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Determinants of working capital behavior: evidence from Egypt

Determinants of working capital behavior: evidence from Egypt 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/approachWorking 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.FindingsThe results show that working capital behavior is affected by various factors related to firm characteristics, economic conditions and industry type.Originality/valueThis 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. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Managerial Finance Emerald Publishing

Determinants of working capital behavior: evidence from Egypt

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References (54)

Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
1743-9132
DOI
10.1108/ijmf-09-2017-0219
Publisher site
See Article on Publisher Site

Abstract

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/approachWorking 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.FindingsThe results show that working capital behavior is affected by various factors related to firm characteristics, economic conditions and industry type.Originality/valueThis 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.

Journal

International Journal of Managerial FinanceEmerald Publishing

Published: Mar 8, 2019

Keywords: Egypt; Panel data; GMM; Working capital management; Cash conversion cycle

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