Determinants of Working Capital Investment in South Africa: Evidence from Selected JSE-Listed Firms

Farai Kwenda

Journal of Economics and Behavioral Studies, 2014, vol. 6, issue 7, 569-580

Abstract: This paper analyses the determinants of working capital investments of 92 companies listed on the Johannesburg Stock Exchange (JSE) over the period 2001-2010. Working capital management has grown in significance from being a survival issue to a strategic and competitive tool. Using the Generalized Method of Moments estimation, the study found that firms pursue target levels of current assets. However, the adjustment process is relatively slow. The study found that leverage, short-term finance and fixed investment significantly influence the level of working capital investment, while operating cash flows, state of the economy, firm size and sales growth rate were found to be statistically insignificantly related to working capital investment. The study recommends that managers understand the driving factors of working capital investment since working capital investment influences the value of the firm.

Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://ojs.amhinternational.com/index.php/jebs/article/view/518/518 (application/pdf)
https://ojs.amhinternational.com/index.php/jebs/article/view/518 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:rnd:arjebs:v:6:y:2014:i:7:p:569-580

DOI: 10.22610/jebs.v6i7.518

Access Statistics for this article

More articles in Journal of Economics and Behavioral Studies from AMH International
Bibliographic data for series maintained by Muhammad Tayyab ().