Author

  • Lee Hui Shan

    • Universiti Tunku Abdul Rahman, Selangor, Malaysia
    • Universiti Putra Malaysia, Selangor, Malaysia
    • Malaysia

  • Har Wai Mun

    • Universiti Tunku Abdul Rahman, Selangor, Malaysia
    • Universiti Putra Malaysia, Selangor, Malaysia
    • Malaysia

  • Yow Taw Onn

    • Universiti Tunku Abdul Rahman, Selangor, Malaysia
    • Universiti Putra Malaysia, Selangor, Malaysia
    • Malaysia

  • Lee Sin Yee

    • Universiti Tunku Abdul Rahman, Selangor, Malaysia
    • Universiti Putra Malaysia, Selangor, Malaysia
    • Malaysia

  • Sim Kee Chuan

    • Universiti Tunku Abdul Rahman, Selangor, Malaysia
    • Universiti Putra Malaysia, Selangor, Malaysia
    • Malaysia

Abstract

This paper provides the influence of working capital management (WCM) on the performance of public listed wholesale & retail industry and property industry in Malaysia from 2002 to 2011. Regression model is employed by using two measures of companies’ performance namely Return on Assets, ROA (proxy to gauge the firm’s profitability) and Tobin’s Q, TQ (proxy to gauge the firm’s market value) as the dependant variables. WCM components include Current Liabilities to Total Assets Ratio and Current Assets to Total Assets Ratio with three control variables which include of Firm Size (SIZE), Sales Growth (SLGR) and Financial Leverage (LEV) as the independent variables. The results to a very large extent indicate that CATAR and SIZE have significant positive effect on the performance of firm. It suggests that wholesale & retail industry and property industry in Malaysia should pursue unadventurous investment strategy by implementing high altitude of short term investment in order to make profit and create value for their shareholders. It also reveals that the larger the firms are, the more profitable they are; recommending the firms shall expand their business to achieve higher profit and accomplish shareholder wealth maximisation.

Keywords

References

  • Alam, H. M., Ali, L., Rehman, C. A. & Akram, M. (2011). Impact of Working Capital Management on Profitability and Market Valuation of Pakistani Firms. European Journal of Economics, Finance and Administrative Sciences , 32, 48-54.
  • Afeef, M. (2011). Analyzing the Impact of Working Capital Management on the Profitability of SME’s in Pakistan. International Journal of Business and Social Science , 2(22), 173-183.
  • Azam, M. & Haider, I. (2011). Impact of Working Capital Management on Firm’s Performance: Evidence from Non-Financial Institutions of KSE-30 index. Interdisciplinary Journal of Contemporary Research in Business , 3(5), 481-9492.
  • Charitou, M., Lois, P. & Santoso, H. B. (2012). The Relationship between Working Capital Management and Firm’s Profitability: An Empirical Investigation for an Emerging Asian Country. International Business & Economics Research Journal , 11(8), 839-848.
  • Deloof, M. (2003). Does Working Capital Management Affect Profitability of Belgian Firms? Journal of Business, Finance and Accounting , 30(3-4), 573-587.
  • Eljelly, A. M. A. (2004). Liquidity-Profitability Tradeoff: An Empirical Investigation in An Emerging Market. International Journal of Commerce and Management , 14(2), 48-61.
  • Hussain, A., Farooq, S. U. & Khan, K. U. (2012). Aggressiveness and Conservativeness of Working Capital: A Case of Pakistani Manufacturing Sector. European Journal of Scientific Research , 73(2), 171-182.
  • Kaddumi, T. A. & Ramadan, I. Z. (2012). Profitability and Working Capital Management: The Jordanian Case. International Journal of Economics and Finance , 4(4), 217-226.
  • Kargar, J. & Blumenthal, R. A. (1994). Leverage Impact of Working Capital in Small Businesses. TMA Journal , 14(6), 46-53.
  • Lazaridis, I. & Tryfonidis, D. (2006). Relationship between Working Capital Management and Profitability of Listed Companies in the Athens Stock Exchange. Journal of Financial Management and Analysis , 19(1), 26-35.
  • Mona, A. M. (2012). The Impact of Working Capital Management Policies on Firm’s Profitability and Value: The Case of Jordan. International Research Journal of Finance and Economics , 3(2), 147-153.
  • Napompech, K. (2012). Effects of Working Capital Management on the Profitability of Thai Listed Firms. International Journal of Trade, Economics and Finance , 3(3), 227-232.
  • Nazir, M. S. & Afza, T. (2009). Impact of Aggressive Working Capital Management Policy on Firms’ Profitability. The IUP Journal of Applied Finance , 15(8), 19-30.
  • Peel, M. L. & Wilson, N. (1996). Working Capital and Financial Management Practices in Small Firm Sector. International Small and Business Journal , 14(2), 52-68.
  • Pouraghajan, A. & Emamgholipourarchi, M. (2012). Impact of Working Capital Management on Profitability and Market Valuation: Evidence from Tehran Stock Exchange. International Journal of Business and Social Science , 3(10), 311-318.
  • Ray, S. (2012). Evaluating the Impact of Working Capital Management Components on Corporate Profitability: Evidence from Indian Manufacturing Firms. International Journal of Economic Practices and Theories, 2(3), 127-136.
  • Raheman, A., Afza, T., Qayyum, A. & Bodla, M. A. (2010). Working Capital Management and Corporate Performance of Manufacturing Sector in Pakistan. International Research Journal of Finance and Economics , 47, 151-163.
  • Raheman, A. & Nasr, M. (2007). Working Capital Management And Profitability – Case Of Pakistani Firms. International Review of Business Research Papers , 3(1), 279-300.
  • Sanger, J. S. (2001). Working Capital: A Modern Approach. Financial Executive , 69(1).
  • Shin, H. H. & Soenen, L. (1998). Efficiency of Working Capital Management and Corporate Profitability. Financial Practice and Education , 8(2), 37-45.
  • Smith, K. (1980). Profitability versus Liquidity Tradeoffs in Working Capital Management. In Readings on the Management of Working Capital, West Publishing Company, St. Pail, New York, 1880.
  • Teruel, P. J. G. & Solano, P. M. (2007). Effects of Working Capital Management on SME Profitability. International Journal of Managerial Finance , 3(2), 164-177.
  • Usama, M. (2012). Working Capital Management and its affect on firm’s profitability and liquidity: In Other food sector of (KSE) Karachi Stock Exchange. Arabian Journal of Business and Management Review (OMAN Chapter) , 1(12), 62-73.
  • Vahid, T. K., Mohsen, A. K. & Mohammadreza, E. (2012). The Impact of Working Capital Management Policies on Firm’s Profitability and Value: Evidence from Iranian Companies. International Research Journal of Finance and Economics , 88, 155-162.
  • Zariyawati, M. A., Annuar, M. N., Taufiq, H. & Abdul Rahim, A. S. (2009). Working Capital Management and corporate performance: Case of Malaysia. Journal of Modern Accounting and Auditing , 5(11), 47-54.
  • Afiq, S. (2011). The Retail Market in Malaysia. Property Quotient. Retrieved March 29th , 2013, from http://www.malaysiapropertyinc.com/pdf/
  • JabatanPerdanaMenteri. (2012). Economic Transformation Programme Annual Report 2012. Retrieved July 23th , 2013 from http://etp.pemandu.gov.my/annualreport2012/
  • JabatanPerdanaMenteri. (2010). Government Transformation Programme: The Roadmap. Retrieved April 23th , 2012 from http://jpt.moe.gov.my/eng/RUJUKAN/GTP%20Roadmap.pdf
  • Nor, Z. A., Nurhisham, H. & Afiq, A. M. (2013). The 2012 Bank Negara Malaysia Annual Report. Malaysian Rating Corporation Berhad Economic Research. Retrieved May 18th , 2013 from http://www.marc.com.my/home/userfiles/file/210313_BNM%20Annual%20Report%202012_Final .pdf.

Downloads

No downloads have been recorded for this article yet. Figures appear here once readers begin downloading the full text.

How to Cite

Shan, L. H., Mun, H. W., Onn, Y. T., Yee, L. S., & Chuan, S. K. (2015). Working Capital Management Effect on the Performance of Wholesale and Property Industry in Malaysia. Journal of Economics and Behavioral Studies, 7(5(J), 19-28. https://doi.org/10.22610/jebs.v7i5(J).602

Share this article

License

Copyright (c) 2015 Lee Hui Shan, Har Wai Mun, Yow Taw Onn, Lee Sin Yee, Sim Kee Chuan (Author)

Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

Author (s) should affirm that the material has not been published previously. It has not been submitted and it is not under consideration by any other journal. At the same time author (s) need to execute a publication permission agreement to assume the responsibility of the submitted content and any omissions and errors therein. After submission of revised paper in the light of suggestions of the reviewers, the editorial team  edits and formats manuscripts to bring uniformity and standardization in published material.

This work will be licensed under Creative Commons Attribution 4.0 International (CC BY 4.0) and under condition of the license, users are free to read, copy, remix, transform, redistribute, download, print, search or link to the full texts of articles and even build upon their work as long as they credit the author for the original work. Moreover, as per journal policy author (s) hold and retain copyrights without any restrictions.

Keywords

Section

Research Paper

Published in

Vol. 7 No. 5(J) (2015) Markets, ICT & Development Dynamics View issue contents

Published

2015-10-30

Submissions

Have research to publish? Journal of Economics and Behavioral Studies welcomes submissions.

Make a Submission