WORKING CAPITAL MANAGEMENT AND PERFORMANCE OF KUWAIT CONSTRUCTION COMPANIES

Abstract

The purpose of this paper is to investigate the relationship between working capital management efficiency and performance of construction companies listed in the Kuwait Stock Exchange. The relationship is examined using dynamic panel data two- steps robust system estimation for the period 2001-2013. The analysis is applied at all the levels of the full sample as well as at the divisions’ levels of the sample by crisis and non-crisis periods, and by size. The results show negative and significant relationships between net trade cycle as a comprehensive measure of the efficiency in working capital management and performance for large firms during the full sample period while the relations between net trade cycle and performance for small firms are insignificant. This indicates that large construction companies in Kuwait are more efficient in managing their working capital than the small companies***.