The Effect of Cash Flow Volatility on Working Capital: An Analysis of the BIST Transportation Index

This study investigates the effect of cash flow uncertainty on working capital in the BIST Transportation Index between 2015 and 2024. In line with this objective, net working capital is the dependent variable; cash flow volatility from operations, investments, and financing are the independent variables; and leverage ratio and firm size are the control variables. First, the volatility of cash flow indicators is modeling using ARCH/GARCH and EGARCH models, and then the panel data analysis method is applied by including the obtained conditional variance series in the model. Based on the findings, operating cash flow uncertainty does not affect net working capital, while investment and financing cash flow uncertainty significantly negatively affects net working capital. In addition, it is found that leverage ratio and firm size also affect net working capital. The findings show that net working capital is shaped not only by operating performance, but also by investment and financing strategy uncertainty, debt structure, and growth dynamics.