Working capital management and financial performance of Malaysian construction sector companies
DOI:
https://doi.org/10.37134/jcit.vol9.9.2019Keywords:
Working capital management, Cash conversion cycle, Return on asset, Return on equity, Share returnAbstract
This study examines the effects of working capital management on financial performance of construction companies listed in Bursa Malaysia for the period of 2012 to 2016. The findings show that only a shortening collection period and a positive working capital are significant to improve financial performance of local construction firms. An effective working capital management however does not contribute significantly to operating cash flow and share price of construction firms in Malaysia. The findings of this study suggest the management of account receivable is the most critical factor to improve financial performance for the local construction firms.
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References
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Akoto, R.K., Dadson, A., & Angmor, P.L. (2013). Working capital management and profitability: Evidence from Ghanaian listed manufacturing firms. Journal of Economics and International Finance, 5(9), 373–379.
Bameri, O. & Dehani, N. (2013). The effect of capital management on stock returns of accepted companies in Tehran Stock Exchange. European Online Journal of Natural and Social Sciences, 2(3), 1061-1069.
Bulin, S., Basit, A., & Hamza, S.M. (2016). Impact of working capital management on firm's profitability. International Journal of Accounting & Business Management, 4(2), 227-241.
Dong, H.P. & Su, J. (2010). The relationship between working capital management and profitability: A Vietnam case. International Research Journal of Finance and Economics, 49, 59–67.
Jakpar, S., Tinggi, M., Siang, T.K., Johari, A., Myint, K.T., & Sadique, M.S. (2017). Working capital management and profitability: Evidence from manufacturing sector in Malaysia. Journal of Business & Financial Affairs, 6(2), 1–9.
Kasiran, F., Mohamad, N., & Chin, O. (2016). Working capital management efficiency: A study on the small medium enterprise in Malaysia. Procedia Economics and Finance, 35, 297-303.
Kroes, J.R. & Manikas, A.S. (2013). Cash flow management and manufacturing firm financial performance: A longitudinal perspective. International Journal of Production Economics, 37-50.
Kumaraswamy, S. (2016). Impact of working capital on financial performance of Gulf cooperation council firms. International Journal of Economics and Financial Issues, 6(3), 1136-1143.
Mandiefe, S.P. (2016). How working capital affects the profitability of commercial banks: case of Afriland Cameroon. Arabian Journal of Business and Management Review, 6(6), 1-9.
Mohamad, N.E.A. & Saad, N. (2010). Working capital management: The effect of market valuation and profitability in Malaysia. International Journal of Business and Management, 5(11), 140–147.
Mohamadlua, A. & Kashmari, A. (2016). Effect of working capital management on stock return and profitability (elected glassmaking companies of Iran). International Journal of Humanities and Cultural Studies, 2007–2020.
Obermaier, R. & Donhauser, A. (2012). Zero inventory and firm performance: A management paradigm revisited. International Journal of Production Research, 50(16), 4543–4555.
Raheman, A. & Nasr, M. (2007). Working capital management and profitability – case of Pakistani firms. International Review of Business Research Papers, 3(1), 279–300.
Ramesh, G., Al-Habsi, H., & Al-Sharji, T. (2017). Effect of working capital management on the financial performance of manufacturing firms in Sultanate of Oman. Innovative Journal of Business and Management, 6(3), 38–42.
Rashvand, A. & Tariverdi, Y. (2015). Effect of working capital management on operating cash flow. Journal of Applied Environmental and Biological Sciences, 5(11S), 39–46.
Sheikh, N.A., Rafique, A., & Nauman, A. (2016). Impact of working capital on performance of textile firms Listed on PSX. Pakistan Journal of Social Sciences (PJSS), 36, 409-419.
Vural, G., Sokmen, A.G., & Cetenak, E.H. (2012). Affects of working capital management on firm’s performance. International Journal of Economics and Financial Issues, 2, 488-495.
Ukaegbu, B. (2014). The significance of working capital management in determining firm profitability: Evidence from developing economies in Africa. Research in International Business and Finance, 31, 1-16.
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Published
2019-08-20
How to Cite
AIK, N.-C., & Tee, P.-L. (2019). Working capital management and financial performance of Malaysian construction sector companies. Journal of Contemporary Issues and Thought, 9, 86–94. https://doi.org/10.37134/jcit.vol9.9.2019
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