The Effect of Working Capital Management on Businesses’ Investment Decisions
Yusuf KurtThis research has been conducted to determine the effect of working capital management on the investment decisions of companies that traded on Borsa Istanbul (BIST) between 2013-2022. The study uses fixed assets to represent the variable of investment decisions and net working capital, accounts receivables turnover, inventory turnover, and cash ratio to represent working capital. The research has included the variables of cash flows from main activities, business size, and growth rate into the model as the control variables and tested the data obtained in this context using the panel data analysis method. According to the results, the best estimator of the model has been determined to be the random effects estimator. In addition, the study observed net working capital to have a significant negative effect and firm size to have a significant positive effect on the enterprises’ investment decisions. The variables of receivable turnover, inventory turnover, cash ratio, cash flows from main activities, and growth rate were observed to have no effect on enterprises’ investment decisions.
İşletmelerin Yatırım Kararları Üzerinde Çalışma Sermayesi Yönetiminin Etkisi
Yusuf KurtAraştırmada 2013-2022 yılları arasında Borsa İstanbul (BIST)’te işlem gören işletmelerin yatırım kararları üzerinde çalışma sermayesi yönetiminin etkisinin tespit edilmesi amaçlanmıştır. Yatırım kararları açısından duran varlıklar kalemi kullanılmıştır. Çalışma sermayesi değişkenleri olarak net işletme sermayesi, alacak devir hızı, stok devir hızı ve nakit oran değişkenleri kullanılmıştır. Araştırmada esas faaliyetlerden nakit akışları, işletme büyüklüğü ve büyüme hızı değişkenleri ise kontrol değişkenleri olarak modelde yer almaktadır. Bu kapsamda elde edilen veriler panel veri analizi yöntemi ile test edilmiştir. Araştırma modeline ilişkin en iyi tahmin edicinin rassal etkiler tahmincisi olduğu belirlenmiştir. Çalışmadan elde edilen sonuçlara göre işletmelerin yatırım kararları üzerinde net işletme sermayesinin negatif ve anlamlı bir etkisi olduğu gözlemlenirken, işletme büyüklüğü değişkenin ise pozitif ve anlamlı bir etkisi olduğu tespit edilmiştir. Alacak devir hızı, stok devir hızı, nakit oran, esas faaliyetlerden nakit akışları ve büyüme hızı değişkenlerinin ise işletmelerin yatırım kararları üzerinde bir etkisi olmadığı sonucuna ulaşılmıştır.
Working capital involves the simple idea of bridging the gap between a business’ current assets and short-term debt. Having a well-planned working capital is expected to increase profitability and company value. Working capital management is closely related to companies’ basic business activities such as purchasing, production, income generation, receivables collection, and payment management. The concept of working capital covers the activities of good planning and the control of current assets and short-term debts. Each component of working capital (e.g., receivables, inventories, and liabilities) must be properly managed to optimize working capital. In order to achieve this, receivables, stocks, and debt items need to
be to constantly monitored and controlled, and receivables, stocks, and debt levels are not expected to be the same for each business.
The international literature shows the subjects that deal with the variable of investment decisions to mainly involve cash flow cycle, dividends, and changes in debts. In terms of working capital management, studies conducted in the national and international literature have been observed to mostly measure the relationship with the variable of firm performance. This study has the feature of being a first due to no study being found regarding working capital management’s effects on investment decisions in the national literature in terms of the variables mentioned above.
The research aims to determine the effect of working capital management on the investment decisions of the companies traded on Borsa Istanbul (BIST) using fixed assets to represent investment decisions and the variables of net working capital, receivables turnover, inventory turnover, and cash ratio to represent working capital. The research includes the variables of cash flows from main activities, business size, and growth rate as the control variables.
In order to determine the effect of working capital management on the investment decisions of the companies traded in the BIST 50 index, the study uses financial statement data was this published annually at the end of the 2013-2022 period. Relevant data were obtained from the Public Disclosure Platform (PDP). Due to the reporting formats of financial institutions traded on the BIST 50 index differing from the reporting formats of other enterprises, financial institutions have been excluded from the scope of the research. In addition, businesses that started being traded on the BIST 50 index after 2013 were not included in the research in order to arrive at healthy and reliable results. In this context, the research has been carried out with 2,720 pieces of data on 34 enterprises, with the obtained data being analyzed using the panel data method. The research was carried out over one dependent variable (i.e., fixed assets), four independent variables (i.e., net working capital, receivables turnover, inventory turnover, and cash ratio), and three control variables (i.e., cash flows from main activities, business size, and growth rate). Autocorrelation issues related to the research model were tested using the Breusch- Godfrey LM Test, and heteroscedasticity issues were tested using the Breusch-Pagan/Cook-Weisberg Test. The probability value for the autocorrelation problem in the model was determined as p < 0.05. This result shows the presence of an autocorrelation problem among the series in the model. The probability value of whether any variable variance issues occur in the model was determined as p > 0.05. In this case, variable variance problems were concluded to not be present in the model. The Hausman test was used to decide whether the fixed-effects model or random-effects model would be chosen for this study. According to the Hausman test results, the best estimator for the model has been determined as the random effects estimator. The random effects estimator was tested with the Cochrane-Orcutt method, which takes into account the autocorrelation issues among the series in the model.
According to the obtained results, the study has determined net working capital to have a significant negative effect and firm size to have a significant positive effect on enterprises’ investment decisions. The probability values for the variables of receivables turnover, inventory turnover, cash ratio, cash flows from main activities, and were determined as p > 0.05. Therefore, these variables have been determined to have no significant effect on enterprises’ investment decisions.
