Determinants of working capital behavior: evidence from Egypt

摘要

Purpose - 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/approach - Working 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. Findings - The results show that working capital behavior is affected by various factors related to firm characteristics, economic conditions and industry type. Originality/value - This 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.