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Working Capital Management in Indonesia: An Analysis on Over-investment and Under-investment Firms
Gadjah Mada International Journal of Business Pub Date : 2019-04-22 , DOI: 10.22146/gamaijb.28354
Rahmat Heru Setianto , Adinda Pratiwi

This study aims to examine the existence of excess working capital in Indonesian firms and its effect on the firms’ performance and risk. The sample includes 425 firm-year observations of Indonesian manufacturing firms for the period 2010 – 2014. To account for the potential asymmetric relation between excess Net Working Capital (NWC) and firm performance, an asymmetric regression model is employed, allowing the slope coefficient of the excess NWC to be different for positive and negative excess NWC. The results indicate (i) the existence of an optimal level of working capital, (ii) higher excess working capital leads to lower performance and risk, (iii) additional investment in working capital reduces firms’ performance for those with positive excess working capital. It is also documented that (iv) additional investment in working capital reduces firms’ risk for those that have working capital deficiencies. The findings have important implications for corporate managers in determining the optimal level of working capital.

中文翻译:

印度尼西亚的营运资金管理:对投资过度和投资不足的公司的分析

这项研究的目的是研究印尼公司中多余的营运资金的存在及其对公司业绩和风险的影响。该样本包括425家印尼制造企业在2010年至2014年期间的企业年观察结果。为解决超额净营运资金(NWC)与企业绩效之间的潜在不对称关系,采用了不对称回归模型,其斜率系数为正负NWC的过量NWC是不同的。结果表明:(i)存在最佳营运资金水平;(ii)过多的营运资金导致较低的绩效和风险;(iii)营运资金的额外投资会降低拥有过量营运资金的企业的绩效。也有文献记载,(iv)对营运资金的额外投资减少了公司对于营运资金不足的公司的风险。该发现对公司经理确定最佳营运资金水平具有重要意义。
更新日期:2019-04-22
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