Relationship between Financial Constraint and Investment Efficiency and Working Capital Strategy

Regarding the limitation of resources and as a result of increasing importance of increase in investment efficiency and the important role of working capital in the business of the economic corporations, this study is devoted to the relationship between financial constraint and investment efficiency and working capital strategy. Financial data of 171 firms in the time period of 2011-2016 is studied in this research. According to the conducted analyses of the first hypothesis, financial constraint has a positive and meaningful effect on inefficiency of the investment. The second hypothesis showed that financial constraint has no meaningful relationship with the working capital policies .The third hypothesis shows a positive and meaningful relationship between financial constraint and investment inefficiency in companies adopting risky strategies and finally the fourth hypothesis showed no meaningful relationship between financial constraint and investment inefficiency in companies adopting a conservative policy. The general conclusions show that a limitation in resourcing will entail a deviation from favorite investment. Also, the unwanted effect of the financial constraint on effective investment occurs only in companies with risky strategies of working capital and it does not exist in companies with conservative strategies.