Investigating the relationship between working capital management strategies and risk management for companies listed on the Tehran stock exchange

Abstract

The various working capital management strategies adopted by businesses influence their liquidity, risk, and return. This study investigates the relationship between working capital strategies and corporate risk management. The statistical population of this research consists of companies listed on the Tehran Stock Exchange in the 2006-2012 interval. One hundred forty companies were studied from nine industries over a seven-year period using a screening method. Corporate data were collected from stock market statistics. Financial statements, including balance sheets, income statements, and explanatory notes of financial statements at the end of each fiscal year (March 19), were used as research tools. Moreover, descriptive statistics and model parameters for statistical analysis and inference were calculated using suitable tests (including Hausman and Pooling), EXCEL spreadsheets, and the EViews package. The results revealed a significant positive relationship between working capital management strategies (aggressive, hedging, conservative, and uncertain) and risk management. The results also indicated that only conservative strategy has a significant negative relationship with risk management.