Improper working capital policies may put companies in a situation where they may have difficulty securing their cash resources; in the financial sector, this is called a liquidity trap. The liquidity trap implies the inability of companies to provide cash resources due to inappropriate working capital policies. Theoretically speaking, companies falling into the liquidity trap have difficulty in fulfilling their obligations and paying off debts, due to applying proper liquidity policies; resulting from lack of cash flows or cash outflows, due to the internal or external factors, they are subject to financial limitations and ultimately bankruptcy. The purpose of this study is to investigate whether the companies listed in the Tehran Stock Exchange that have been fallen in the liquidity trap, eventually go bankrupt; using the data of 206 companies in the period of 2008-2017 and based on th...

Improper working capital policies may put companies in a situation where they may have difficulty securing their cash resources; in the financial sector, this is called a liquidity trap. The liquidity trap implies the inability of companies to provide cash resources due to inappropriate working capital policies. Theoretically speaking, companies falling into the liquidity trap have difficulty in fulfilling their obligations and paying off debts, due to applying proper liquidity policies; resulting from lack of cash flows or cash outflows, due to the internal or external factors, they are subject to financial limitations and ultimately bankruptcy. The purpose of this study is to investigate whether the companies listed in the Tehran Stock Exchange that have been fallen in the liquidity trap, eventually go bankrupt; using the data of 206 companies in the period of 2008-2017 and based on th...