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Corporate Governance Quality and Cash Conversion Cycle: Evidence from Jordan

Ayat S. Al-Rahahleh

International Business Research, 2016, vol. 9, issue 10, 140-150

Abstract: This study aims at examining the impact of corporate governance quality on cash conversion cycle (CCC) in Jordan. Using OLS regression for a sample of all industrial companies listed on Amman Stock Exchange during the period (2009-2013). The results revealed that CCC is affected negatively by corporate governance quality, which provides an implication to industrial companies in Jordan to boost their compliance with corporate governance code in order to improve their working capital management efficiency. Furthermore, the outcomes showed a variation in corporate governance categories between sub-samples, which supports contingency theory that rejects the approach of “one size fits all”. The findings provide implications for future studies to deal with firm characteristics as context dependent rather than simply as control variables. The results also provide implications for regulatory bodies in Jordan that highlight the importance of “comply or explain” approach to some corporate governance rules embracing the “one size does not fit all” approach. This study fills a gap in the existing literature by studying the quality of corporate governance and by using the context dependent approach.

Keywords: corporate governance quality; working capital management efficiency; cash conversion cycle; contingency theory (search for similar items in EconPapers)
Date: 2016
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Handle: RePEc:ibn:ibrjnl:v:9:y:2016:i:10:p:140-150