Since 2014
LIQUIDITY-PROFITABILITY TRADEOFF EXISTENCE IN TURKEY: AN EMPIRICAL INVESTIGATION UNDER STRUCTURAL EQUATION MODELING
Copernican Journal of Finance & Accounting
View Archive Info| Field | Value | |
| Title |
LIQUIDITY-PROFITABILITY TRADEOFF EXISTENCE IN TURKEY: AN EMPIRICAL INVESTIGATION UNDER STRUCTURAL EQUATION MODELING
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| Creator |
Baser, Furkan; Department of Insurance and Actuarial Sciences, Ankara University, Ankara
Gokten, Soner; Department of Management, Baskent University, Baskent Universitesi, Baglica Kampusu Eskisehir Yolu 20. km, IIBF, Isletme Bolumu, 06810, Ankara Kucukkocaoglu, Guray; Department of Management, Baskent University, Ankara Ture, Hasan; Department of Econometrics, Gazi University, Ankara |
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| Subject |
liquidity-profitability tradeoff; structural equation modeling; working capital management
G30; M10 |
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| Description |
Firms in emerging markets could show a tendency to have high liquidity positions by ignoring the liquidity-profitability tradeoff in terms of working capital management due to gained experiences from stressed times. Accordingly, this study empirically examines the validity of liquidity-profitability tradeoff in Turkish market via structural equation modeling. The functions of liquidity and profitability as latent variables of the model are constituted from Piotroski’s criterias of liquidity/solvency, operating efficiency and profitability. The hypothesized model for the inexistence of the validity of liquidity-profitability tradeoff was verified and there is a moderate level of positive effect between liquidity and profitability in Turkey. The findings indicate that (1) current ratio or its variants as single-handed variables are inadequate to explain liquidity- profitability relation and (2) leverage seems to be the most important indicator as taken into account on working capital management decisions. Turkish firms apply prudent working capital management to overcome possible liquidity shocks.
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| Publisher |
Uniwersytet Mikołaja Kopernika w Toruniu
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—
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| Date |
2017-03-09
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| Type |
info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion — — — |
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| Format |
application/pdf
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| Identifier |
http://apcz.pl/czasopisma/index.php/CJFA/article/view/CJFA.2016.013
10.12775/CJFA.2016.013 |
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| Source |
Copernican Journal of Finance & Accounting; Vol 5, No 2 (2016); 27-44
Copernican Journal of Finance & Accounting; Vol 5, No 2 (2016); 27-44 2300-3065 2300-1240 |
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| Language |
eng
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| Relation |
http://apcz.pl/czasopisma/index.php/CJFA/article/view/CJFA.2016.013/11417
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| Coverage |
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| Rights |
Copyright (c) 2017 Copernican Journal of Finance & Accounting
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