Board Characteristics and Working Capital Management Linkage: Panel Data Analysis Approach across Listed Construction and Manufacturing Firms in Kenya
A firm does not operate in a vacuum but where there is an interaction with shareholders and stakeholders. Thus, other than providing resources, a firm given its board as one of corporate governance aspect is in a better position to enhance management of its resources. To extend existing knowledge in literature, the study therefore examined the effect of board characteristics on working capital management of listed construction and manufacturing firms in Kenya. The specific objective was to test the hypotheses as to whether there was a significant relationship board size, board independence, board committee, board's gender and working capital management. As guided by resource dependency theory and explanatory research design, 14 listed construction and manufacturing firms from 2008 to 2017 were targeted. From the panel regression analysis, WCM positively and significantly related to board's gender, board size as indicated by ji= 18.293 (p-value=.011) and Hr= 3.822 (p-value = .019) respectively. Moreover, board composition had significant (p-value = .028<.05) and negative tji= -35.833) result while relationship between board independence and WCM was negative tjl= -6.581) but insignificant (p-value = .558 >.05). The study thus concluded that board size and gender diversity of the board enhanced WCM. The findings of the study contributed to resource dependency theory by examining the extent to which the features of the board affect management of resources inform of working capital. The management firms listed in construction and manufacturing sectors were suggested to increase female representation in the board as well as ensuring that optimal board size and committee is maintained. Future studies were expected to extend the model by incorporating other board characteristics. Furthermore, working capital strategies and ownership structure could be considered by upcoming researchers as mediating and moderating variables in that order.
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