Moderating Role of Managerial Ownership on Nexus between Inventory Days and Working Capital to Asset Ratio on Firm Performance: Evidence from Listed Industrial and Consumer Goods Companies in Nigeria


  • Isaac LAMBE
  • Bemshima ORBUNDE
  • Williams A. TION
  • Haruna DZUGWAHI


inventory days ratio, working capital to assets ratio, managerial ownership, return on assets, firm size


The management of working capital is a crucial area of business management that can make or mar the existence of a business entity. This must be matched against the available assets of the organization. Since working capital determines how the operations of a company is run daily, it requires absolute attention and the area of interest is the management of inventory. Businesses will strive to make goods available to meet customers demand while also taking caution not to over-stock to mitigate possible pilfering, deterioration, unnecessary trapping of finance in inventories, etc. In order to maintain a healthy cash level for the business, managers would typically take proactive steps to ensure a shorter time lag between investments in inventories and when they are converted back to cash. This study looked at how this possibility would affect a company's performance. The study takes a novel turn by taking into account the moderating impact of managers who have equity stakes in the company in order to mitigate inadequate inventory management in listed industrial and consumer goods companies in Nigeria. The study's methodology is based on agency theory, and the data for the 2012–2021 study period was taken from the annual reports of 26 listed industrial and consumer goods companies in Nigeria. The use of an ex post facto research design was justified by the nature of the data. Using a multivariate regression model, the study's relationship between its variables was examined. The findings demonstrated that managerial ownership significantly modifies the impact of the working capital to total asset ratio on financial performance. Based on the findings of the analysis, it was advised that the management of listed consumer and industrial goods companies in Nigeria increase the effectiveness and efficiency of working capital management to improve company performance as well as that they adhere to stock management models that enhance corporate performance.