Working Capital Management Effect in Indonesia and Thailand Manufacturing Sector

Abstract

This research aims to analyze working capital management in selected manufacturing firms in Indonesia and Thailand. Database of 216 companies is selected for the ten years from 2008-2017. The cash conversion cycle is the measuring tool to calculate the efficiency of working capital management. Tobin's Q was used to examine market valuation. Meanwhile, Return On Asset was used to represent profitability. Leverage, firm size, firm age, growth opportunities, and economic conditions are taken as control variables. The study used panel data and regression analysis to test the hypothesis. The study results show similar things for both countries that there is a significant negative effect between cash conversion cycle and manufacturing firm's profitability in Indonesia and Thailand. Meanwhile, the cash conversion cycle proved to have no significant effect on firms' value in Indonesia and Thailand.