Working Capital Management and Performance of Telecommunication Companies in ASEAN-4: The Role of Financial Development

Abstract

Purpose: The research is designed to comprehensively analyze the influence of internal factors (working capital) and external (financial development) on the probability of telecommunication companies in ASEAN-4. Theoretical framework: Managing Working capital is concerns about efficiency and proportion of investment in current assets and short-term financing to see the level of profitability and risk of the company that is a trade-off. Design/Methodology/Approach: This study uses panel data regression analysis using secondary data from annual financial statements of telecommunications companies in ASEAN-4 from 2012-2021. Findings: Net Trade Cycle (NTC) positively affects long-term profitability (Tobin's Q), Average Payable Period to Sales (APPS) and Working Capital Financial Policy (WCFP) affect short-term profitability (ROA) and long-term profitability (Tobin's Q). Financial Development (FD) moderates the relationship of managing working capital (management and policy) to short-term performance (ROA) and long-term performance (Tobin'sQ). Research, practical & social implications: Management and investors of telecommunication companies in ASEAN-4 need to consider internal factors such as working capital management and external factors such as financial development to improve company performance. Originality/Value: This study is the first to analyze the influence of Financial Development in managing working capital for telecommunication companies in ASEAN-4.