Working Capital Management, Working Capital Policy, and Firm Performance in Ghana : Empirical Evidence Using a Dynamic System GMM 

Our study ascertains if efficient working capital management improves the profitability and firm value of non-financial firms listed on the Ghana Bourse. Using annual financial data of 19 Ghanaian non-financial listed firms for the period 2009 -2016, a dynamic panel system Generalized Methods of Moments (GMM) was employed to ensure robustness. We found no significant relationship between working capital management proxied by cash conversion cycle and both profitability and firm value. We, however, found statistically significant relationships between working capital policies and both firm value and firm profitability. The study suggests that managers of listed non-financial firms can create value for their shareholders by adopting an aggressive approach towards working capital financing policy. The consensus that non-financial firms play a crucial role in the development of the economy and the lack of published industry-wide studies of this type in the Ghanaian case justify the relevance of our study.