Working Capital Management Effect in Indonesia and Thailand Manufacturing Sector Amalina Syaharani (a*), Dony Abdul Chalid (b)
a) Master of Management, Faculty of Economics and Business, University of Indonesia, Jalan Salemba Raya 4, Kota Jakarta Pusat, DKI Jakarta, 10430, Indonesia.
*amalinasyaharani[at]gmail.com
b) Master of Management, Faculty of Economics and Business, University of Indonesia, Jalan Salemba Raya 4, Kota Jakarta Pusat, DKI Jakarta, 10430, Indonesia.
Abstract
The main objective of this research is to provide an analysis of working capital management in selected manufacturing firms in Indonesia and Thailand. Database of 216 companies is selected for the ten-year period from 2008-2017. Cash conversion cycle is the measuring tools to calculate the efficiency of working capital management. Tobin’s Q used for examined market valuation, meanwhile, Return On Asset used to represent profitability. Leverage, firm size, firm age, growth opportunities, and economic conditions are taken as control variables. The study used panel data and regression analysis to test the hypothesis. The results of the study show similar things for both countries that there is a significant negative effect between cash conversion cycle and manufacturing firm’s profitability in Indonesia and Thailand. Meanwhile, the cash conversion cycle proved to have no significant effect on firms’ value both in Indonesia and in Thailand.
Keywords: Working Capital Management, Profitability, Tobin’s Q, Cash Conversion Cycle
