Firm value and working capital decisions: Further evidence from an emerging market
This study investigates the effects of working capital management decisions on market values using a sample data set containing annual measurements for 317 Turkish publicly traded companies between 2010 and 2018. Cash ratio, Current ratio, Net Working Capital, and Cash Conversion Cycle are used as i...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
| Published: |
University of Split, Faculty of Economics
2023-01-01
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| Series: | Management : Journal of Contemporary Management Issues |
| Subjects: | |
| Online Access: | https://hrcak.srce.hr/file/439360 |
| _version_ | 1797206446197178368 |
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| author | Rumeysa Bilgin Sema Turan |
| author_facet | Rumeysa Bilgin Sema Turan |
| author_sort | Rumeysa Bilgin |
| collection | DOAJ |
| description | This study investigates the effects of working capital management decisions on market values using a sample data set containing annual measurements for 317 Turkish publicly traded companies between 2010 and 2018. Cash ratio, Current ratio, Net Working Capital, and Cash Conversion Cycle are used as indicators of the liquidity policies of the sample firms. The specified dynamic model is estimated using the System GMM estimator. The findings show that firms can affect their market values by managing their liquid assets efficiently. However, this relationship weakens as cash holdings increase. In other words, a long cash conversion cycle and a large amount of net working capital are not considered negative signals by investors if accompanied by sufficient cash holdings. Hence, it can be said that cash management can help reduce the negative impact of working capital investments on firm value. This study found no evidence of the effects of the current ratio and net working capital on firm value. |
| first_indexed | 2024-04-24T09:07:09Z |
| format | Article |
| id | doaj.art-637bc3b294b94a2397046c4295423d12 |
| institution | Directory Open Access Journal |
| issn | 1331-0194 1846-3363 |
| language | English |
| last_indexed | 2024-04-24T09:07:09Z |
| publishDate | 2023-01-01 |
| publisher | University of Split, Faculty of Economics |
| record_format | Article |
| series | Management : Journal of Contemporary Management Issues |
| spelling | doaj.art-637bc3b294b94a2397046c4295423d122024-04-15T18:40:07ZengUniversity of Split, Faculty of EconomicsManagement : Journal of Contemporary Management Issues1331-01941846-33632023-01-0128116918010.30924/mjcmi.28.1.11Firm value and working capital decisions: Further evidence from an emerging marketRumeysa Bilgin0Sema Turan1Department of Management, Istanbul Sabahattin Zaim UniversityInstitute of Graduate Studies, Istanbul Sabahattin Zaim UniversityThis study investigates the effects of working capital management decisions on market values using a sample data set containing annual measurements for 317 Turkish publicly traded companies between 2010 and 2018. Cash ratio, Current ratio, Net Working Capital, and Cash Conversion Cycle are used as indicators of the liquidity policies of the sample firms. The specified dynamic model is estimated using the System GMM estimator. The findings show that firms can affect their market values by managing their liquid assets efficiently. However, this relationship weakens as cash holdings increase. In other words, a long cash conversion cycle and a large amount of net working capital are not considered negative signals by investors if accompanied by sufficient cash holdings. Hence, it can be said that cash management can help reduce the negative impact of working capital investments on firm value. This study found no evidence of the effects of the current ratio and net working capital on firm value.https://hrcak.srce.hr/file/439360liquidity managementfirm valuationemerging marketworking capitalcash holdingssystem GMM |
| spellingShingle | Rumeysa Bilgin Sema Turan Firm value and working capital decisions: Further evidence from an emerging market Management : Journal of Contemporary Management Issues liquidity management firm valuation emerging market working capital cash holdings system GMM |
| title | Firm value and working capital decisions: Further evidence from an emerging market |
| title_full | Firm value and working capital decisions: Further evidence from an emerging market |
| title_fullStr | Firm value and working capital decisions: Further evidence from an emerging market |
| title_full_unstemmed | Firm value and working capital decisions: Further evidence from an emerging market |
| title_short | Firm value and working capital decisions: Further evidence from an emerging market |
| title_sort | firm value and working capital decisions further evidence from an emerging market |
| topic | liquidity management firm valuation emerging market working capital cash holdings system GMM |
| url | https://hrcak.srce.hr/file/439360 |
| work_keys_str_mv | AT rumeysabilgin firmvalueandworkingcapitaldecisionsfurtherevidencefromanemergingmarket AT sematuran firmvalueandworkingcapitaldecisionsfurtherevidencefromanemergingmarket |