The Effect of Working Capital Management and External Capital on Going Concern for Indonesian Small and Medium Enterprises
DOI:
https://doi.org/10.26740/jaj.v11n1.p21-35Keywords:
Going concern, External capital, Small and medium enterprises, Working capital managementAbstract
This study aimed to examine the influence of working capital management and external capital ongoing concern of small and medium enterprises in Indonesia. This study used small and medium listed enterprises in Indonesia as a sample, which were included in the Pefindo-25 index from the year 2009-2016. The results showed that working capital management had a negative effect on SMEs going concern, while the external capital had a positive effect. This study had the implication for small and medium-sized issuers, which was they were expected to be able to accelerate the company's cash conversion cycle to improve working capital management so as to improve the sustainability of their business. In addition, they were expected to consider external capital as an alternative capital to increase competitiveness in the market.
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https://doi.org/10.1108/17439130710738718
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Hadianto, B. (2010). Effect of Asset Structure, Company Size, and Profitability on the Capital Structure of Issuers in the Telecommunications Sector 2000-2006: A Pecking Order Hypothesis Testing. Journal of Management, 7 (2), 14-29.
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https://doi.org/10.1017/CBO9781107415324.004
Sarwono, J. (2006). Quick and Easy Guide to SPSS 14. Edition 1. Yogyakarta: ANDISetiawan, Budi. (2015). Practical Techniques of Analysis of Social and Business Research Data with SPSS. Yogyakarta: ANDI
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Sharma, A. K., & Kumar, S. (2011). Effect of Working Capital Management on Firm Profitability¯: Empirical Evidence from India. Global Business Review, 12(1), 159173. https://doi.org/10.1177/097215091001200110
Singh, H. P., Kumar, S., & Colombage, S. (2017). Working Capital Management and Firm Profitability: A Meta-Analysis. Qualitative Research in Financial Markets, 9(1), 3447. https://doi.org/10.1108/QRFM-06-2016-0018
Susanti, A., & Hidayat, I. (2015). Effect of Debt and Own Capital Against Profitability. Jurnal Ilmu Dan Riset Manajemen, 4(11).
Svanberg, J., & Öhman, P. (2014). Lost Revenues Associated with Going Concern Modified Opinions in the Swedish Audit Market. Journal of Applied Accounting Research, 15(2), 197214.
https://doi.org/10.1108/JAAR-11-2012-0077
Tuanakotta, T. M. (2016). Contemporary Audit. Jakarta: Salemba Empat.
Warren, C. S., Reeve, J. M., Duchac, J. E., Wahyuni, E. T., & Amir Abadi Yusuf. (2014). Introduction of accounting. Jakarta: Salemba Empat.
Yazdanfar, D., & Öhman, P. (2014). The Impact of Cash Conversion Cycle on Firm Profitability. International Journal of Managerial Finance, 10(4), 442452. https://doi.org/10.1108/IJMF-12-2013-0137
Yunos, R. M., Nazaruddin, N., Ghapar, F. A., Ahmad, S. A., & Zakaria, N. B. (2015). Working Capital Management in Malaysian Government-linked Companies. Procedia Economics and Finance, 31(15), 573580. https://doi.org/10.1016/S2212-5671(15)01203-4
Baker, H. K., Kumar, S., Colombage, S., & Singh, H. P. (2017). Working Capital Management Practices in India: Survey Evidence. Managerial Finance, 43(3), 331353. https://doi.org/10.1108/MF-07-2016-0186
Brigham, E. F., & Ehrhardt, M. C. (2011). Financial Management: Theory and Practice. (J. W. Calhoun, Ed.) (Thirteen). USA: Nelson Education Ltd.
Brigham, E. F., & Joel F. H. (2007). Fundamentals of Financial Management. Eleventh Edition. USA: Thomson Higher Education
Cifuentes, R., Ferrucci, G., & Shin, H. S. (2005). Liquidity Risk and Contagion. Journal of the European Economic Association, 3(2/3), 556566. https://doi.org/10.1162/jeea.2005.3.2-3.556
Didonet, S., Simmons, G., DÃazVillavicencio, G., & Palmer, M. (2012). The Relationship Between Small Business Market Orientation and Environmental Uncertainty. Marketing Intelligence & Planning, 30(7), 757779. https://doi.org/10.1108/02634501211273841
GarcÃa-Teruel, P. J., & MartÃnez-Solano, P. (2005). Effects of Working Capital Management on SME Profitability. International Journal of Managerial Finance, 3(2), 164177.
https://doi.org/10.1108/17439130710738718
Ghozali, I. (2013). Multivariate Analysis Application with IBM SPSS 23. Semarang Program: Diponegoro University Publisher Agency.
Hadianto, B. (2010). Effect of Asset Structure, Company Size, and Profitability on the Capital Structure of Issuers in the Telecommunications Sector 2000-2006: A Pecking Order Hypothesis Testing. Journal of Management, 7 (2), 14-29.
Iqbal, N., Ahmad, N., & Riaz, Z. (2014). The Relationship between Working Capital Management and Profitability: Evidence from Pakistan. International Letters of Social and Humanistic Sciences, 20, 1425. https://doi.org/10.18052/www.scipress.com/ILSHS.20.14
Koh, H. C., & Low, C. K. (2004). Going Concern Prediction Using Data Mining Techniques. Managerial Auditing Journal, 19(3), 462476.
https://doi.org/10.1108/02686900410524436
Leland, H. E., & Pyle, D. H. (1977). Informational Asymmetries Financial Structure, and Financial Intermediation. The Journal of Finance, 32(2), 371. https://doi.org/10.2307/2326770
Lyngstadaas, H., & Berg, T. (2016). Working Capital Management: Evidence from Norway. International Journal of Managerial Finance, 12(3), 295313. https://doi.org/10.1108/IJMF-01-2016-0012
Martono, C. (2002). Analysis of the Effect of Industry Profitability, Weighted Financial Leverage Ratio and Weighted Capital Intensity and Market Share Against "Roa" and "Roe" Go-Public Manufacturing Companies in Indonesia. Journal of Akuntansi and Keuangan, 4 (2), 126-140.
Maulana, Z., & Safa, A. F. (2017). The Effect of Short-term Debt and Long-term Debt on Profitability at PT. Bank Mandiri Tbk. Journal of Economic Accounting Research (JENSI), 1 (1), 4448.
Miller, J. C., & Whiting, R. H. (2005). Voluntary Disclosure of Intellectual Capital and The "Hidden Value". Journal of Economic Literature Classification, 41, 1-30.
Modigliani, F., & H.Miller, M. (1963). Corporate Income Taxes and the Cost of Capital: A Correction. The American Economic Review, 53(3), 433443.
Moss, J. D., & Stine, B. (1993). Cash Conversion Cycle and Firm Size: a Study of Retail Firms. Managerial Finance, 19(8), 2534. https://doi.org/10.1108/eb013739
Myers, S. C. (1984). The Capital Structure Puzzle. Journal of Finance, 39.
Öhman, P., & Yazdanfar, D. (2017). Short- and Long-term Debt Determinants in Swedish SMEs. Review of Accounting and Finance, 16(1),106124. https://doi.org/10.1108/RAF-08-2015-0118
Padachi, K. (2006). Trends in Working Capital Management and its Impact on Firms Performance: An Analysis of Mauritian Small Manufacturing Firms. International Review of Business Research Papers, 2(2), 4558.
Pais, M. A., & Gama, P. M. (2015). Working Capital Management and SMEs Profitability: Portuguese Evidence. International Journal of Managerial Finance, 11(3), 341358. https://doi.org/10.1108/IJMF-11-2014-0170
Ramiah, V., Zhao, Y., & Moosa, I. (2014). Working Capital Management during The Global Financial Crisis: The Australian Experience. Qualitative Research in Financial Markets, 6(3), 332351. https://doi.org/10.1108/QRFM-09-2012-0026
Rashid, A. (2014). Firm External Financing Decisions: Explaining the Role of Risks. Managerial Finance, 40(1), 97116. https://doi.org/10.1108/MF-02-2013-0049
Ross, S. A., Westerfield, R. W., Jordan, B. D., Lim, J., & Tan, R. (2015). Introduction to Corporate Finance. Book 1. Jakarta: Salemba Empat.
Santosa, A. F., & Wedari, L. K. (2007). Analysis of Factors Affecting the Tendency of Going Concern Audit Opinion. Journal of UNIKA Soegijapranata, 11 (9), 141-158. https://doi.org/10.1017/CBO9781107415324.004
Sari, A. M. (2014). Going Concern Audit Opinion: Study Based on Financial and Non-Financial Factors in Manufacturing Companies Registered in Bei 2011-2013. Journal of Chemical Information and Modeling, 53 (9), 16891699.
https://doi.org/10.1017/CBO9781107415324.004
Sarwono, J. (2006). Quick and Easy Guide to SPSS 14. Edition 1. Yogyakarta: ANDISetiawan, Budi. (2015). Practical Techniques of Analysis of Social and Business Research Data with SPSS. Yogyakarta: ANDI
Setyanto, A. D., & Permatasari, I. (2014). Working Capital Management and Its Impact on Company Value with Corporate Governance as a Moderating Variable. AKRUAL: Jurnal Akuntansi, 6 (1), 66-82. http://dx.doi.org/10.26740/jaj.v6n1
Sharma, A. K., & Kumar, S. (2011). Effect of Working Capital Management on Firm Profitability¯: Empirical Evidence from India. Global Business Review, 12(1), 159173. https://doi.org/10.1177/097215091001200110
Singh, H. P., Kumar, S., & Colombage, S. (2017). Working Capital Management and Firm Profitability: A Meta-Analysis. Qualitative Research in Financial Markets, 9(1), 3447. https://doi.org/10.1108/QRFM-06-2016-0018
Susanti, A., & Hidayat, I. (2015). Effect of Debt and Own Capital Against Profitability. Jurnal Ilmu Dan Riset Manajemen, 4(11).
Svanberg, J., & Öhman, P. (2014). Lost Revenues Associated with Going Concern Modified Opinions in the Swedish Audit Market. Journal of Applied Accounting Research, 15(2), 197214.
https://doi.org/10.1108/JAAR-11-2012-0077
Tuanakotta, T. M. (2016). Contemporary Audit. Jakarta: Salemba Empat.
Warren, C. S., Reeve, J. M., Duchac, J. E., Wahyuni, E. T., & Amir Abadi Yusuf. (2014). Introduction of accounting. Jakarta: Salemba Empat.
Yazdanfar, D., & Öhman, P. (2014). The Impact of Cash Conversion Cycle on Firm Profitability. International Journal of Managerial Finance, 10(4), 442452. https://doi.org/10.1108/IJMF-12-2013-0137
Yunos, R. M., Nazaruddin, N., Ghapar, F. A., Ahmad, S. A., & Zakaria, N. B. (2015). Working Capital Management in Malaysian Government-linked Companies. Procedia Economics and Finance, 31(15), 573580. https://doi.org/10.1016/S2212-5671(15)01203-4
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2019-10-31
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Marita, W. E., & Permatasari, I. (2019). The Effect of Working Capital Management and External Capital on Going Concern for Indonesian Small and Medium Enterprises. AKRUAL: Jurnal Akuntansi, 11(1), 21–35. https://doi.org/10.26740/jaj.v11n1.p21-35
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