Investigating the Factors Affecting Working Capital of Companies Using the Generalized Method of Moments

Abstract

This paper attempted to examine the determinants of investment level in working capital of companies listed on the Tehran Stock Exchange (TSE). For this purpose, data from 143 companies listed in the TSE were employed for 2004-2014. The generalized method of moments (GMM) was used to test the hypotheses. The findings suggested that in periods with lower GDP or lower corporate profitability, lower leverage, pre-period working capital and greater information asymmetry tended to make higher investment in working capital compared to other companies. In addition, there was no significant relationship between firm size, firm age and non-executives with corporate working capital.