Board structure and net working capital: evidence from FTSE all share index companies

ABSTRACT

The success and value of a company depend heavily on effective governance practices. Efficient management of working capital is also crucial for maximizing profits and increasing the company’s worth. To better understand the connection between board composition and net working capital, we analysed the FTSE All-Share Index from 2012 to 2021. Our research discovered that the inclusion of independent directors and the rate of adjustment linked to an increase in independent board members had a negative impact on working capital management. However, we could not identify significant connection between gender diversity on the board and working capital investments. Therefore, our findings suggest that the presence of independent directors may indicate a proactive approach to working capital management with the aim of maximizing the company’s value.

KEYWORDS:

• Board structure
• independent directors
• Net working capital
• the speed of adjustment
• working capital management

JEL CLASSIFICATION:

• G30
• G31
• G32

Disclosure statement

The author has no conflicts of interest to declare. All co-authors have seen and agree with the manuscript’s contents, and there is no financial interest to report. I certify that the submission is original work and is not under review at any other publication.

Correction Statement

This article has been corrected with minor changes. These changes do not impact the academic content of the article.