The Impact of Corporate Governance on Working Capital Management Efficiency (WCME) in the Manufacturing Firms

Abstract

The main aim of conducting this research work is to explore the impact of Corporate Governance (CG) on the Working Capital Management Efficiency (WCME) for the Manufacturing firms in Palestine. The Data for this study was collected from secondary data sources; annual reports for manufacturing firms, 15 Palestinian manufacturing firms have been selected for this purpose for three years from (2016 to 2018). The result shows that a significant relationship exists between Cash Conversion Cycle and (firm size, and sales growth), Sales Growth & Firms Size explains 42% of the variation in the Working Capital Management component (Cash Conversion Cycle). Current Ratio as the second dimension of Working Capital Management has a significant correlation with CEO Duality, Firm Size and Firm Performance. CEO Duality & Firms Performance explains 25.9% of the variation in the Working Capital Management component (Current Ratio). The researcher recommended that the manufacturing companies need to implement corporate governance procedures which help them to achieve an efficient working capital management, while they need to keep the working capital in an optimal and balanced status which will have a major impact on the financial performance of the manufacturing firm in terms of liquidity and profitability.