International Journal of Nonlinear Analysis and Applications

Value of financial flexibility and quantitative aspects of net working capital: Evidence from Tehran Stock Exchange

Document Type : Research Paper

Authors

1 Department of Accounting, Ahvaz Branch, Islamic Azad University, Ahvaz, Iran

2 Department of Accounting, Abadan Branch, Islamic Azad University, Abadan, Iran

3 Department of Economics, Ahvaz Branch, Islamic Azad University, Ahvaz, Iran

4 Department of Accounting, Masjed-Soleiman Branch, Islamic Azad University, Masjed-Soleiman, Iran

Abstract

The value of the financial flexibility factor is less addressed by the academic literature. This value is not directly visible to companies and should be measured and tested. This paper investigates the relationship between the value of financial flexibility, investment efficiency in net working capital and speed of adjustment of net working capital. This is an applied descriptive-correlational paper. The data were analyzed using the statistical population including 100 companies listed in the Tehran Stock Exchange for the period of 2005 to 2020. The multivariate linear regression method was used to test the research hypotheses. The results of the estimation of the regression model showed that there is a positive significant relationship between the value of financial flexibility and investment efficiency in net working capital and the speed of adjustment of net working capital. In addition, considering the value of financial flexibility factor in investment decisions can lead to more efficient investment opportunities and more optimal working capital policies for the company.

Keywords

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International Journal of Nonlinear Analysis and Applications
Volume 14, Issue 11
November 2023
Pages 207-217
  • Receive Date: 06 May 2022
  • Revise Date: 30 June 2022
  • Accept Date: 11 July 2022