guizani

Abdalkrim²

2022

MRR

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Purpose The purpose of this study is to analyze the impact of board gender diversity (BGD) on working capital management (WCM) decision by scrutinizing different positions covered by female board directors. Design/methodology/approach This study uses a panel data regression model with fixed effect estimations and the generalized method of moments (GMM) to determine the impact of BGD on WCM strategy. This study uses a panel data analysis for 277 non-financial firms listed on Bursa Malaysia over the period from 2011 to 2019. Findings The results of this study show that female directors fulfilling either monitoring or executive positions increase the investment in working capital (WC), suggesting a conservative WCM. Precisely, results from this study are consistent with the embedded risk aversion traits of female executives and, hence, preserve high level of investment in WC, which allows superior levels of liquidity to meet firms’ financial commitments. The results also show that Malaysia commitment to gender equality is a key moderator in the female directors – firm WCM relation. The authors find that when the level of gender equality is greater, female directors support firms in adopting aggressive WCM strategies. Practical implications This study’s findings provide insights for corporate decision-makers in helping them to determine the board’s design in term of roles and composition that enhances the efficiency of WC. The results also provide guidelines for policymakers and regulators to formulate strategies that support more female board representation. In this way, firms should appoint more female directors on their boards to ensure prudent WC decisions. Moreover, given that female directors are an important determinant of a firm’s WC policy, investors and various internal or external monitoring groups need to factor boardroom gender diversity into their investing, hiring and monitoring mechanisms. Originality/value While prior research has examined the effect of BGD on firm performance, to the best of the authors’ knowledge, this study is the first to investigate the effect of BGD on the WCM decision.

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Section: Regression Analyses and Discussionsupporting

confidence: 91%

Section: Executive Rolesmentioning

confidence: 71%

Section: Executive Rolesmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 3 more Smart Citations

Female directors and working capital management: aggressive vs. conservative strategy

Guizani

Abdalkrim²

2022

MRR

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Gender perceptions in shipping

Stavroulakis

Papadimitriou

Tsirikou

2023

Australian Journal of Maritime & Ocean Affairs

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Does managerial myopia exacerbate firms excessive financialization? Evidence from Malaysia

Guizani

2024

MRR

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Purpose This study aims to examine the influence of managerial myopia on the excessive financialization behavior of listed firms on Bursa Malaysia. Design/methodology/approach Through a sample of 313 firms from 2015 to 2021, the author examine whether managerial myopia promotes or inhibits corporate financialization. The author uses ordinary least squares and Logit as the baseline models and addresses potential endogeneity through the dynamic-panel generalized method of moments. The results are also robust to alternative measures of financialization and managerial myopia. Findings The results show a significant positive effect of managerial myopia on the excessive financialization of enterprises. Furthermore, the findings indicate that the impact of managerial myopia on the over-financialization of enterprises is more prominent in periods of low economic policy uncertainty. However, the relationship between excessive financialization and managerial myopia is weakened in the presence of female chief executive officers. Practical implications The empirical results have useful policy implications. First, firms should establish scientific managerial assessment and supervision systems to avoid excessive financial investment behavior by myopic managers caused by assessments that place too much emphasis on short-term performance. Second, regulators and policymakers should encourage firms to appoint women to top management positions, which may inhibit short-sighted financialization behavior. Finally, the regulatory authorities should undertake the necessary measures driving companies to disclose the investment direction of the funds so that shareholders and investors can understand the use direction of the funds in a timely manner, which can effectively prevent the economy “from the real to the virtual” and promote the development of the real economy. Originality/value This paper expands the existing research on corporate financialization behavior and provides a new theoretical basis for the underlying factors of excessive financialization. It studies the influence of corporate financialization from the perspective of short-run managerial actions and deepens the understanding of managerial myopia and companies’ financialization levels.

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Working Capital Management Policy: Female Top Managers and Firm Profitability

Abstract: English-language editing of that article was financed under Agreement 672/ P-DUN /2019 with funds from the Ministry of Science and Higher Education allocated to the popularization of science.

Cited by 5 publications

References 43 publications

Female directors and working capital management: aggressive vs. conservative strategy

Female directors and working capital management: aggressive vs. conservative strategy

Gender perceptions in shipping

Does managerial myopia exacerbate firms excessive financialization? Evidence from Malaysia

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