Abstract

The importance of studying working capital management efficiency (WCME) springs from its effect on a firm’s profitability, value, and solvency. The board of directors together with the Chief Executive Officer formulate corporate policies including those concerning working capital levels, yet it is management’s role to continuously monitor the various working capital components to strike an optimal balance amongst them. Accordingly, this study analyses the effect of corporate governance in overseeing management handling working capital levels. In addition, this paper studies the role of firm maturity as a determinant factor of WCME. For this purpose, the paper at hand uses 583 listed European firms from 2002 till 2013. And, it employs cross section random effect panel regression models, where various working capital characteristics are used as dependent variables. And, along with the explanatory firm maturity proxy and the corporate governance variables, we control for the effect of country and multiple firm-specific characteristics. Finally, this study suggests that both corporate governance (except for ownership concentration proxy) and firm maturity are significant factors of WCME. Yet, for some of the proxies used, we did not reach conclusive results regarding the direction of impact on working capital investment.

Department

Management Department

Degree Name

MS in Finance

Graduation Date

2-1-2015

Submission Date

January 2016

First Advisor

Azzam, Islam

Committee Member 1

Ahmed, Neveen

Committee Member 2

Elshahat, Ahmed

Extent

51 p.

Document Type

Master's Thesis

Rights

The author retains all rights with regard to copyright. The author certifies that written permission from the owner(s) of third-party copyrighted matter included in the thesis, dissertation, paper, or record of study has been obtained. The author further certifies that IRB approval has been obtained for this thesis, or that IRB approval is not necessary for this thesis. Insofar as this thesis, dissertation, paper, or record of study is an educational record as defined in the Family Educational Rights and Privacy Act (FERPA) (20 USC 1232g), the author has granted consent to disclosure of it to anyone who requests a copy.

Institutional Review Board (IRB) Approval

Not necessary for this item

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