Working capital manageemnt and performance of gse listed oil firms; the moderating role of earnings management
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Date
2023
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KNUST
Abstract
Working capital accounts for more than 50% of total assets under management in most companies. Due to inefficient working capital and earning management, many oil and gas companies lose billions every year. Thus, this study seeks to examine the effect of working capital on the profitability of listed companies in Ghana, ascertain the effect of earnings management on the profitability of listed companies in Ghana, and determine whether earnings management moderates the relationship between working capital and profitability and listed companies in Ghana. The agency, stakeholder and stewardship theories were applied in achieving the stated objectives. The case study approach with quantitative method is applied in the study. In order to determine which elements were deemed necessary to obtain accurate data required to achieve the research objectives, the researcher applied a reasonable selection method to select all oil and gas companies listed on the Ghana Stock Exchange. These companies are Ghana Oil, Total. The study concludes that it is not only good working capital management that increases efficiency, but also good interest income management. The estimated outcomes indicate that depending on the elements of working capital management, the cash conversion cycle and the average number of days to collect have a statistically significant negative impact on the financial performance of the companies. Discretionary accruals were also found to have a negative impact on profitability. It can be concluded that not only do current asset items have an impact on financial performance, but also profit management can have a negative impact on profitability. The study confirms a significant link between firm size and equity returns. This indicates that management must adopt and pursue appropriate policies that will ensure an improvement in the sales or asset base of the firm, which can be done through innovative products and extensive marketing.
Description
A thesis submitted to the department of accounting and finance, kwame nkrumah university of science and technology, kumasi in partial fulfilment of the requirements for the award degree of master of science accounting and finance.