Effects of Working Capital Management Policies on Shareholders’ Value: Evidence from Listed Manufacturing Firms in Ghana

Anokye M. Adam () and Edward Quansah ()

Panoeconomicus, 2019, vol. 66, issue 5, 659-686

Abstract: This study has sought to determine the effects of working capital management policies on shareholder value creation for six manufacturing firms listed at the Ghana Stock Exchange for the period of 2000–2013. Data were gathered from the annual reports of the firms and the publication of Ghana Stock Exchange. The study employed a longitudinal explanatory non-experimental research design applied to a dynamic panel Autoregressive Distributed Lags methodology framework for analysing the data. The results indicated that conservative current asset investment policies increase economic value added (EVA), whereas aggressive current asset investment policies enhance market-to-book ratio and Tobin’s Q in the long-run. On the other hand, conservative current asset financing policies enhance market-to-book ratio, Tobin’s Q, and EVA in the long-run. Thus, investors discount aggressive current assets’ financing policies. A firm pursuing an aggressive current asset investment policy should balance it with a conservative current asset financing policy to create value for its shareholders. Key words: Current asset investment policy, Current asset financing policy, Panel unit root, Panel ARDL, Shareholder value. JEL: G30, G31, G32. Uticaj politika upravljanja obrtnim kapitalom na vrednost akcionara: Dokazi iz kompanija koje se bave proizvodnjom u Gani Istraživanje je usmereno ka utvrđivanju efekata politike upravljanja obrtnim kapitalom na stvaranje vrednosti akcionara za šest proizvodnih preduzeća na Ganskoj berzi za period 2000-2013. Podaci su prikupljeni iz godišnjih izveštaja preduzeća i publikacije Ganske berze. Longitudinalni eksplicitni neeksperimentalni dizajn istraživanja je primenjen na dinamičkom panelu u metodološkom okviru autoregresivnog modela sa pomakom za analizu podataka. Rezultati su pokazali da konzervativne politike investiranja u tekuću imovinu povećavaju ekonomsku dodatu vrednost (EVA), dok agresivne politike investiranja u tekuću imovinu dugoročno povećavaju odnos tržišne i književne vrednosti preduzeća i Tobinov Q indeks. S druge strane, konzervativne politike finansiranja tekućih sredstava dugoročno poboljšavaju odnos između tržišne i književne vrednosti preduzeća, Tobinov Q indeks i EVA. Na taj način, investitori popuste pred agresivnim politikama finansiranja tekuće imovine. Preduzeće koja vodi agresivnu politiku investiranja u tekuću imovinu trebalo bi da je u ravnoteži sa konzervativnom politikom finansiranja tekućih sredstava kako bi stvorilo vrednost za svoje akcionare. Ključne reči: Trenutna politika ulaganja u imovinu, trenutna politika finansiranja imovine, panel jedinični koren, ARDL panela, vrednost akcionara.

Keywords: Current asset investment policy; Current asset financing policy; Panel unit root; Panel ARDL; Shareholder value (search for similar items in EconPapers)
Date: 2019
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