Search results

This study examines the impact of debt maturity structure on stock price crash risk (SPCR) in Asian economies and the moderating effect of firm age on this relationship.

The study utilized annual data from 432 nonfinancial firms publicly listed in six Asian countries: China, Hong Kong, Japan, Singapore, Pakistan and India. The observation period covers 14 years, from 2007 to 2020. The sample was categorized into three groups: the entire sample and one group each for developing and developed Asian economies. A generalized least squares panel regression method was employed to test the research hypotheses.

The results suggest that long-term debt has a significant negative influence on SPCR in Asian economies, indicating that firms with high long-term debt experience lower future SPCR. Moreover, firm age negatively moderates this relationship, implying that older firms may experience a more pronounced reduction in SPCR due to high long-term debt. Finally, firms in developed Asian economies with high long-term debt are more effective in mitigating the risk of a significant drop in their stock prices than firms in developing Asian economies.

This study contributes to the literature in several ways. To the best of the researcher’s knowledge, this is the first of such efforts to investigate the relationship between debt maturity structure and crash risk in Asia. Additionally, it reveals that long-term debt influences SPCR directly and indirectly in Asia through the moderating role of firm age. Lastly, it is likely one of the first studies by a research team in Asia to compare the nonfinancial markets of developed and developing Asian countries.

This study empirically investigates the relationship between goodwill assets and capital structure (i.e. debt ratio) of firms and the moderating effect of financial market development on the relationship between goodwill assets and capital structure.

This research applied a quantitative method. The article collects large samples of listed firms from 23 developing and nine developed countries and applied the panel data techniques. This research used firm-level data from the DataStream database for both developed and developing countries. The study uses 4,912 firm-level data from 23 developing countries and 4,303 firm-level data from nine developed countries.

The findings reveal a significant positive relationship between goodwill assets and capital structure in developing countries, but goodwill assets have a significant negative relationship with capital structure in developed countries. Moreover, financial market development positively moderates the relationship between goodwill assets and the capital structure of firms in developing countries. The results inform firm managers that goodwill assets serve as additional collateral to secure debt financing. Moreover, policymakers should formulate a debt market policy that recognizes goodwill assets as additional collateral for the purpose of obtaining debt capital.

The study has several implications. First, goodwill assets are identified as a factor of capital structure in this study. Fixed assets have been identified as one of the drivers of capital structure in previous research, although goodwill assets are seldom included. Second, this article shows that along with demand-side determinants, supply-side determinants also play an important role in terms of the firms' choice about the capital structure. Therefore, firms should take both the demand-side and supply-side factors into consideration when sourcing for external financing (i.e. debt capital).

The study considered goodwill as a component of capital structure. The study analysis includes a large sample of enterprises, including 4,912 big firms from 23 developing countries and 4,303 large firms from nine industrialized or developed countries, which adds to the current capital structure information. Furthermore, a large sample size increases the results' robustness and generalizability.

This paper investigates the impact of financial integration on the capital structure of the firms operating in mainland China, examining the firm-level and country-level integrating variables for 2,878 listed Chinese firms over the period of 1991–2016 in regard to the firms' capital structures. Finally, the study revisits the associations for the state-owned and multinational firms in the context of China.

A large sample of unbalanced data from firms were used to explore the relationship firm-level and country-level integrating variables has with firm leverage and maturity; this is accomplished using the fixed effect model. For robustness, a system-generalised method of moments was used.

The results indicate that internationalisation positively impacts the leverage and debt maturity of all listed Chinese firms and multinational firms and that state-owned firms are financed mainly by the state. For country-level integration, the authors find that credit and equity markets are negatively related to a firm's leverage. A negative relation with credit markets suggests that Chinese firms have much cheaper financing options than the benefits that arise from credit market integration. Moreover, the effect of equity market integration is more pronounced on Chinese firms' capital structure and debt maturity than credit market integration.

The results provide valuable implications of financial integration for policymakers as well as capital structure decision-making for managers in China.

Few studies have examined the impact of integration on firms' capital structures in developing countries. After controlling for unobserved heterogeneity and endogeneity, this study adds new multilevel integration evidence on the capital structure of Chinese firms.

This study investigates the impact of bank CEOs’ inside debt on shareholder benefits in the context of bank mergers and acquisitions (M&A) before the 2008–2009 financial crisis.

Employing an event-study methodology, this analysis delves into market reactions to bank M&A announcements during 2006–2007, encompassing 105 M&As by 79 public commercial banks. This era witnessed heightened risk-taking behavior on the verge of the financial crisis. We explore the relation between relative inside debt and market abnormal returns at M&A announcements and the association between relative inside debt and cash payment preferences in M&As.

Evidence suggests that M&A announcements from banks where acquiring CEOs hold a substantial inside debt experience favorable stock market reaction, particularly for smaller banks. Additionally, banks with elevated CEO inside debt tend to favor cash as a payment mode for M&As.

One limitation of this study is the short period of data availability. The data used in this study covers only 2006 and 2007, the periods marked by notable risk-taking activities on the verge of the financial crisis. Although this period is perfectly suitable for our investigation, given the prevalence of conflicts between equity and debt holders, it is essential to acknowledge that our findings may not capture changes or trends over time. Nevertheless, the results offer valuable insights into the factors that influence the behavior of the studied population. Future research could employ a longitudinal design to address this limitation and gain a more comprehensive understanding of the dynamics over extended periods.

Our study has significant implications for businesses and policymakers as it provides insights into the factors contributing to financial crises and how compensation mechanisms can be used to moderate bank risk-taking. We propose that CEO inside debt compensation presents a plausible mechanism that boards of directors can incorporate into bank executive compensation contracts. By doing so, they can promote value-enhancing investments and moderate excessive risk-taking, thereby safeguarding the financial stability of individual banks and overall financial system.

Our study sheds light on the beneficial role of bank CEO inside debt for shareholders, contributing empirical backing to the conflict resolution viewpoint in the discourse on wealth appropriation. From a regulatory stance, our findings advocate for the inclusion of bank CEO inside debt in executive remuneration agreements. Such a strategy can empower boards of directors to mitigate undue risk and enhance shareholder value in M&As, safeguarding both individual bank and broader financial system stability.

This paper explores the connection between capital structure and financial performance within European listed firms. The primary objective is to demonstrate an inverse U-shaped relationship between these two variables and pinpoint an optimal debt-equity mix.

In this study, we adopt a dynamic modeling approach to investigate the relationship between a firm’s capital structure and financial performance. Drawing on well-established theories and prior empirical studies, our model examines 3,121 dividend-paying firms from 41 European countries over 14 years, from 2008 to 2021. To enhance the reliability of our findings, we employ two distinct estimation techniques: the fixed effect model (FE) and the system generalized method of moments (System-GMM).

This study reveals an inverse U-shaped relationship between the firm’s financial performance, measured by the return on equity (ROE) and its capital structure (total liability to total assets ratio). Furthermore, an optimal capital structure of about 29% is determined for all firms in the sample, and about 21%, 28% and 41% industry-specific capital structure for manufacturing, real estate and wholesale trade, respectively.

This paper contributes to existing knowledge by empirically determining an optimal capital structure for listed firms across various industries in Europe, which very few studies have attempted to do in the past. An optimal capital structure is an invaluable benchmark for managers and other stakeholders, informing their decision-making.

This paper aims to examine prospective graduate students' attitudes toward educational loan borrowing in an experimental setting.

Participants were randomly assigned to two treatment groups and one control group. Subjects in experimental group 1 received financial education: a short online course on the economic viability of getting a master's degree and how to finance it with a graduate student loan, while subjects in experimental group 2 received financial education along with information on the availability bias.

Relying on a control group in the assessment of financial literacy education intervention impacts, this research finds positive causal treatment effects on individuals’ attitudes toward debt-financed graduate education. In comparison to the control group, experimental subjects perceived the possibility of going into debt with a graduate loan to complete a master’s degree as less stressful and worrying.

This study has important educational policy implications to prevent students from stopping investing in human capital by perceiving educational loan debt as something stressful or worrying. The results can help potential (and current) grad students develop a feasible financial plan for graduate school by encouraging higher education institutions to implement educational loan information and financial education into university seminar courses for better graduate student loan decision-making.

Student attitudes toward debt have been analyzed in the context of higher education, but only a few researchers internationally have used an experimental design to study personal financial decision-making.

This study aims to guide firms in emerging markets on whether corporate social responsibility (CSR) engagement facilitates their access to debt with the moderation of asset structure and firm performance. Considering the moderating effect analysis, this study explores the substitutive or complementary effect of these two contingencies on CSR-oriented firms in accessing debt financing.

Drawing on data collected for 16 emerging markets between 2008 and 2019, this study runs country–industry–year fixed-effects regression.

This study finds that CSR performance and reporting facilitate access to debt in emerging markets. However, CSR performance does not have an inverted U-shaped influence on firms’ access to debt financing. The moderation analysis of this study shows that asset tangibility has a negative moderating effect on the link between CSR engagements (i.e. both CSR performance and reporting) and access to debt, confirming a substitutive relationship between asset tangibility and CSR engagements in accessing debt. In contrast, firm performance is positively moderating the nexus between CSR engagement proxies and access to debt, which confirms a complementary type of relationship between firm performance and CSR engagements in accessing debt.

The empirical evidence of this study implies that creditors critically consider CSR engagements of firms in the loan-granting decision process. Similarly, the inverted U-shaped relationship between CSR and access to debt implies that there is an optimal level of CSR engagement creditors might consider in their decision. Likewise, the moderating effects analysis highlights that asset tangibility and firm performance are two conditions under which CSR performance and reporting are linked to access to debt.

Emerging countries are a different set of countries than developed ones; they have high growth rates and hence need financing, have a weaker institutional environment and have weaker stakeholder power. These particularities motivated the authors to conduct a separate study focusing on CSR and debt financing links drawing on a wide range of emerging countries. Thus, this study adds to the ongoing debate by examining the conditions under which CSR-oriented firms can access debt financing in emerging economies.

This paper takes Chinese A-share listed companies from 2007 to 2021 as research samples to investigate the influence of supplier concentration on debt maturity structure and its mechanism. It further analyzes whether the relationship between the two is different in the case of different monetary policies, collateral assets, and total debt. The research conclusion is of practical significance for enterprises to construct a balanced debt maturity structure and prevent financial risks.

This paper adopts the empirical research method. The data came from the CSMAR database, which eliminated ST and *ST and companies with missing data, resulting in a sample of 20,328. Stata16 was used for statistical analysis.

There is an inverted U-shaped relationship between supplier concentration and debt maturity structure, and market position and trade credit play an intermediary role. In the case of tight monetary policy, fewer collateral assets, and higher total debt, the inverse U-shaped relationship is more significant.

This paper examines the relationship between supplier concentration and debt maturity structure from a non-linear perspective for the first time, providing theoretical support for enterprises to form a reasonable debt structure, and deepening the theoretical cognition of the relationship between supplier concentration and corporate debt maturity structure.

This study investigates the influence of corporate income tax on two corporate financial decisions — dividend and capital structure policies, particularly for Shariah compliant companies in Malaysia.

The study considered data from a sample of 529 Malaysian listed companies from four industrial sectors from 2007–2021 (6,746 company-year observations, before eliminating outliers). Panel models such as Fixed Effect and Random effect models were used. The study specifically tested the effect of corporate income tax on dividend and capital structure policies for Shariah compliant companies (3,148 observations) and controlled for industrial sectors.

(1) Firms are mostly Shariah-compliant, less liquid, less profitable and smaller in size, (2) Broadly when analysed together, tax has no impact on debt-equity ratio while it has an impact on dividend per share, (3) However, when tested separately for Shariah compliant companies, the influence of effective tax on capital structure is very evident but not for dividend and (4) influence of industrial sector on the relationship between corporate tax and capital structure and dividend policy is significant. Results indicate that Shariah firms might be raising debt to gain tax advantage. Companies in general pay dividends to avoid reputational damage.

This study assumes that leverage and dividend policy decisions are the main outcomes of the changing tax policies, while it seems that there could be other important outcomes that can be tested in future research. The study also shows the changing tax regimes of different ASEAN countries but they have not been tested to see the differences between countries. It will be indeed interesting for future researchers to focus on this aspect.

The findings contribute to the literature on tax planning of the Shariah-compliant firms, a high growth business segment in the Asian context. The study discussed potential tax-based Islamic market product development.

This chapter investigates the cost of public debt for firms using a comprehensive sample consisting of 17,368 industrial bond issues from 1970 to 2011. The empirical evidence shows that yield spreads for seasoned bond issues are significantly lower than those for initial bond issues. This seasoning effect is robust across different sample periods, subsamples, and model specifications. On average, the yield spreads for seasoned bond issues are around 50 bps lower than those for initial bond issues. This difference cannot be explained by other bond and firm characteristics. The seasoning effect is more pronounced for firms with higher levels of uncertainty, lower information disclosure quality, and longer time intervals between the first and subsequent issues. Our empirical findings provide supportive evidence for the extant theories that aim to rationalize the information role in determining the cost of capital.