Board composition, audit committee and financing structure: moderating role of cash conversion cycle

Purpose Board of directors and audit committee play a key role in shaping the financing structure of a firm. However, the role of cash conversion cycle in affecting these relationships needs further investigation. The objective of the present study is to evaluate the moderating role of cash conversion cycle on the association between board composition, audit committee and financing structure. Design/methodology/approach The study uses panel data of 740 listed non-financial firms across Asian emerging economies, covering the time frame from 2010 to 2024. Furthermore, the study employs a fixed effect model as the primary approach, while the dynamic panel GMM approach is utilized to verify robustness of the main findings. Findings The empirical results of the study indicate a positive and significant impact of board composition, like board size, CEO duality and board independence, on financing structure. Conversely, board gender diversity has a significant and negative influence. In addition, audit committee attributes such as size, effectiveness and audit quality exhibit a positive and significant impact on financing structure. Results show that a longer cash conversion cycle significantly increases the financing structure. In addition, the interaction of the cash conversion cycle with board composition and the audit committee strengthens their positive impacts. Originality/value The study unveils novel insights by focusing on the unexplored moderating role of the cash conversion cycle. By incorporating board dynamics, audit committee features and cash conversion cycle, the study forms a framework that is rarely addressed in existing literature, mainly in the context of an emerging Asian economy.