Working Capital Management Aggressiveness and Its Performance: Evidence from Agro-Food Industry in Thailand

Abstract

The primary objective of this research study was to empirically examine the association between the efficiency of working capital management (WCM), comprising measures such as the Cash Conversion Cycle (CCC), Efficiency Index (EI), Aggressiveness Index (AGGR), and Accounts Receivable Aggressiveness (ARAGGR), and the financial performance (FP) metrics, including Earnings on Assets (EOA) and Return on Assets (ROA). Additionally, this study aimed to compare the efficiency of WCM across various models of publicly listed companies operating in Thailand's Agro & Food Industry. The study utilized a dataset spanning a period of 11 years, from 2007 to 2018, encompassing a sample of 53 enterprises listed within the Agri-business and Food & Beverage sectors. The data was sourced from the SETSMART database, a reputable financial data repository. To investigate the relationship between WCM efficiency and financial performance, the study employed multiple regression analysis. The empirical findings from this research indicate that all the independent variables associated with WCM have a statistically significant impact on financial performance. Notably, the variable AGGR exhibited the most substantial influence on financial performance, as evidenced by its beta coefficient of 0.485. These findings suggest that a model incorporating a combination of performance metrics provides a more comprehensive explanation of the interplay between working capital management and financial performance.