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Determinants of working capital behavior: evidence from Egypt

Author

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  • Amr Ahmed Moussa

Abstract

Purpose - The purpose of this paper is to empirically analyze and identify key factors affecting working capital behavior of companies listed on the Egyptian Stock Exchange. Design/methodology/approach - Working capital requirement and cash conversion cycle were used to proxy working capital behavior. The study explored nine main factors widely discussed in previous research to explain working capital behavior: operating cash flow, growth opportunities, performance, firm value, age, size, leverage, economic conditions and industry type. The study employed a panel data analysis for 68 listed Egyptian industrial firms for the period 2000–2010. Different techniques of the generalized method of moments were used to test the validity of the research hypotheses. Findings - The results show that working capital behavior is affected by various factors related to firm characteristics, economic conditions and industry type. Originality/value - This study provides financial managers with a better understanding of the impact of different internal and macroeconomic factors on working capital behavior in an emerging market, such as Egypt’s.

Suggested Citation

  • Amr Ahmed Moussa, 2019. "Determinants of working capital behavior: evidence from Egypt," International Journal of Managerial Finance, Emerald Group Publishing Limited, vol. 15(1), pages 39-61, February.
    • Handle: RePEc:eme:ijmfpp:ijmf-09-2017-0219
    DOI: 10.1108/IJMF-09-2017-0219
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    Citations

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    Cited by:

    1. Sawarni, Kumar Sanjay & Narayanasamy, Sivasankaran & Padhan, Purna Chandra, 2023. "Impact of earnings management on working capital management efficiency," Finance Research Letters, Elsevier, vol. 54(C).
    2. Hanvedes Daovisan & H. L. Shen, 2020. "Does Working Capital Affect Family Firms’ Decision-Making in Laos? Evidence from a Two-Wave Cross-Lagged Approach," Sustainability, MDPI, vol. 12(7), pages 1-16, March.
    3. Tarek Eldomiaty & Nourhan Eid & Farida Taman & Mohamed Rashwan, 2023. "An Assessment of the Benefits of Optimizing Working Capital and Profitability: Perspectives from DJIA30 and NASDAQ100," JRFM, MDPI, vol. 16(5), pages 1-19, May.
    4. Muhammad Azeem Naz & Rizwan Ali & Ramiz Ur Rehman & Collins G. Ntim, 2022. "Corporate governance, working capital management, and firm performance: Some new insights from agency theory," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(5), pages 1448-1461, July.
    5. Hossain Mohammad Reyad & Mohd Ashhari Zariyawati & Tze San Ong & Haslinah Muhamad, 2022. "The Impact of Macroeconomic Risk Factors, the Adoption of Financial Derivatives on Working Capital Management, and Firm Performance," Sustainability, MDPI, vol. 14(21), pages 1-19, November.
    6. Jacek Jaworski & Leszek Czerwonka, 2022. "Which Determinants Matter for Working Capital Management in Energy Industry? The Case of European Union Economy," Energies, MDPI, vol. 15(9), pages 1-18, April.
    7. Jarosław Nowicki & Piotr Ratajczak & Dawid Szutowski, 2024. "Impact of Macroeconomic Factors on Financial Liquidity of Companies: A Moderation Analysis," Sustainability, MDPI, vol. 16(11), pages 1-26, May.

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