Does corporate governance influence the efficiency of working capital management of listed firms

Purpose - The purpose of this paper is to explore the relevance of corporate governance in the quest to attain organizational efficiency in the working capital management of listed firms. There is a consensus that efficiency of working capital management is vital for firm’s growth and survival, yet another consensus is the role of corporate governance in limiting managerial self-serving behavior and ultimately improving firm’s efficiency. If the foregoing views hold, then the empirical question “Is corporate governance important for firm-level working capital efficiency?” becomes important. Design/methodology/approach - Panel data on 13 non-financial firms listed on the Ghana Stock Exchange were employed in a pooled OLS regression. Findings - The results of the study indicate mostly a negative effect of internal governance mechanisms on the cash conversion cycle, the inventory, receivables’ periods and payables’ periods, implying that governance structures do affect the efficiency of working capital management. Firm characteristics like age, size and profitability also emerged as relevant influences on the efficiency of working capital management. Research limitations/implications - Data for the study cut across several sectors thus limiting the specificity with which findings can be applied. Originality/value - These findings have implications for board composition in the quest for firm-level efficiency while raising the need for more industry-specific enquiries.