The Interplay Of Working Capital Management And Corporate Governance In Determining Firm Performance

Abstract

Considering the unpredictable economic conditions in Pakistan, it is essential to implement efficient working capital management practices to maintain financial stability and ensure long-term sustainability. This study investigates the effect of working capital management on firm performance in non-financial listed firms in Pakistan, with corporate governance practices as a moderating variable. The research used a data set of Pakistani non-financial firms from 2017-22. However, the nature of data is panel and secondary[1] data. The proxy used for working capital management is the cash conversion cycle. Besides these, control variables such as current ratio and firm size are also used. The results conclude that good working capital management has a statistically significant impact on financial performance. Furthermore, corporate governance measures such as the board's size and the addition of independent directors have a role in moderating this relationship. The results provide significant knowledge for scholars, professionals, and decision-makers, emphasizing the significance of strong corporate governance standards in enhancing firm performance and guaranteeing long-term viability.