Working Capital Management, Firm Value and Financial Constraints: Empirical Evidence from non-financial firms of Pakistan
Authors
FAIZ RASOOL, KASHIF HAMID, MUHAMMAD FAHEEM ULLAH and MUHAMMAD AHSAN ALI
Abstract
The aim of this study is to investigate the impact of working capital management, financial constraints and firm value. For this purpose data of 178 non-financial firms listed on PSX has been taken from 2015 to 2020. Descriptive statistics, Correlation, OLS, the Fixed Effect and Hausman test has been used to determine the outcomes. The outcomes of the study revealed that working capital and financial constraints affect the value of the company. The empirical results show that there is no impact of firm age and working capital management on the firm value. Firm value has a significantly positive correlation with Assets Tangibility, Leverage and Net-Working Capital where’s negative association with the Size of firm, Cash flow of the firm and Profitability. OLS results indicate that Cash Flow and Size of the firm has significantly negative impact whereas Leverage, Net-Working Capital and Profitability has significantly positive impact on the firm value. Fixed Effect model also ensure and confirmed the results of OLS and Hausman test indicated that the Fixed Effect model is better than Random Effect Model.
