Corporate Governance and Working Capital Management in Selected Manufacturing Firms in Nigeria
Ayodeji, Emmanuel A
ABUAD Business School, Ibadan, Oyo-State, Nigeria & Professor of Finance at Afe Babalola University Ado-Ekiti (ABUAD), Ekiti State, Nigeria.
Ajala, Rosemary Bukola *
Department of Banking and Finance, The Federal Polytechnic Ado Ekiti, Ekiti-State, Nigeria.
Oyeluyi Edward Olufemi
ABUAD Business School, Ibadan, Oyo-State, Nigeria.
*Author to whom correspondence should be addressed.
Abstract
This study examined the effect of corporate governance practices on working capital management of the selected consumer goods companies in Nigeria, spanning from 2015 to 2023. The model of study specifies that working capital management (cash conversion cycle) is a function of corporate governance (board size, board composition, board remuneration and corporate social responsibility). Using cross sectional data extracted from 10 consumer goods companies, and estimated using fixed panel regression, the study revealed that board of directors’ remuneration and corporate social responsibility adversely affected cash conversion cycle while board size and board composition positively affected it. Further findings revealed that none of the variables significantly impacted on cash conversion cycle. The findings of the study underscore the importance of corporate governance best practices tailored to firm-specific contexts to enhance liquidity and operational efficiency. This study contributes to the literature on corporate governance practices in emerging economies and offers actionable insights for practitioners and policymakers.
Keywords: Corporate governance, working capital management, solvency, board of director