Proceedings of the International Conference on Business and Management Research (ICBMR 2017)

Impact of the Agressive Working Capital Management Policy on Firm's Profitability and Value: Study on Non-Financial Listed Firms in Indonesia Stock Exchange

Authors
Rosyeni Rasyid
Corresponding Author
Rosyeni Rasyid
Available Online November 2017.
DOI
10.2991/icbmr-17.2017.20How to use a DOI?
Keywords
Aggressive Investment Policy; Aggressive Financing Policy; Leverage; Size; Profitability; Value of the Firm
Abstract

Effective working capital management policies is crucial to the company's long survival. The working capital policy is concerned with determining the aggregate amount of a firm's current assets and current liabilities is required by a firm. This study investigates the impact of the aggressive working capital management policy on firm's profitability and value of non-financial listed firms. This study collected the data from 393 non-financial Indonesian listed companies in 2014. The data were analyzed by using multiple linear regression. The findings have established that aggressive working capital policy has a significant influence on the company profitability, however, it has no significant impact on the market value of the company. Moreover, this study found that aggressive investment policy (AIP) has a positive relationship with the profitability. Surprisingly, the finding showed that the aggressive financing policy (AFP) has a negative impact on profitability. Accordingly, to increase the company's market value, the manager must increase profitability by optimizing investment on current asset and by adding the proportion of long-term financing in working capital. In addition, this study employed leverage ratio and firm's size as the control variables. Finally, this study has also discussed some limitations and future research.

Copyright
© 2017, the Authors. Published by Atlantis Press.
Open Access
This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

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Volume Title
Proceedings of the International Conference on Business and Management Research (ICBMR 2017)
Series
Advances in Economics, Business and Management Research
Publication Date
November 2017
ISBN
978-94-6252-431-6
ISSN
2352-5428
DOI
10.2991/icbmr-17.2017.20How to use a DOI?
Copyright
© 2017, the Authors. Published by Atlantis Press.
Open Access
This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

Cite this article

TY  - CONF
AU  - Rosyeni Rasyid
PY  - 2017/11
DA  - 2017/11
TI  - Impact of the Agressive Working Capital Management Policy on Firm's Profitability and Value: Study on Non-Financial Listed Firms in Indonesia Stock Exchange
BT  - Proceedings of the International Conference on Business and Management Research (ICBMR 2017)
PB  - Atlantis Press
SP  - 207
EP  - 216
SN  - 2352-5428
UR  - https://doi.org/10.2991/icbmr-17.2017.20
DO  - 10.2991/icbmr-17.2017.20
ID  - Rasyid2017/11
ER  -