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Working Capital Management Policies And Returns Of Listed Manufacturing Firms In Ghana

Author

Listed:
  • Anokye M. ADAM
  • Edward QUANSAH
  • Seyram KAWOR

Abstract

This 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. JEL Codes - G31; C23

Suggested Citation

  • Anokye M. ADAM & Edward QUANSAH & Seyram KAWOR, 2017. "Working Capital Management Policies And Returns Of Listed Manufacturing Firms In Ghana," Scientific Annals of Economics and Business (continues Analele Stiintifice), Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, vol. 64(2), pages 255-269, June.
    • Handle: RePEc:aic:saebjn:v:64:y:2017:i:2:p:255-269:n:71
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    References listed on IDEAS

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    5. Joshua Abor, 2005. "The effect of capital structure on profitability: an empirical analysis of listed firms in Ghana," Journal of Risk Finance, Emerald Group Publishing, vol. 6(5), pages 438-445, November.
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    8. Agyemang Badu Ebenezer & Michael Kwame Asiedu, 2013. "The Relationship Between Working Capital Management and Profitablity of Listed Manufacturing Companies in Ghana," International Journal of Business and Social Research, LAR Center Press, vol. 3(2), pages 25-34, February.
    9. Joshua Abor, 2005. "The effect of capital structure on profitability: an empirical analysis of listed firms in Ghana," Journal of Risk Finance, Emerald Group Publishing Limited, vol. 6(5), pages 438-445, December.
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    More about this item

    Keywords

    aggressive/conservative; current asset investment policies; current asset financing policies; panel ARDL;
    All these keywords.

    JEL classification:

    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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