Relationship between Financial Constraints, Economic Crises and Working Capital Management of Companies Listed on Tehran Stock Exchange

This study aims to examine the relationship between financial constraints and economic crises, and working capital management of companies listed in Tehran Stock Exchange (TSE) for the period of 2014-2015. Cash conversion cycle and net liquidity balance were used to assess working capital management. KZ index was used to calculate the financial constraints, and to determine the economic crisis, dummy variable of economic growth rate was used. The results of panel data analysis showed that financial constraints and economic crisis has adversely affected working capital Management. In other words, managers decrease the level of investment in working capital during financial and economic crisis. Moreover, we found that firm size, profitability and financial leverage have negative impact on cash conversion cycle