Determinants of Working Capital Investments: Evidence from the Lodging Companies in Developed and Emerging Countries

Year 2023, , 157 - 168, 30.12.2023

Mehmet Beyazgül , Erdinç Karadeniz

https://doi.org/10.26650/jot.2023.9.2.1324886

Abstract

The aim of this research study is to analyze and compare the factors affecting the working capital investment levels of lodging companies in both developed and emerging countries. To this end, the Generalized Method of Moments (GMM), one of the dynamic panel data analysis methods, was employed in testing the models, contingent upon the data compatibility. In the research study, the annual financial data of 152 lodging companies located in the top 25 countries with the highest tourism revenues over the period 2011-2019 were analyzed by categorizing them into groups by the status of being developed and emerging countries. As a result of the analysis of the factors affecting the level of working capital, it was observed that the factors affecting working capital differed between developed and emerging countries. Total leverage negatively affects the working capital investment levels of the lodging companies in developed countries, whereas it positively affects the working capital investment levels of the lodging companies in emerging countries. Moreover, the impacts of firm size and operating cash flow on working capital vary by the development level of the countries.

Keywords

Working capital management, Generalized method of moments, Lodging companies, Developed and emerging countries

Supporting Institution

Mersin University

Project Number

2017-2-TP3-2656

Thanks

Thanks to Mersin University Scientific Research Projects Unit for supporting this research.

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