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Cited by 82Working Capital and Financial PerformanceAccounting and Organizational ManagementFinancial Literacy and Behavior

Internal control systems, working capital management and financial performance of supermarkets

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Kabuye, Frank, Kato, Joachim, Akugizibwe, Irene, Bugambiro, Nicholas·2019·Cogent Business & Management
DOI 10.1080/23311975.2019.1573524
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Abstract

The purpose of this paper is to examine the contribution made by the internal control systems and working capital management on financial performance of supermarkets. This study is cross-sectional and correlational, and it uses firm-level data that were collected by means of a questionnaire survey from a sample of 110 supermarkets in Uganda. Results suggest that working capital management is a significant predictor of financial performance. Contrary to previous thinking internal control systems do not significantly predict financial performance. Therefore, once organizations have appropriate working capital management, they are also likely to have adequate internal control systems that enhance financial performance. This study focuses on supermarkets in Uganda, and it is possible that these results are only applicable to the supermarkets. More research is therefore needed to further understand the contribution of the internal control systems and working capital management on financial performance in other sectors. The results are important for internal control and working capital policy development, for example, in terms of prescribing the internal control systems and working capital requirements for the organizations to enhance financial performance. Internal control systems and working capital management have apparently hitherto been the subject of limited consideration by most supermarkets in Uganda. Nevertheless, this study, in possibly the most thorough treatment so far, highlights the areas requiring improvement to enhance financial performance.

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  • The study's results are consistent with prior research showing that improvements in ICE and WCME lead DMUs to achieve better performance.

    “These results are consistent with prior research showing that improvements in ICE and WCME lead DMUs' to achieve better performance (Hamdan, 2018;Isola et al., 2020;Kabuye et al., 2019;Louw et al., 2022;Nadeem et al., 2017Nadeem et al., , 2018;;Seth, Chadha, Ruparel, et al., 2020;Seth et al., 2021a, b).”

    From Does the Efficiency of a Firm's Intellectual Capital and Working Capital Management Affect Its Performance? (2024) · cites this paper as Kabuye et al., 2019

    Section 4.3 reports positive correlations between both internal controls and working capital management and supermarkets’ financial performance. But the Introduction states that only working capital management was a significant predictor in the regression model. The study surveyed supermarkets, so it does not establish that improving both efficiencies causes better performance across DMUs generally. (LLM, conf=0.86)

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Research works printed but not linked: 11

  1. Altaf, N., & Shah, F. A. (2018). Investment and financial constraints in indian firms: Does working capital smoothen fixed investment. DECISION: Official jour- nal of the indian institute of management Calcutta, Springer; Indian Institute of Management Calcutta, 45 (1), 43-58.
  2. Bana, A. (2012). Working capital management and firms' performance in emerging markets: The case of Jordan. International Journal of Managerial Finance, 8(2), 155-179. doi:10.1108/ 17439131211216620 · DOI
  3. Beeler, J. D., Hunton, J. E., & Wier, B. (1999). Promotion performance of internal auditors: A survival analysis. Internal Auditing, 14(4), 3-14.
  4. Channar, Z. A., Khan, M., & Shakri, I. H. (2015). Internal control effectiveness and its relationship with finan- cial performance. Formerly Journal of Management and Social Sciences, 11(2), 92-107.
  5. Ernst and Young. (2011). All tied up: Working capital management report 2011. Retrieved from: http:// www.ey.com/GL/en/Services/Transactions/All-tied-up -Working-capital-management-report-2011
  6. Garson, G. D. (2012). Testing statistical assumptions, sta- tistical associates publishing, 2012 edition.
  7. Ghosh, S. K., & Maji, S. G. (2004). Working capital man- agement efficiency: A study on the Indian cement industry. Management Accountant, 39(5), 363-372.
  8. Global value chain report. (2016). Financing growth; SMEs in global value chains. The case for a coordinated G20 policy approach 2016 Edition. Center on Globalization, Governance & Competitiveness, Duke University.
  9. IIA Uganda Chapter (2015). The 10th national internal audit conference. Retrieved from: www.newvision.co. ug/new_vision/news/1321504/institute-internal- auditors-uganda
  10. Levene, H. (1960). In I. Olkin (Ed.), Robust tests for equality of variances.
  11. Mukhopadhyay, D. (2004). Working capital management in heavy engineering firms -A case study. Management Accountant, 39(4), 317-323.

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Authors
Kabuye, F., Kato, J., Akugizibwe, I., & Bugambiro, N.
Affiliations
  • Makerere University (UG)
  • Accounting and Finance, New Uganda Securiko Limited, P.o Box 3540, Kampala, Uganda
Corresponding author
Kabuye, Frank
ORCID
Kabuye, Frank
Venue
Cogent Business & Management
Publisher
Informa UK Limited
Published
2019-01
Volume
6
Issue
1
ISSN
2331-1975 (ISSN-L)
DOI
10.1080/23311975.2019.1573524
OpenAlex
W2911821331
Cited by
82
References
53
Citations by year
2026: 4 · 2025: 7 · 2024: 14 · 2023: 20 · 2022: 13 · 2021: 15 · 2020: 7 · 2019: 2
FWCI
23.60
Type
journal article
Language
en
Open access
Licence
Locations
  • Cogent Business & Management (publishedVersion, cc-by)
  • RePEc: Research Papers in Economics (submittedVersion)
  • DOAJ (DOAJ: Directory of Open Access Journals) (submittedVersion, cc-by-sa)
  • Econstor (Econstor) (submittedVersion, cc-by)
Funders
research
Topics
  • Social Sciences › Business, Management and Accounting › Accounting › Working Capital and Financial Performance
  • Social Sciences › Business, Management and Accounting › Management Information Systems › Accounting and Organizational Management
  • Social Sciences › Business, Management and Accounting › Accounting › Financial Literacy and Behavior
Keywords
internal control system, working capital management, financial performance, supermarkets, retail companies, Uganda

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