Journal of Accounting, Finance & Management Strategy





Volume 17, Number 1, June 2022

Inventory-management efficiency and consumer co-op financial performance


We examine the association between inventory-management efficiency and the financial performance of consumer co-operative societies (co-ops), and the influence of government financial monitors (financial monitors) on this association. Our results indicate that effective inventory management improves consumer co-op financial performance. Also, although we fail to show improvement in the association between inventory-management proxies and financial-performance proxies following the appointment of financial monitors, our additional tests show that co-ops with high inventory turnover exhibit a stronger association between inventory-management proxies and ROA after 2013. We also show that co-ops with higher inventory turnover ratio have higher ROE following the appointment of financial monitors. Further, co-ops that are larger, younger, and have greater sales growth exhibit better financial performance. In contrast, co-ops with negative earnings, greater fixed assets, and inventory excesses or shortages have lower financial performance.

Keywords: Management efficiency, Kuwait, inventory efficiency, co-op financial performance, Ministry of Social Affairs and Labor, co-op

JEL Classification: G34, G38, G31, G30