Analyzing the Relationship between Corporate Governance and Working Capital Management in Malaysian Manufacturing Public Listed Companies: A Conceptual Study

Abstract

In recent years, Malaysian businesses have faced various issues related to working capital management (WCM), which have affected their profitability, liquidity, and overall financial performance. According to a report by the World Bank, only 18.5% of Malaysian SMEs (which include many manufacturing companies) had access to formal financing in 2018, with the majority relying on internal funds or informal sources of financing (World Bank, 2020). This lack of access to financing can lead to cash flow problems and hinder companies' ability to manage their working capital effectively. This conceptual paper aims to investigate the impact of corporate governance on WCM in Malaysia's manufacturing public listed companies. The manufacturing sector is a significant contributor to Malaysia's economy, accounting for over 23% of the country's Gross Domestic Product (GDP) and providing employment to over 2 million people (Department of Statistics Malaysia, 2021). The study employed a qualitative approach, which involved a thorough review of relevant literature on corporate governance and WCM. At the end of this discussion, this study will show the links and correlations between Corporate Governance and WCM. In conclusion, this study found that CEO duality, board size, and audit committee are elements that influence WCM. These findings provide valuable insights for policymakers, management