Which Determinants Matter for Working Capital Management in Energy Industry? The Case of European Union Economy
Energies
; 15(9):3030, 2022.
Article
in English
| ProQuest Central | ID: covidwho-1837419
ABSTRACT
The main purpose of the paper is to identify firm,- industry- and country-specific determinants of working capital management (WCM) in energy industry. The empirical research is based on 6122 EU companies operating in the years 2011–2018. The influence of internal factors on variables describing WCM (cash conversion cycle—CCC, financial liquidity—LIQ and level of working capital—WC) were identified. The factors included size of the company (positive effect), its growth, tangibility and indebtedness (negative effect). Cash flow had a positive effect on CCC and a negative effect on LIQ and WC. The influence of industry-specific factors were also found. Companies applied similar strategies in CCC and LIQ management, following their industry averages. Measures of WCM decreased under the influence of an increase in average trade payables in the industry. Following country-specific factors were found to be significant (i) growth of GDP and strength of legal rights had negative influence on all measures of WCM, (ii) unemployment positively affects LIQ and WC and negatively CCC, (iii) an increase in the share of renewable energy sources caused a decrease in all WCM measures, while (iv) with an increase in energy consumption, CCC and WC increased.
Energy; working capital management; liquidity; cash conversion cycle; energy industry; European Union; Capital; Turnover; Fixed assets; Current liabilities; Energy sources; Working capital; Receivables; Energy resources; Corporate profits; Retained earnings; Energy policy; COVID-19; Energy consumption; Financial management; Renewable energy; Accounts payable; Hypotheses; Liberalization; Decision making; Renewable energy sources; Gross Domestic Product--GDP; Alternative energy sources; Renewable resources; Energy prices; Inventory
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Collection:
Databases of international organizations
Database:
ProQuest Central
Language:
English
Journal:
Energies
Year:
2022
Document Type:
Article
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