The Impact of Corporate Governance on The Efficiency of Managing Working Capital: The Manufacturing Sector in Jordan

Bashar Khaled Abu Khalaf, Alaaeddin Al-Tarawneh

Abstract


The main objective of this research is to investigate the effect of corporate governance on working capital proficiency. A sample of 49 manufacturing organizations listed in ASE during the period of 2005-2016 is used. This research uses panel analysis (fixed and random effect techniques) in order to empirically investigate the impact of corporate governance in managing working capital efficiently. The model includes two variables of corporate governance; CEO tenure duration and board size and controlled the model by including the size of the firms, growth and the performance of company. The results suggest that the more experience the CEO has and the smaller the board size is, the better governance manufacturing companies in Jordan would be in managing their working capital efficiently. In addition, large, high growth companies efficiently manage their working capital in a better way. Lastly, high profitably manufacturing companies in Jordan tend to ignore managing their working capital efficiently.

Keywords


Working capital, governance, efficiency, Amman Stock Exchange, manufacturing firms.

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