Working Capital Management and Firm Performance: An Empirical Study for Malaysian Public Listed Companies in Property Industry

Abstract

Over the erstwhile two decades, complexity and dynamism of the business environment have postulated greater devotion of treasurer to possess meticulously comprehension on the principal driving forces for the firm’s performance. Working capital management is a compelling managerial decision-making in attaining the exemplary which counterbalances between short-term risk and return. This study contemplates furnishing certain intuition for the appositeness of contemporaneous literature as regards the effectiveness of managing short-term resources towards the firm’s performance. This study adopts dynamic panel data methodology, generalised method of moments (GMM) to capture for the unobserved time-invariant firm-specific elements. Using a sample of 72 Malaysian public companies listed on Bursa Malaysia in property economy sector from years 2007 through 2016, the researcher discovered evidence as follows: the coefficient findings implying insignificant negative linkage between working capital components (i.e. CCC) and firm performance indicators (Tobin’s Q) and the nonconformity of results as comparable with prior established literature from developed nations due to the divergent of business environment as well as the adoption of different methodology to test the model.