Working Capital Management and Cash Holdings: Evidence from LQ45 Companies in Indonesia

Working Capital Management and Cash Holdings: Evidence from LQ45 Companies in Indonesia

Number 9, September 2021  »  Business strategy, risk and corporate governance

Anggita Langgeng Wijaya
Mayang Resqita Ayu Nadya
Universitas PGRI Madiun, Indonesia

Abstract: The aim of this study is to examine the effect of working capital management on corporate cash holdings with a sample of LQ45 index companies on the Indonesia Stock Exchange. This study used all companies included in the LQ45 stock index company category on the Indonesia Stock Exchange as the population. The purposive sampling method was used as a sampling technique, with the research period set between 2012 and 2019. The hypothesis in this study was tested using a multiple regression model. The results of this study indicate that working capital management has a positive influence on LQ45 companies’ cash holdings on the Indonesia Stock Exchange. This research proves that in the case of LQ45 companies on the Indonesia Stock Exchange, even though the company has an adequate working capital ratio, the company does not reduce the amount of company’s cash holdings to maintain the level of corporate liquidity.
Classification JEL: G30, G32, M40 | Pages: 52-62

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