To Survey the Effect of Working Capital Policies (Investing & Financing) on Profitability Risk (Evidence from Tehran Stock Exchange)

Mohammad Hassani; Arezoo Rajab Tavosi

doi:doi:10.11648/j.jim.20140301.14

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To Survey the Effect of Working Capital Policies (Investing & Financing) on Profitability Risk (Evidence from Tehran Stock Exchange)

Mohammad Hassani, Arezoo Rajab Tavosi

Published in Journal of Investment and Management (Volume 3, Issue 1)

Received: 27 January 2014 Published: 10 March 2014

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Abstract

Managers can increase the firm value by using the effective working capital policies. The corporate value maximization strategy is executed with a focus on return and risk. This study investigates the relationship between aggressive/conservative working capital policies and profitability risk in Tehran stock exchange listed companies. The sample includes 274 companies over the period 2006-2012. The results in all industries indicate a negative relationship between working capital investment policy and profitability risk measures. And there is a positive relationship between working capital financing policy and profitability risk measures. It means that, more the companies use conservative working capital policy, it will lead to decreasing profitability risk. And more the companies use aggressive working capital policy, it will lead to increasing profitability risk.

Published in	Journal of Investment and Management (Volume 3, Issue 1)
DOI	10.11648/j.jim.20140301.14
Page(s)	30-36
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2014. Published by Science Publishing Group

Keywords

Profitability Risk, Working Capital, Investment Policy, Financing Policy

References

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[12]	Howorth, C. P. Westhead, (2003), "The Focus of Working Capital Management in UK Small Firms", Management Accounting Research 14, Blackwell Publishing, PP.97-111.
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[18]	Mohammadzadeh, A., Nofresti, L., (2009), "Effects of Working Capital Policies on Return on Investment in Chemical and Food Industries" Journal of Management Research, Vol.81.
[19]	Nazir, M. Afza, T., (2008), "On The Factor Determining Working Capital Requirements", Proceedings of ASBBS, Vol.15, No.1, PP.293-301.
[20]	Rajesh, M., and Reddy, V., (2011), "Impact of working capital management on firms profitability", Global Journal of Finance and Management, 3(1): 151-158.
[21]	Sarniloglu, F and K. Demirgunes, (2008), "The Effect of Working Capital Management on Firm Profitability: Evidence From Turkey", International Journal of Applied Economics and Finance, 3(7)943-947.
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APA Style

Mohammad Hassani, Arezoo Rajab Tavosi. (2014). To Survey the Effect of Working Capital Policies (Investing & Financing) on Profitability Risk (Evidence from Tehran Stock Exchange). Journal of Investment and Management, 3(1), 30-36. https://doi.org/10.11648/j.jim.20140301.14

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ACS Style

Mohammad Hassani; Arezoo Rajab Tavosi. To Survey the Effect of Working Capital Policies (Investing & Financing) on Profitability Risk (Evidence from Tehran Stock Exchange). J. Invest. Manag. 2014, 3(1), 30-36. doi: 10.11648/j.jim.20140301.14

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AMA Style

Mohammad Hassani, Arezoo Rajab Tavosi. To Survey the Effect of Working Capital Policies (Investing & Financing) on Profitability Risk (Evidence from Tehran Stock Exchange). J Invest Manag. 2014;3(1):30-36. doi: 10.11648/j.jim.20140301.14

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@article{10.11648/j.jim.20140301.14,
  author = {Mohammad Hassani and Arezoo Rajab Tavosi},
  title = {To Survey the Effect of Working Capital Policies (Investing & Financing) on Profitability Risk (Evidence from Tehran Stock Exchange)},
  journal = {Journal of Investment and Management},
  volume = {3},
  number = {1},
  pages = {30-36},
  doi = {10.11648/j.jim.20140301.14},
  url = {https://doi.org/10.11648/j.jim.20140301.14},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jim.20140301.14},
  abstract = {Managers can increase the firm value by using the effective working capital policies. The corporate value maximization strategy is executed with a focus on return and risk. This study investigates the relationship between aggressive/conservative working capital policies and profitability risk in Tehran stock exchange listed companies. The sample includes 274 companies over the period 2006-2012. The results in all industries indicate a negative relationship between working capital investment policy and profitability risk measures. And there is a positive relationship between working capital financing policy and profitability risk measures. It means that, more the companies use conservative working capital policy, it will lead to decreasing profitability risk. And more the companies use aggressive working capital policy, it will lead to increasing profitability risk.},
 year = {2014}
}

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TY  - JOUR
T1  - To Survey the Effect of Working Capital Policies (Investing & Financing) on Profitability Risk (Evidence from Tehran Stock Exchange)
AU  - Mohammad Hassani
AU  - Arezoo Rajab Tavosi
Y1  - 2014/03/10
PY  - 2014
N1  - https://doi.org/10.11648/j.jim.20140301.14
DO  - 10.11648/j.jim.20140301.14
T2  - Journal of Investment and Management
JF  - Journal of Investment and Management
JO  - Journal of Investment and Management
SP  - 30
EP  - 36
PB  - Science Publishing Group
SN  - 2328-7721
UR  - https://doi.org/10.11648/j.jim.20140301.14
AB  - Managers can increase the firm value by using the effective working capital policies. The corporate value maximization strategy is executed with a focus on return and risk. This study investigates the relationship between aggressive/conservative working capital policies and profitability risk in Tehran stock exchange listed companies. The sample includes 274 companies over the period 2006-2012. The results in all industries indicate a negative relationship between working capital investment policy and profitability risk measures. And there is a positive relationship between working capital financing policy and profitability risk measures. It means that, more the companies use conservative working capital policy, it will lead to decreasing profitability risk. And more the companies use aggressive working capital policy, it will lead to increasing profitability risk.
VL  - 3
IS  - 1
ER  -

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Author Information

Mohammad Hassani

Head of Accounting Department, Management & Social Science Faculty, Islamic Azad University-Tehran North Branch, Tehran, Iran
Arezoo Rajab Tavosi

Master in Accounting, Islamic Azad University-Tehran North Branch, Tehran, Iran

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APA Style

Mohammad Hassani, Arezoo Rajab Tavosi. (2014). To Survey the Effect of Working Capital Policies (Investing & Financing) on Profitability Risk (Evidence from Tehran Stock Exchange). Journal of Investment and Management, 3(1), 30-36. https://doi.org/10.11648/j.jim.20140301.14

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ACS Style

Mohammad Hassani; Arezoo Rajab Tavosi. To Survey the Effect of Working Capital Policies (Investing & Financing) on Profitability Risk (Evidence from Tehran Stock Exchange). J. Invest. Manag. 2014, 3(1), 30-36. doi: 10.11648/j.jim.20140301.14

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AMA Style

Mohammad Hassani, Arezoo Rajab Tavosi. To Survey the Effect of Working Capital Policies (Investing & Financing) on Profitability Risk (Evidence from Tehran Stock Exchange). J Invest Manag. 2014;3(1):30-36. doi: 10.11648/j.jim.20140301.14

Copy | Download

@article{10.11648/j.jim.20140301.14,
  author = {Mohammad Hassani and Arezoo Rajab Tavosi},
  title = {To Survey the Effect of Working Capital Policies (Investing & Financing) on Profitability Risk (Evidence from Tehran Stock Exchange)},
  journal = {Journal of Investment and Management},
  volume = {3},
  number = {1},
  pages = {30-36},
  doi = {10.11648/j.jim.20140301.14},
  url = {https://doi.org/10.11648/j.jim.20140301.14},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jim.20140301.14},
  abstract = {Managers can increase the firm value by using the effective working capital policies. The corporate value maximization strategy is executed with a focus on return and risk. This study investigates the relationship between aggressive/conservative working capital policies and profitability risk in Tehran stock exchange listed companies. The sample includes 274 companies over the period 2006-2012. The results in all industries indicate a negative relationship between working capital investment policy and profitability risk measures. And there is a positive relationship between working capital financing policy and profitability risk measures. It means that, more the companies use conservative working capital policy, it will lead to decreasing profitability risk. And more the companies use aggressive working capital policy, it will lead to increasing profitability risk.},
 year = {2014}
}

Copy | Download

TY  - JOUR
T1  - To Survey the Effect of Working Capital Policies (Investing & Financing) on Profitability Risk (Evidence from Tehran Stock Exchange)
AU  - Mohammad Hassani
AU  - Arezoo Rajab Tavosi
Y1  - 2014/03/10
PY  - 2014
N1  - https://doi.org/10.11648/j.jim.20140301.14
DO  - 10.11648/j.jim.20140301.14
T2  - Journal of Investment and Management
JF  - Journal of Investment and Management
JO  - Journal of Investment and Management
SP  - 30
EP  - 36
PB  - Science Publishing Group
SN  - 2328-7721
UR  - https://doi.org/10.11648/j.jim.20140301.14
AB  - Managers can increase the firm value by using the effective working capital policies. The corporate value maximization strategy is executed with a focus on return and risk. This study investigates the relationship between aggressive/conservative working capital policies and profitability risk in Tehran stock exchange listed companies. The sample includes 274 companies over the period 2006-2012. The results in all industries indicate a negative relationship between working capital investment policy and profitability risk measures. And there is a positive relationship between working capital financing policy and profitability risk measures. It means that, more the companies use conservative working capital policy, it will lead to decreasing profitability risk. And more the companies use aggressive working capital policy, it will lead to increasing profitability risk.
VL  - 3
IS  - 1
ER  -

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