Working capital management and corporate profitability: the moderating role of foreign ownership
This study investigates the moderating role of foreign ownership by examining the working capital management (WCM)–corporate profitability relationship in emerging Chinese High-tech manufacturing industry during 2010–2021. We apply a two-way fixed effects model, sub-group testing, and generalised me...
| Main Authors: | , , , , |
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| Format: | Article |
| Language: | English |
| Published: |
Elsevier Ltd
2025
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| Online Access: | http://psasir.upm.edu.my/id/eprint/121114/ http://psasir.upm.edu.my/id/eprint/121114/1/121114.pdf |
| _version_ | 1848868294837141504 |
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| author | Zhou, Siyu Amin Noordin, Bany Ariffin Tunde, Matemilola Bolaji Chen, Yuhua Xu, Keming |
| author_facet | Zhou, Siyu Amin Noordin, Bany Ariffin Tunde, Matemilola Bolaji Chen, Yuhua Xu, Keming |
| author_sort | Zhou, Siyu |
| building | UPM Institutional Repository |
| collection | Online Access |
| description | This study investigates the moderating role of foreign ownership by examining the working capital management (WCM)–corporate profitability relationship in emerging Chinese High-tech manufacturing industry during 2010–2021. We apply a two-way fixed effects model, sub-group testing, and generalised method of moment estimation (GMM), finding that longer Cash Conversion Cycles (CCC) significantly diminish operating profit and shareholder benefits, especially in firms with above-average CCC or high sales growth. Notably, foreign ownership mitigates this negative effect, and this reverse moderating effect is more significant in firms with low WCM efficiency or low growth, suggesting it can enhance corporate governance and ease financial constraints. Managers can bolster profitability by introducing foreign capital, underscoring the strategic role of foreign ownership in emerging markets. The findings enhance the understanding of foreign ownership role in corporate finance and management. |
| first_indexed | 2025-11-15T14:50:07Z |
| format | Article |
| id | upm-121114 |
| institution | Universiti Putra Malaysia |
| institution_category | Local University |
| language | English |
| last_indexed | 2025-11-15T14:50:07Z |
| publishDate | 2025 |
| publisher | Elsevier Ltd |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | upm-1211142025-10-28T02:05:53Z http://psasir.upm.edu.my/id/eprint/121114/ Working capital management and corporate profitability: the moderating role of foreign ownership Zhou, Siyu Amin Noordin, Bany Ariffin Tunde, Matemilola Bolaji Chen, Yuhua Xu, Keming This study investigates the moderating role of foreign ownership by examining the working capital management (WCM)–corporate profitability relationship in emerging Chinese High-tech manufacturing industry during 2010–2021. We apply a two-way fixed effects model, sub-group testing, and generalised method of moment estimation (GMM), finding that longer Cash Conversion Cycles (CCC) significantly diminish operating profit and shareholder benefits, especially in firms with above-average CCC or high sales growth. Notably, foreign ownership mitigates this negative effect, and this reverse moderating effect is more significant in firms with low WCM efficiency or low growth, suggesting it can enhance corporate governance and ease financial constraints. Managers can bolster profitability by introducing foreign capital, underscoring the strategic role of foreign ownership in emerging markets. The findings enhance the understanding of foreign ownership role in corporate finance and management. Elsevier Ltd 2025 Article NonPeerReviewed text en http://psasir.upm.edu.my/id/eprint/121114/1/121114.pdf Zhou, Siyu and Amin Noordin, Bany Ariffin and Tunde, Matemilola Bolaji and Chen, Yuhua and Xu, Keming (2025) Working capital management and corporate profitability: the moderating role of foreign ownership. Finance Research Letters, 81 (undefined). art. no. 107466. undefined-undefined. ISSN 1544-6123 https://linkinghub.elsevier.com/retrieve/pii/S1544612325007251 10.1016/j.frl.2025.107466 |
| spellingShingle | Zhou, Siyu Amin Noordin, Bany Ariffin Tunde, Matemilola Bolaji Chen, Yuhua Xu, Keming Working capital management and corporate profitability: the moderating role of foreign ownership |
| title | Working capital management and corporate profitability: the moderating role of foreign ownership |
| title_full | Working capital management and corporate profitability: the moderating role of foreign ownership |
| title_fullStr | Working capital management and corporate profitability: the moderating role of foreign ownership |
| title_full_unstemmed | Working capital management and corporate profitability: the moderating role of foreign ownership |
| title_short | Working capital management and corporate profitability: the moderating role of foreign ownership |
| title_sort | working capital management and corporate profitability: the moderating role of foreign ownership |
| url | http://psasir.upm.edu.my/id/eprint/121114/ http://psasir.upm.edu.my/id/eprint/121114/ http://psasir.upm.edu.my/id/eprint/121114/ http://psasir.upm.edu.my/id/eprint/121114/1/121114.pdf |