Article: An empirical study on supplier concentration and working capital: the moderating effect of internal control Journal: International Journal of Applied Management Science (IJAMS) 2025 Vol.17 No.5 pp.1 - 20 Abstract: Working capital is an essential resource for the continuity of corporate operations, and its management is crucial for maintaining a firm's everyday activities. Senior management must prioritise the appropriate management of working capital to ensure the company's long-term stability and sustainable development. This study analyses a data set of 7451 firm-year observations from A-share listed companies on the Shanghai and Shenzhen Stock Exchanges from 2012 to 2019 to evaluate the impact of supplier concentration and internal control on the efficacy of corporate working capital management. The empirical data indicate that increased supplier concentration is associated with a diminished cash conversion cycle, hence improving the efficiency of working capital utilisation. This suggests that fostering robust, cooperative relationships with a select group of essential suppliers might improve cash flow management and accelerate capital turnover. The study additionally reveals that the internal control system positively moderates this association. Implementing strong internal control systems can enhance the beneficial impact of supplier concentration on the effectiveness of working capital management. Inderscience Publishers - linking academia, business and industry through research

Title: An empirical study on supplier concentration and working capital: the moderating effect of internal control

Authors: Huang Changxiang; Sunita Lylia Binti Hamdan; Nor Azliana Binti Aridi

Addresses: Faculty of Management (FOM), Multimedia University, Selangor, Malaysia ' Faculty of Management (FOM), Multimedia University, Selangor, Malaysia ' Faculty of Management (FOM), Multimedia University, Selangor, Malaysia

Abstract: Working capital is an essential resource for the continuity of corporate operations, and its management is crucial for maintaining a firm's everyday activities. Senior management must prioritise the appropriate management of working capital to ensure the company's long-term stability and sustainable development. This study analyses a data set of 7451 firm-year observations from A-share listed companies on the Shanghai and Shenzhen Stock Exchanges from 2012 to 2019 to evaluate the impact of supplier concentration and internal control on the efficacy of corporate working capital management. The empirical data indicate that increased supplier concentration is associated with a diminished cash conversion cycle, hence improving the efficiency of working capital utilisation. This suggests that fostering robust, cooperative relationships with a select group of essential suppliers might improve cash flow management and accelerate capital turnover. The study additionally reveals that the internal control system positively moderates this association. Implementing strong internal control systems can enhance the beneficial impact of supplier concentration on the effectiveness of working capital management.

Keywords: suppliers; internal control; working capital.

DOI: 10.1504/IJAMS.2025.150546

International Journal of Applied Management Science, 2025 Vol.17 No.5, pp.1 - 20

Received: 16 Nov 2024
Accepted: 18 Aug 2025
Published online: 16 Dec 2025 *

Title: An empirical study on supplier concentration and working capital: the moderating effect of internal control

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