Citation:

Erika Jimena Arilyn, Ericka Caroline Nguisteva. "The Nexus between Corporate Determinants and ESG Firm Performance: The Mediating Role of Working Capital Management in the ASEAN Capital Market" International Research Journal of Economics and Management Studies, Vol. 5, No. 1, pp. 61-72, 2026. Crossref. http://doi.org/10.56472/25835238/IRJEMS-V5I2P108

Abstract:

This study examines the relationship between leverage, corporate governance, firm size, and Porter’s generic strategies cost leadership, differentiation, and focus and firm performance, with working capital management (WCM) serving as a mediating variable. Using publicly listed companies from the Indonesia Stock Exchange (IDX) and the Singapore Exchange (SGX), the study addresses the ongoing debate regarding the role of working capital management in translating corporate determinants into firm performance. Grounded in trade-off theory and legitimacy theory, this study investigates whether corporate financial and strategic decisions directly or indirectly influence firm performance through WCM. Employing panel data regression analysis, the findings reveal notable cross-country differences. In Indonesia, leverage demonstrates a significant indirect effect of leverage on firm performance through working capital management, while other corporate determinants show no such mediating effect. In contrast, none of the examined corporate determinants exhibit a significant indirect effect on firm performance through WCM in Singapore. These results suggest that the effectiveness of working capital management as a performance-enhancing mechanism is highly context-dependent and influenced by country-specific institutional and market conditions. This study contributes to the literature by empirically incorporating Porter’s generic strategies into the corporate determinants–firm performance framework, an approach that remains relatively underexplored in prior empirical research. The findings provide practical insights for managers and policymakers in designing financial and strategic decisions that support sustainable firm performance.

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Keywords:

Leverage, Corporate Governance, Firm Size, Cost Leadership, Differentiation, Focus, Working Capital Management, Firm Performance, ASEAN Capital Market.