Title: Corporate governance, working capital management and profitability: empirical insights for Indian pharmaceutical firms

Authors: Najib H.S. Farhan; Mosab I. Tabash; Faozi A. Almaqtari; Amgad S.D. Khaled

Addresses: College of Business Studies, Arab Open University, KSA ' College of Business, Al Ain University, P.O. Box 64141, Al Ain, United Arab Emirates ' Department of Accounting, Hodeidah University, Hodeidah, Yemen ' Department of Management Information System, Al-Rowad University, Taiz, Yemen

Abstract: The current study examines the inter-relationships between working capital management (WCM) and the profitability of Indian pharmaceutical firms. The impact of corporate governance on the link between WCM and profitability is also addressed. The financial data of 82 Indian pharmaceutical firms for the period from 2008 to 2017 are used. Fixed and random effect regression models are used for estimating the results. Findings show that there is a negative and significant impact on the number of days' payable deferral period, number of days' collection period, number of days' inventory holding period, and operating cycle on the profitability of Indian pharmaceutical firms. Moreover, findings reveal that board of directors' composition does not moderate the association between working capital components (WCCs) and the profitability of Indian pharmaceutical firms. The researchers believe that this study perhaps is the first study that evaluates the impact of corporate governance on the association between WCCs and firms' profitability in the Indian context.

Keywords: profitability; moderation effect; India; working capital management; WCM; pharmaceutical firms.

DOI: 10.1504/IJEBR.2022.119350

International Journal of Economics and Business Research, 2022 Vol.23 No.1, pp.68 - 91

Received: 30 Jul 2020
Accepted: 19 Sep 2020

Published online: 01 Dec 2021 *

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