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The impact of working capital on the value of the company in light of differing size, growth, and debt

Author

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  • Tamer Bahjat Sabri

    (Ramallah, West Bank)

Abstract

This study investigates the potential effect of the working capital management on the value of the industrial companies in Jordan, by studying determinants (company size, company growth, leverage) that affect company value measured by Tobin's Q (TQ). Also it uses an improved methodology to produce three indexes (benchmarks) that can present the suitable information for mangers and investors. To achieve the objectives of the study, a sample constituted by forty-one (41) industrial companies was studied. The study covered the period from 2000 to 2007. Regression analysis and Mann-Whitney-U Test were used to test the hypotheses of the study. The results shows that R2 for small size companies is higher than big size companies. And it is noted that the average TQ for companies with big size is higher than the average for small-sized companies.

Suggested Citation

  • Tamer Bahjat Sabri, 2012. "The impact of working capital on the value of the company in light of differing size, growth, and debt," Business and Economic Horizons (BEH), Prague Development Center, vol. 7(1), pages 27-41, June.
    • Handle: RePEc:pdc:jrnbeh:v:7:y:2012:i:1:p:27-41
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    Citations

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    Cited by:

    1. Roma Rys-Jurek, 2021. "Working Capital Management vs Profitability in Agricultural Holdings (in the Context of Integration for “Old” and “New” EU Members)," European Research Studies Journal, European Research Studies Journal, vol. 0(1), pages 173-187.
    2. Barbora Rýdlová & Ivana Svatová, 2020. "The impact of working capital optimization on the value of the company - part 1 [Vliv optimalizace pracovního kapitálu na hodnotu podniku - část 1 empirické studie]," Oceňování, Prague University of Economics and Business, vol. 13(3-4), pages 37-50.

    More about this item

    Keywords

    Tobin's Q; working capital; company size; company growth; leverage.;
    All these keywords.

    JEL classification:

    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies

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