Izvorni znanstveni članak
https://doi.org/10.1080/1331677X.2018.1436450
The influence of capital expenditures on working capital management in the corporate sector of an emerging economy: the role of financing constraints
Paweł Mielcarz
; Department of Finance, Kozminski University, Warsaw, Poland
Dmytro Osiichuk
; Department of Finance, Kozminski University, Warsaw, Poland
Adam Behr
; Independent scholar
Sažetak
Relying on firm-level panel data from an emerging economy, this
study explores the impact of fixed capital expenditure on working
capital management practices. When facing insufficient internally
generated cash flows and external funds for accommodating capital
investments, companies are found to finance capital expenditure
by primarily depleting cash reserves and increasing trade payables.
Corroborating the postulates of the financing constraints theory,
working capital investments are found to be inversely related to
the degree of financing constraints, and positively sensitive to
operating cash flow fluctuations and availability of external finance.
For financially constrained companies, capital expenditures are
found to more likely exercise a negative impact on working capital
investments. Contributing to the discussion on the nature of business
cycles, we document that the negative cash flow shocks are likely
to be transmitted to firms’ counterparties through the trade credit
channel rather than through the reduction of investment demand.
The empirical findings also suggest that financial managers fail to
properly account for capital expenditures in short-term liquidity
planning, which, under conditions of limited access to imperfect
capital markets, may induce the recurrence of costly working capital
adjustments.
Ključne riječi
Capital expenditure; working capital management; investment smoothing
Hrčak ID:
206084
URI
Datum izdavanja:
3.12.2018.
Posjeta: 1.211 *