Abstract
Working capital is a crucial component of corporate assets and is essential for maintaining daily operational continuity. Improving working capital management (WCM) efficiency is therefore a key managerial objective that supports firms’ sustainable growth. This study conducts an empirical analysis using a panel dataset of 9,933 A-share listed firms on the Shanghai and Shenzhen Stock Exchanges from 2012 to 2023. A corporate governance index is constructed through principal component analysis, and panel regression models are employed to examine the impact of corporate governance on WCM efficiency. The results show that corporate governance has a significant and positive effect on working capital efficiency. Further analysis reveals that this effect is more pronounced in firms ultimately controlled by non-state entities than in state-owned enterprises. In addition, higher governance standards are consistently associated with more efficient WCM practices. When profit quality is incorporated as a mediating variable, it partially mediates the relationship between corporate governance and working capital efficiency. Overall, the findings provide both theoretical insights and practical implications for firms seeking to enhance working capital management.