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The Impact of Working Capital Management on Firm Value and Profitability of Listed Property and Real Estate Firms in Indonesia During the Covid-19 Pandemic

In: The Finance-Innovation Nexus: Implications for Socio-Economic Development

Author

Listed:
  • Rifaldi Yunus Mahendra
  • Taufik Faturohman

Abstract

Since the first COVID-19 outbreak in Indonesia, the demand for property and real estate has plunged. The point to consider during an economic crisis and one of the appropriate solutions to withstand the impacts of the economic crisis is to carry out efficient working capital management (WCM). Furthermore, the efficient WCM also contributes positively to the value creation and profitability of the firm. This study aims to empirically analyse and examine the impact of WCM on firms’ market valuation and profitability of listed property and real estate firms in Indonesia over the period 2018Q3–2021Q3. This study employs panel data regression and the two-step system generalised method of moment (GMM) to deal with unobservable heterogeneity and endogeneity issues. The results show that WCM components significantly affect firms’ value and profitability. In addition, the COVID-19 pandemic has also proven to have a significant negative impact on firms’ value and profitability.

Suggested Citation

  • Rifaldi Yunus Mahendra & Taufik Faturohman, 2024. "The Impact of Working Capital Management on Firm Value and Profitability of Listed Property and Real Estate Firms in Indonesia During the Covid-19 Pandemic," International Symposia in Economic Theory and Econometrics, in: The Finance-Innovation Nexus: Implications for Socio-Economic Development, volume 34, pages 161-176, Emerald Group Publishing Limited.
    • Handle: RePEc:eme:isetez:s1571-038620240000034013
    DOI: 10.1108/S1571-038620240000034013
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    More about this item

    Keywords

    Working capital management; property and real estate industry; firm value; profitability; Indonesia; credit policy; C33; C58; G01; G31; L85;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • C58 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Financial Econometrics
    • G01 - Financial Economics - - General - - - Financial Crises
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services

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