Working capital management and financial performance of Malaysian construction sector companies

Abstract

This study examines the effects of working capital management on financial performance of construction companies listed in Bursa Malaysia for the period of 2012 to 2016. The findings show that only a shortening collection period and a positive working capital are significant to improve financial performance of local construction firms. An effective working capital management however does not contribute significantly to operating cash flow and share price of construction firms in Malaysia. The findings of this study suggest the management of account receivable is the most critical factor to improve financial performance for the local construction firms.