Working capital management and board diversity towards firm performances in Indonesia's LQ45

IF 3.2 Q1 BUSINESS, FINANCE
Saarce Elsye Hatane, Jennie Winoto, Josua Tarigan, Ferry Jie
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Abstract

Purpose

This study examines the effect of working capital management and board diversity on firm profitability and firm value for a sample of Indonesian firms listed in the LQ45 index. The interaction of board diversity components with working capital management adds a comprehensive discussion to enhancing working capital management efficiency.

Design/methodology/approach

This study engages a panel multiple regression method. Data from a sample of LQ45 companies from 2010 to 2016 are analysed using a fixed and a common effect model. Board diversity is further analysed in interaction variables, whether it holds the moderating role in the relationship of working capital and firm performances. This study operates return on capital employed (ROCE) as the proxy of profitability performance and EVA-Spread for the firm's value performance. The simultaneous effect test is used for the robustness test.

Findings

The results indicate that working capital management and board diversity have no significant impact towards profitability. However, they significantly positively impact firm value, meaning that the market is attracted by effective working capital management and board diversity. However, the interaction variable analysis shows that gender diversity and education level diversity weaken the impact of working capital management towards firm value.

Research limitations/implications

This study is not limited to one industry; therefore, future studies may focus on one industry and detect the pattern of working capital components in the particular industry. This study focuses on quantitative numbers to explain board diversity's interaction in working capital management to maximise shareholders' wealth. Future studies may consider a qualitative discussion to describe the quality of women's presence on the board, education level and educational background of board members.

Originality/value

Unlike most studies in which authors relate working capital and board diversity to firm performances separately, this study combines both components and analyses whether board diversity can act as a moderator effect. As part of corporate governance, it is expected that board diversity can enhance working capital management efficiency.

营运资本管理和董事会多元化对印尼LQ45公司业绩的影响
本研究以LQ45指数中的印尼公司为样本,考察营运资金管理和董事会多样性对公司盈利能力和公司价值的影响。董事会多元化成分与营运资金管理的相互作用为提高营运资金管理效率提供了一个全面的讨论。设计/方法/方法本研究采用面板多元回归方法。本文使用固定效应模型和共同效应模型对LQ45公司2010年至2016年的样本数据进行了分析。在交互变量中进一步分析董事会多样性是否在营运资金与企业绩效的关系中起到调节作用。本研究以已动用资本报酬率(ROCE)作为企业获利表现的代理,以EVA-Spread作为企业价值表现的代理。稳健性检验采用同时效应检验。研究结果表明,营运资金管理和董事会多元化对盈利能力没有显著影响。然而,它们显著正向影响公司价值,这意味着市场被有效的营运资本管理和董事会多样性所吸引。然而,交互变量分析表明,性别多样性和教育水平多样性削弱了营运资金管理对企业价值的影响。研究的局限性/意义本研究并不局限于一个行业;因此,未来的研究可能会集中在一个行业,并检测特定行业的营运资金构成模式。本研究侧重于定量数字来解释董事会多样性在营运资本管理中的相互作用,以最大化股东财富。未来的研究可能会考虑进行定性讨论,以描述董事会中女性的存在质量、董事会成员的教育水平和教育背景。原创性/价值与大多数作者将营运资金和董事会多样性与公司绩效单独联系起来的研究不同,本研究结合了这两个组成部分,并分析了董事会多样性是否可以起到调节作用。董事会多元化作为公司治理的一部分,有望提高营运资金管理效率。
本文章由计算机程序翻译,如有差异,请以英文原文为准。
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来源期刊
CiteScore
5.80
自引率
13.00%
发文量
38
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