The OECD Principles of Corporate Governance

Ever since the publication in 1905 of Max Weber's study Die Protestantische Ethik und der Geist des Kapitalismus, there has been lively controversy concerning the connection between religious belief and economic activity. Three main .categories of opinion have emerged from this debate: (1) the theory advocated by Weber, which has found numerous supporters aware in varying degrees of their debt to Weber's mode of thought: viz., that Protestantism, especially in its Calvinistic form, created a climate in which the ‘spirit of capitalism’ could flourish; (2) what may be called the inverted Weberian theory, argued with particular rigour by H. M. Robertson, that the spirit of capitalism is not the creator but the creation of businessmen; and finally (3) an intermediate theory, presented by Professor R. H. Tawney and others, the gist of which may be said to be that economic change tan affect religious teaching, but that also religious teaching can in tum intensify and enhance the spirit of capitalism. O...

Religion and the rise of capitalism

Working Capital Management and Corporate Profitability: Evidence from Panel Data Analysis of Selected Quoted Companies in Nigeria

The main aim of this article is to examine the effect of working capital on profitability of Indian firms. We collected data about a sample of 263 non-financial BSE 500 firms listed at the Bombay Stock (BSE) from 2000 to 2008 and evaluated the data using OLS multiple regression. The findings of our study significantly depart from the various international studies conducted in different markets. The results reveal that working capital management and profitability is positively correlated in Indian companies. The study further reveals that inventory of number of days and number of days accounts payable are negatively correlated with a firm’s profitability, whereas number of days accounts receivables and cash conversion period exhibit a positive relationship with corporate profitability. The present study contributes to the existing literature by examining the effect of working capital management on profitability in the context of an emerging capital market such as India.

Effect of Working Capital Management on Firm Profitability: Empirical Evidence from India

The paper is made with an attempt to bridge the gap in the literature by offering empirical evidence about working capital management and its effect to the performance of Malaysian listed companies from the perspective of market valuation and profitability. The secondary data for analysis is retrieved from Bloomberg’s Database of 172 listed companies randomly selected from Bursa Malaysia main board for five year period from 2003 to 2007. The study aims to explore the effects of working capital component i.e cash conversion cycles (CCC), current ratio (CR), current asset to total asset ratio (CATAR), current liabilities to total asset ratio (CLTAR), and debt to asset ratio (DTAR) to the firm’s performance by looking at firm’s value i.e Tobin Q (TQ) and profitability i.e. return on asset (ROA) and return on invested capital (ROIC). Applying correlations and multiple regression analysis, the result shows that there are significant negative associations between working capital variables with firm’s performance. Thus it highlights the importance of managing working capital requirements to ensure an improvement in firm’s market value and profitability and this aspect must form part of the company's strategic and operational thinking in order to operate effectively and efficiently.

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Working Capital Management: The Effect of Market Valuation and Profitability in Malaysia

A well designed and implemented working capital management is expected to contribute positively to the creation of a firm’s value The purpose of this paper is to examine the trends in working capital management and its impact on firms’ performance. The trend in working capital needs and profitability of firms are examined to identify the causes for any significant differences between the industries. The dependent variable, return on total assets is used as a measure of profitability and the relation between working capital management and corporate profitability is investigated for a sample of 58 small manufacturing firms, using panel data analysis for the period 1998 – 2003. The regression results show that high investment in inventories and receivables is associated with lower profitability. The key variables used in the analysis are inventories days, accounts receivables days, accounts payable days and cash conversion cycle. A strong significant relationship between working capital management and profitability has been found in previous empirical work. An analysis of the liquidity, profitability and operational efficiency of the five industries shows significant changes and how best practices in the paper industry have contributed to performance. The findings also reveal an increasing trend in the short-term component of working capital financing.

Trends in working capital management and its impact on firms, performance: an analysis of mauritian small manufacturing firms

This paper aims to report the results of an investigation of the relationship between working capital level, measured by the cash conversion cycle and profitability of Small and Medium Enterprises (SMEs). The paper employs panel data regression analysis on a sample of 160 Alternative Investment Market (AIM) listed SMEs for the period from 2005 to 2010. The empirical results show that there is a concave relationship between working capital level and firm profitability and that there is an optimal working capital level at which firms’ profitability is maximised. Furthermore, an examination as to whether or not deviations from the optimal working capital level reduce firm profitability indicate that deviations above or below the optimum decrease profitability. The sample is limited to AIM listed SMEs, and therefore the findings cannot be generalised to all firms. Overall, the evidence suggests that firms should strive and attain the optimal working capital level in order to maximise their profitability. The results are of importance to both SMEs and policy makers providing insight into the nature of cash conversion cycle and its relationship to SMEs profitability.

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Working capital level influence on SME profitability

This paper investigates the approach of small- to medium-sized Mauritian manufacturing firms to working capital finance using a survey-based approach and case studies. Financing has been cited as one of the most common problems faced by SMEs and is often viewed as one of their main barriers to growth. Using parametric and nonparametric techniques, the important variables that affect the demand for financing are examined. Interestingly, it is observed that the sample firms adopted more informal sources of financing and networking to meet their financing requirements. The financing preferences of the firms were predominantly short-term and there was conclusive evidence that they were reluctant to move down the pecking order for fear of losing control of their businesses. The findings confirmed that internal resources, non-bank sources and short-term debt represent the main sources of financing. The research findings provided some new evidence in support of the different approaches to financing working capital. These SMEs used more informal sources such as shareholder loans and bootstrap finance. These results indirectly suggest that firms experience significant information costs that prevent them from gaining access to the traditional sources of financing. The findings of the study will be useful to the financial institutions that fund SMEs and to policy makers.

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Working capital financing preferences: the case of mauritian manufacturing small and medium-sized enterprises (SMES)

Small to medium-sized enterprises’ (SMEs) poor performance is often ascribed to external factors such as burdensome character of the legal framework, limited scope to penetrate the export market and access to finance. However, internal factors such as marketing, operation and in particular accounting services may be equally responsible to such state of affairs. This study therefore attempts to analyse the importance attached to formal accounting systems among the small to medium-sized Mauritian manufacturing firms operating in six main industry groups. The research findings are based on a comprehensive survey of the financial and working capital management practices of 141 SMEs. Additional rigour to the research findings was possible through the use of 12 mini case studies.

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Factors Affecting the Adoption of Formal Accounting Systems by SMEs

The study examines the relationships among entrepreneurial orientation, market orientation and networking on firm performance with radical and incremental innovation as the mediator. The present study draws on the resource-based view theory to provide insights about intangible resources and capabilities among SMEs. The study adopts a subjectivist approach and is based on multiple case study method by conducting interviews with 7 SMEs purposively operating in different sectors. The research findings seem to support both proactive and responsive market orientation (PMO, RMO), entrepreneurial orientation (EO) and networking have positive relationships on firm performance with radical and incremental innovation as the mediator. It appears firms initiating radical innovation take longer for new product performance because of lack of information about customer needs in the market but networking assists in providing market information that enables commercialization of new products. Further, networking among firms drives performance while strong ties are practiced to a lesser extent.

Kesseven Padachi

Papers

Trends in working capital management and its impact on firms, performance: an analysis of mauritian small manufacturing firms

Working capital level influence on SME profitability

Working capital financing preferences: the case of mauritian manufacturing small and medium-sized enterprises (SMES)

Factors Affecting the Adoption of Formal Accounting Systems by SMEs

Entrepreneurial orientation, market orientation and networking: impact on innovation and firm performance