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This study investigates the effect of efficient working capital management and working capital policies on the performance of manufacturing firms in Malaysia between 2010 and 2016. To achieve the objective, this study uses balanced panel data of 143 manufacturing firms that are listed on the Main Market of Bursa Malaysia. The results show that cash conversion cycle, which is used as a proxy of efficiency working capital management, is significantly negative in having an effect on the economic value added, which is used as a proxy of firm performance. Moreover, the results show that the ratio of current assets to total asset, which is used as a proxy of working capital investment policy, has a significant and positive effect on the firm performance. However, the results show that the ratio of current liabilities to total asset, which is used as a proxy of working capital financing policy, has no effect on the firm performance. The results of the study imply that the manufacturing firms in Malaysia can increase their economic value added by adopting efficient working capital management which is to reduce their cash conversion cycle. In addition, the manufacturing firms in Malaysia can improve their economic value added by adopting a conservative working capital investment policy.

The Effects of Efficient Working Capital Management and Working Capital Policies on Firm Performance: Evidence from Malaysian Manufacturing Firms