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Working Capital Management Policies and Returns of Listed Manufacturing Firms in Ghana

Author

Listed:
  • Adam Anokye M.

    (School of Business, University of Cape Coast, Cape Coast, Ghana)

  • Quansah Edward
  • Kawor Seyram

    (Department of Finance, University of Cape Coast, Cape Coast, Ghana)

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.

Suggested Citation

  • Adam Anokye M. & Quansah Edward & Kawor Seyram, 2017. "Working Capital Management Policies and Returns of Listed Manufacturing Firms in Ghana," Scientific Annals of Economics and Business, Sciendo, vol. 64(2), pages 255-269, June.
    • Handle: RePEc:vrs:aicuec:v:64:y:2017:i:2:p:255-269:n:9
    DOI: 10.1515/saeb-2017-0017
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    Cited by:

    1. Garikai Mandipa & Athenia Bongani Sibindi, 2022. "Financial Performance and Working Capital Management Practices in the Retail Sector: Empirical Evidence from South Africa," Risks, MDPI, vol. 10(3), pages 1-17, March.

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