Academy of Strategic Management Journal (Print ISSN: 1544-1458; Online ISSN: 1939-6104)


Liquidity Risks and Working Capital Management: Empirical Study of Selected Consumer Goods Companies

Author(s): Aguzue Sandra Adaeze, Ikpefan Ochei Ailemen, Ezeh Ugochi Lucy, Awogbenja Bukola Bolanle

The research explained the impact of management of liquidity risk on the management of working capital of selected consumer goods organizations. Return on capital employed, equity returns, and asset returns were studied to see how they impact working capital which was measured by net working capital. Secondary data received from the five consumer goods companies’ financial statements were analyzed using the panel data regression. Both fixed and random effects regressions were conducted, however, Hausman test pointed to the fixed effect regression as significant, hence it was focused on. Findings from the fixed effect revealed that equity returns, asset returns, and return on capital employed were all negatively significance in impacting net working capital of the five selected companies. The study therefore recommended that the consumer companies’ boards of directors should put in place policy like corporate governance that would help manage the company’s liquidity in order to boost net working capital.

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