The Impact of Working Capital Management on Firm Value and Profitability of Listed Property and Real Estate Firms in Indonesia During the Covid-19 Pandemic

Rifaldi Yunus Mahendra and Taufik Faturohman

A chapter in The Finance-Innovation Nexus: Implications for Socio-Economic Development, 2024, vol. 34, pp 161-176 from Emerald Group Publishing Limited

Abstract: Since the first COVID-19 outbreak in Indonesia, the demand for property and real estate has plunged. The point to consider during an economic crisis and one of the appropriate solutions to withstand the impacts of the economic crisis is to carry out efficient working capital management (WCM). Furthermore, the efficient WCM also contributes positively to the value creation and profitability of the firm. This study aims to empirically analyse and examine the impact of WCM on firms’ market valuation and profitability of listed property and real estate firms in Indonesia over the period 2018Q3–2021Q3. This study employs panel data regression and the two-step system generalised method of moment (GMM) to deal with unobservable heterogeneity and endogeneity issues. The results show that WCM components significantly affect firms’ value and profitability. In addition, the COVID-19 pandemic has also proven to have a significant negative impact on firms’ value and profitability.

Keywords: Working capital management; property and real estate industry; firm value; profitability; Indonesia; credit policy; C33; C58; G01; G31; L85 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eme:isetez:s1571-038620240000034013

DOI: 10.1108/S1571-038620240000034013

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