ISSN: 2225-8329
Open access
This study attempts to measure the circumference of the cash utilization activities from operations activity, investment activity, and financing activity towards firms’ performance of the construction industry in Malaysia by using Government Ownership as the moderating variable. This study essentially using a secondary data that obtain from the annual report for the year 2014 to 2018. The data of the cash flow variable and firms’ performance was originally keep recorded in a monetary value whilst data for Government Ownership was obtained through a content analysis. The findings revealed that there is negative relationship with Net Cash Flow towards the Return on Assets. The results demonstrated that the Net Cash Flow in Operating activity is the most influenced by Government Ownership. The Net Cash Flow in Investing activity is significantly affected, while the Net Cash Flow in Financing is the least affected by Government Ownership. In other words, although the government has an authority to influence the economic activity in the market, the government interfere in their capital structure does not effectively affect the firms’ performance of construction sector in Malaysia.
Agyei-Boapeah, H., & Machokoto, M. (2018). Allocation of internally generated corporate cash flow in Africa. Journal of Accounting in Emerging Economies, 8(4), 495-513. https://doi.org/10.1108/jaee-10-2017-0099
Alavipour, S. R., & Arditi, D. (2019). Maximizing expected contractor profit using an integrated model. Engineering, Construction and Architectural Management, 26(1), 118-138. https://doi.org/10.1108/ecam-04-2018-0149
Ang, J. S., & Ding, D. K. (2006). Government ownership and the performance of government-linked companies: The case of Singapore. Journal of Multinational Financial Management, 16(1), 64-88. https://doi.org/10.1016/j.mulfin.2005.04.010
De Marco, A., Mangano, G., Corinna Cagliano, A., & Grimaldi, S. (2012). Public financing into build-operate-Transfer hospital projects in Italy. Journal of Construction Engineering and Management, 138(11), 1294-1302. https://doi.org/10.1061/(asce)co.1943-7862.0000545
Feng, F., Sun, Q., & Tong, W. H. (2004). Do government-linked companies underperform? Journal of Banking & Finance, 28(10), 2461-2492. https://doi.org/10.1016/j.jbankfin.2003.10.012
Gill-de-Albornoz, B., & Illueca, M. (2005). Earnings management under price regulation: Empirical evidence from the Spanish electricity industry. Energy Economics, 27(2), 279-304. https://doi.org/10.1016/ j.eneco.2004.12.005
Habbash, M. (2016). Corporate governance and corporate social responsibility disclosure: Evidence from Saudi Arabia. Social Responsibility Journal, 12(4), 740-754. https://doi.org/10.1108/srj-07-2015-0088
Hanafi, M. M., Setiyono, B., & Sanjaya, I. P. (2018). Ownership structure and firm performance: Evidence from the subprime crisis period. Corporate Governance: The international journal of business in society, 18(2), 206-219. https://doi.org/10.1108/cg-10-2016-0203
Hoang, H. C., Xiao, Q., & Akbar, S. (2019). Trade credit, firm profitability, and financial constraints. International Journal of Managerial Finance, 15(5), 744-770. https://doi.org/10.1108/ijmf-09-2018-0258
Huang, X., Kabir, R., & Zhang, L. (2018). Government ownership and the capital structure of firms: Analysis of an institutional context from China. China Journal of Accounting Research, 11(3), 171-185. https://doi.org/10.1016/j.cjar.2018.07.001
Jackowicz, K., Mielcarz, P., & Wnuczak, P. (2017). Fair value, equity cash flow and project finance valuation: Ambiguities and a solution. Managerial Finance, 43(8), 914-927. https://doi.org/10.1108/mf-08-2016-0235
Kim, S. H., & An, Y. (2018). The effect of ownership-control disparity on the Chinese firm’s real activity earnings management. Pacific Accounting Review, 30(4), 482-499. https://doi.org/10.1108/par-01-2018-0003
Lu, W., & Jhuang, R. (2014). Cash flow and growth considering different ownership structure. Journal of Modelling in Management, 9(1), 5-17. https://doi.org/10.1108/jm2-04-2011-0028
Lyngstadaas, H. (2019). An empirical investigation of how information sharing affects cash flow performance through competitive capability. Supply Chain Management: An International Journal, 24(6), 710-728. https://doi.org/10.1108/scm-08-2018-0293
Mak, Y., & Li, Y. (2001). Determinants of corporate ownership and board structure: Evidence from Singapore. Journal of Corporate Finance, 7(3), 235-256. https://doi.org/10.1016/s0929-1199(01)00021-9
Memon, Z. A., Chen, Y., Tauni, M. Z., & Ali, H. (2018). The impact of cash flow volatility on firm leverage and debt maturity structure: Evidence from China. China Finance Review International, 8(1), 69-91. https://doi.org/10.1108/cfri-06-2017-0106
Nagar, N., & Raithatha, M. (2016). Does good corporate governance constrain cash flow manipulation? Evidence from India. Managerial Finance, 42(11), 1034-1053. https://doi.org/10.1108/mf-01-2016-0028
Odeyinka, H. A., Lowe, J., & Kaka, A. (2008). An evaluation of risk factors impacting construction cash flow forecast. Journal of Financial Management of Property and Construction, 13(1), 5-17. https://doi.org/ 10.1108/13664380810882048
Omopariola, E. D., Windapo, A., Edwards, D. J., & Thwala, W. D. (2019). Contractors’ perceptions of the effects of cash flow on construction projects. Journal of Engineering, Design and Technology, 18(2), 308-325. https://doi.org/10.1108/jedt-04-2019-0099
Qiang, Q. (2003). Corporate governance and state-owned shares in China listed companies. Journal of Asian Economics, 14(5), 771-783. https://doi.org/10.1016/j.asieco.2003.10.005
Shahhossein, V., Afshar, M. R., & Amiri, O. (2017). The root causes of construction project failure. Scientia Iranica, 0(0), 0-0. https://doi.org/10.24200/sci.2017.4178
Sharma, D. S. (2001). The role of cash flow information in predicting corporate failure: The state of the literature. Managerial Finance, 27(4), 3-28. https://doi.org/10.1108/03074350110767114
Talonpoika, A., Monto, S., Pirttilä, M., & Kärri, T. (2014). Modifying the cash conversion cycle: Revealing concealed advance payments. International Journal of Productivity and Performance Management, 63(3), 341-353. https://doi.org/10.1108/ijppm-12-2012-0130
Tatum, M. C., & Terrell, F. (2012). Hurricane reconstruction in the United States Gulf coast. International Journal of Disaster Resilience in the Built Environment, 3(3), 199-219. https://doi.org/10.1108/ 17595901211263602
Tran, N. H., & Le, C. D. (2017). Financial conditions and corporate investment: Evidence from Vietnam. Pacific Accounting Review, 29(2), 183-203. https://doi.org/10.1108/par-07-2016-0066
Tucker, G. C., Windapo, A., & Cattell, K. S. (2015). Exploring the use of financial capacity as a predictor of construction company corporate performance. Journal of Engineering, Design and Technology, 13(4), 596-611. https://doi.org/10.1108/jedt-10-2013-0074
Wahyudin, A., & Solikhah, B. (2017). Corporate governance implementation rating in Indonesia and its effects on financial performance. Corporate Governance: The international journal of business in society, 17(2), 250-265. https://doi.org/10.1108/cg-02-2016-0034
Xu, L., Wang, J., & Xin, Y. (2010). Government control, uncertainty, and investment decisions in China's listed companies. China Journal of Accounting Research, 3, 131-157. https://doi.org/10.1016/s1755-3091(13)60022-2
Xu, S., He, X., & Xu, L. (2019). Market or government: Who plays a decisive role in R&D resource allocation? China Finance Review International, 9(1), 110-136. https://doi.org/10.1108/cfri-08-2017-0190
Zuoping, X. (2011). Ownership?control rights divergence, government intervention and choice of capital structure. Nankai Business Review International, 2(3), 303-324. https://doi.org/10.1108/20408 741111155316
To cite this article: Md. Aris, N. Nurhidayah Sokat, N., Sahari, S. (2020). The Moderating Effect of Government Ownership on the Relationship Between Cash Flow and Firm’s Performance for Construction Industry in Malaysia, International Journal of Academic Research in Accounting, Finance and Management Sciences 10 (3): 52-63.
Copyright: © 2020 The Author(s)
Published by HRMARS (www.hrmars.com)
This article is published under the Creative Commons Attribution (CC BY 4.0) license. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this license may be seen at: http://creativecommons.org/licences/by/4.0/legalcode