CAPITAL INDUSTRY PRACTICE AND AGGRESSIVE CONSERVATIVE WORKING CAPITAL POLICIES IN NIGERIA

Rafiu Oyesola Salawu

Global Journal of Business Research, 2007, vol. 1, issue 2, 109-117

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.

Date: 2007
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