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Corporate Governance Quality and Cash Conversion Cycle: Evidence from Jordan

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  • Ayat S. Al-Rahahleh

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.

Suggested Citation

  • Ayat S. Al-Rahahleh, 2016. "Corporate Governance Quality and Cash Conversion Cycle: Evidence from Jordan," International Business Research, Canadian Center of Science and Education, vol. 9(10), pages 140-150, October.
    • Handle: RePEc:ibn:ibrjnl:v:9:y:2016:i:10:p:140-150
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    References listed on IDEAS

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    1. Julia Sawicki, 2009. "Corporate governance and dividend policy in Southeast Asia pre- and post-crisis," The European Journal of Finance, Taylor & Francis Journals, vol. 15(2), pages 211-230.
    2. Bana Abuzayed, 2012. "Working capital management and firms’ performance in emerging markets: the case of Jordan," International Journal of Managerial Finance, Emerald Group Publishing Limited, vol. 8(2), pages 155-179, March.
    3. Ruth V. Aguilera & Igor Filatotchev & Howard Gospel & Gregory Jackson, 2008. "An Organizational Approach to Comparative Corporate Governance: Costs, Contingencies, and Complementarities," Organization Science, INFORMS, vol. 19(3), pages 475-492, June.
    4. Prommin, Panu & Jumreornvong, Seksak & Jiraporn, Pornsit, 2014. "The effect of corporate governance on stock liquidity: The case of Thailand," International Review of Economics & Finance, Elsevier, vol. 32(C), pages 132-142.
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    Cited by:

    1. Sathyamoorthi C. R. & Christian J. Mbekomize & Mogotsinyana Mapharing & Popo Selinkie, 2018. "The Impact of Corporate Governance on Working Capital Management Efficiency: Evidence from the Listed Companies in the Consumer Services Sector in Botswana," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 10(12), pages 135-135, December.
    2. Lingesiya Kengatharan & W. S. Sanoli Tissera, 2019. "Do Corporate Governance Practices Influence Working Capital Management Efficiency? Evidence From Listed Manufacturing Companies in Sri Lanka," Research in World Economy, Research in World Economy, Sciedu Press, vol. 10(3), pages 205-216, December.
    3. Shamsi S. Bawaneh, 2020. "Impact of Corporate Governance on Financial Institutions? Performance: A Board Composition Case," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 10(1), pages 54-63, January.

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    More about this item

    Keywords

    corporate governance quality; working capital management efficiency; cash conversion cycle; contingency theory;
    All these keywords.

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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