Publication:
The impact of working capital management on the profitability of Shariah-compliant and non-Shariah firms: the case of Malaysia
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Date
2014
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Abstract
This paper examines the impact of working capital management on the firm's profitability using retun on equity as its core determinant. Using a sampe of ninety listed Malaysian Shariah-compliant and non-Shariah firms react differently to similar firm specific variables. By employing static panel data estimation technique, we document that although the Shariah-compliant firms are subject to certain restrictions, they still efficiently compete with their conventional counterparts in terms of profitability by sustaining a higher return on equity. This might be attributed to better management of their receivables as well as a higher and better inventory turnover as per our empirical results. Thus, it can be assumed that Shariah restrictions have not impeded the performance of Shariah-compliant firms; rather it has helped them in some respects if not all.
Keywords
Profitability , Shariah-compliant and non-Shariah firms , Working capital management
Citation
Albdwy, F. E., Mohd Rasid, M. E. S., & Salman, S. (2014). The impact of working capital management on the profitability of Shariah-compliant and non-Shariah firms: the case of Malaysia. Capital markets review, 22 (1&2), pp. 41-58.
Publisher
Bursa Malaysia & Malaysian Finance Association