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This study aims to investigate the influence of board composition on the working capital management (WCM) of Thai listed firms for the period 2010–2019.

Probit regression and two-step system generalized method of moments (GMM) are used to address this issue.

The results indicate that, while a larger board size causes a lower net working capital holding, it increases its efficiency. Firms with chief executive officer (CEO) duality adopt aggressive policies for their financing but avoid them for their investment to balance the risks and returns of implementing the working capital (WC) policy. Conversely, firms with higher board independence prefer to use conservative WC financing policies. The findings support using both the agency and stewardship theories.

The authors focus on listed non-financial firms; therefore, the findings may not be generalizable to financial and private firms.

The findings provide implications for practitioners to focus more on board composition, as it is crucial for WCM. Furthermore, they should avoid applying a single theory in isolation, especially for CEO duality, as one theory is appropriate only for some policies. The authors also provide guidelines for policymakers and regulators to formulate strategies that support more board diversification in terms of size and independence, to enhance board efficiency.

To the best of the author’s knowledge, this study is the first to directly examine the influence of board composition on aggressive WC policies in Thailand.

This study investigates whether the integration between working capital management (WCM) and the structure of a firm's board of directors impacts its Tobin's q ratio. The sample set consists of 319 Thai listed firms with 3,190 firm-year observations from 2010 to 2019.

The two-step generalized method of moments (two-step GMM) model is employed to address endogeneity.

The empirical results show that having both (1) a high level of net working capital holdings, a long period of net trade cycles or using an aggressive policy in working capital investment and (2) a more diverse board of directors decrease a firm's Tobin's q ratio. Conversely, when a firm's managers employ an aggressive policy for their working capital financing and the board structure of their firms is highly diverse, the firm's Tobin's q ratio increases. This indicates the appropriateness of some WCM policies is dependent on the characteristics of a firm's board of directors. Thus, the different integration between WCM and board structure may elicit dissimilar outcomes for a firm's Tobin's q ratio.

To their knowledge, the authors are the first to investigate the influence of the integration between WCM and board characteristics on Tobin's q ratio.