Corporate governance, working capital management and profitability: empirical insights for Indian pharmaceutical firms

Najib H.S. Farhan, Mosab I. Tabash, Faozi A. Almaqtari and Amgad S.D. Khaled

International Journal of Economics and Business Research, 2022, vol. 23, issue 1, 68-91

Abstract: The current study examines the inter-relationships between working capital management (WCM) and the profitability of Indian pharmaceutical firms. The impact of corporate governance on the link between WCM and profitability is also addressed. The financial data of 82 Indian pharmaceutical firms for the period from 2008 to 2017 are used. Fixed and random effect regression models are used for estimating the results. Findings show that there is a negative and significant impact on the number of days' payable deferral period, number of days' collection period, number of days' inventory holding period, and operating cycle on the profitability of Indian pharmaceutical firms. Moreover, findings reveal that board of directors' composition does not moderate the association between working capital components (WCCs) and the profitability of Indian pharmaceutical firms. The researchers believe that this study perhaps is the first study that evaluates the impact of corporate governance on the association between WCCs and firms' profitability in the Indian context.

Keywords: profitability; moderation effect; India; working capital management; WCM; pharmaceutical firms. (search for similar items in EconPapers)
Date: 2022
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