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This study aims to examine empirically the aggressive behavior of investment in working capital. Empirically, the research was carried out for companies in industrial sectors listed on the Indonesia Stock Exchange. Data consist of panel data of 2012-2017 totaling 157 samples after screening for outliers and normality. Structural equation modeling (SEM) is employed to test the recursive model. The results reveal that investment aggressiveness is influenced by sales growth, that is, the higher the aggressiveness of working capital investment, the lower the risk of liquidity. Furthermore, the lower liquidity risk has an impact on the lower operational risk. The lower the operational risk, the lower the profitability, and the lower the value of the company or the higher the financial risk. The findings are supported by previous studies which show that the higher the liquidity risk, the lower the financial risk. In short, the aggressiveness of working capital does not create value for shareholders.


working capital behavior liquidity risk operating risk financial risk

Article Details

Author Biography

Sulastri Sulastri, Universitas Sriwijaya

Prof Dr Sulastri ME., MKomp

Department of Management, Economics Faculty, Universitas Sriwijaya

I completed undergraduate program at Universitas Sumatera Utara, and continued my master's program at the University of Indonesia in the field of financial management. I graduated from the doctoral program at Diponegoro University in the field of strategic management.

Currently, my position as the coordinator of Doctoral Program in the Graduate School of Management, Faculty of Economics, Universitas Sriwijaya.

Work in Faculty of Economics, Universitas Sriwijaya, as lecturer and researcher, and now teaching some courses such as Strategic Management, Financial Management, and Research Methodology. Iam interest in collaborating with overseas researchers in field of strategic Finance and other related strategic management field.

Scopus ID: 56641598200; Orcid ID: 0000-0002-0435-3626; Google Scholar ID: RuuDMfsAAAAJ&hl=id

How to Cite
Sulastri, S. (2023). Working Capital Behavior and Risk: Empirical Study of Manufacturing Companies in Indonesia. SRIWIJAYA INTERNATIONAL JOURNAL OF DYNAMIC ECONOMICS AND BUSINESS, 7(4), 321–342.