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Capital Industry Practice And Aggressive Conservative Working Capital Policies In Nigeria

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  • Rafiu Oyesola Salawu

Abstract

This study investigates fifteen diverse industrial groups over an extended period to establish the relationship between aggressive and conservative working capital practices. Data were sourced from the annual reports of the companies and the publications of Nigerian Stock Exchange. Descriptive statistics were used for analyzing the data collected. Results strongly show that firms in differing industries have significantly different current asset management policies. Additionally, the relative industry ranking of the aggressive/conservative asset policies exhibit remarkable stability over time. It is evident that there is a significant negative correlation between industry asset and liability policies. Relatively aggressive working capital asset management seems balanced by relatively conservative working capital financial management. The study recommends that, a firm in deciding its working capital policies should consider the policies adopted in that industry in which it operates. A firm pursing aggressive working capital investment policy should match it with a conservative working capital financing policy.

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  • Rafiu Oyesola Salawu, 2007. "Capital Industry Practice And Aggressive Conservative Working Capital Policies In Nigeria," Global Journal of Business Research, The Institute for Business and Finance Research, vol. 1(2), pages 109-117.
    • Handle: RePEc:ibf:gjbres:v:1:y:2007:i:2:p:109-117
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    References listed on IDEAS

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    1. Schwartz, Robert A., 1974. "An Economic Model of Trade Credit," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 9(4), pages 643-657, September.
    2. Frederick C. Scherr, 1996. "Optimal Trade Credit Limits," Financial Management, Financial Management Association, vol. 25(1), Spring.
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    Cited by:

    1. Małgotrzata B. Okręglicka, 2014. "The Economic Recession And Working Capital Management Of Companies In Poland," Economy & Business Journal, International Scientific Publications, Bulgaria, vol. 8(1), pages 696-706.
    2. Nufazil Altaf & Farooq Ahmad Shah, 2018. "Investment and financial constraints in Indian firms: Does working capital smoothen fixed investment?," DECISION: Official Journal of the Indian Institute of Management Calcutta, Springer;Indian Institute of Management Calcutta, vol. 45(1), pages 43-58, March.
    3. Sin Huei Ng & Chen Ye & Tze San Ong & Boon Heng Teh, 2017. "The Impact of Working Capital Management on Firm's Profitability: Evidence from Malaysian Listed Manufacturing Firms," International Journal of Economics and Financial Issues, Econjournals, vol. 7(3), pages 662-670.

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