Search results

1 – 4 of 4
Article
Publication date: 9 July 2020

Ehsan Poursoleiman, Gholamreza Mansourfar and Sazali Abidin

This paper aims to investigate the impact of debt maturity on the relationship between financial leverage and future financing constraints. Moreover, it attempts to…

Abstract

Purpose

This paper aims to investigate the impact of debt maturity on the relationship between financial leverage and future financing constraints. Moreover, it attempts to analyze the moderating role of short-term debt and the mediating role of future financing constraints in the relationship between financial leverage and future investment.

Design/methodology/approach

To test the moderating role of debt maturity, all the observations are divided into two groups based on short-term debt to total debt ratio. Moreover, Sobel, Aroian and Goodman tests are used to analyze the mediating role of future financing constraints. The sample used in this research includes firms listed on the Tehran Stock Exchange from 2006 to 2018.

Findings

It is shown that financial leverage is inversely (positively) related to future financing constraints for firms with higher (lower) use of short-term debt and, short-term debt moderates the relation between financial leverage and future investment. The findings also indicate that future financing constraints carry the influence of financial leverage to future investment.

Originality/value

In an imperfect market where financing is not independent of investment, it is highly required to carry out some studies on the role of different financing scenarios in firms and their impacts on future financing and investment; therefore, this paper is conducted to address one of the most important issues in the capital market, which is almost the pioneer study in this field.

Details

International Journal of Islamic and Middle Eastern Finance and Management, vol. 13 no. 4
Type: Research Article
ISSN: 1753-8394

Keywords

Article
Publication date: 23 November 2021

Ehsan Poursoleyman, Samira Joudi, Gholamreza Mansourfar and Saeid Homayoun

Previous literature posits that corporate governance and information asymmetry are the main factors in making efficient investments. Meanwhile, a growing body of studies…

Abstract

Purpose

Previous literature posits that corporate governance and information asymmetry are the main factors in making efficient investments. Meanwhile, a growing body of studies is of the opinion that corporate governance can also mitigate the problem of information asymmetry and consequently exerts significant impacts on the association between information asymmetry and investment efficiency. This study aims to analyze the impact of corporate governance and information asymmetry on investment efficiency. It also tests the moderating role of corporate governance in the relationship between information asymmetry and investment efficiency.

Design/methodology/approach

The sample consists of 4,082 firms domiciled in 20 developed countries over the years from 2003 to 2019, including 33,812 firm-year observations. The bid–ask spread is used as a proxy for information asymmetry. To measure corporate governance performance, a proxy provided by ASSET4 is employed, and to determine the optimal levels of investments, we relied on the growth opportunity. To estimate the models, ordinary least squares and generalized method of moment are used.

Findings

The results reveal that information asymmetry is inversely related to investment efficiency, and, corporate governance mitigates this negative association.

Originality/value

This paper sheds light on the role of corporate governance in firms as a lever for mitigating information asymmetry and tries out information asymmetry and agency theories in relation to the impact of information asymmetry on investment efficiency. It also confirms the theory stating that corporate governance can be considered as a determinant of investment efficiency.

Details

Journal of Economic and Administrative Sciences, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1026-4116

Keywords

Article
Publication date: 31 December 2021

Ehsan Poursoleyman, Gholamreza Mansourfar and Sazali Abidin

The purpose of this paper is to investigate the relation between debt structure and future external financing and investment. Furthermore, it aims to analyze the…

Abstract

Purpose

The purpose of this paper is to investigate the relation between debt structure and future external financing and investment. Furthermore, it aims to analyze the association between debt structure and future financial performance.

Design/methodology/approach

Volume, maturity, possessing collateral and having priority at the settlement date are the dimensions of debt structure that have been employed in this paper. The sample consists of 1,060 firm-year observations from Tehran Stock Exchange corporations during the period 2009–2018.

Findings

The findings reveal that greater reliance on financial leverage (debt volume) and short-term debt are associated with increases in future debt financing as well as future equity financing. Moreover, these two dimensions of debt structure are positively related to future investment. This paper also shows that the positive impact of financial leverage and short-term debt on future financing and investment can finally lead to a favorable financial performance. Regarding other dimensions of debt structure, the results suggest that although collateralized debt with the priority option at the settlement date enhances future external financing, this type of debt can ultimately lead to a reduction in future investment and financial performance. Finally, the findings indicate that uncollateralized debt exacerbates future financial performance.

Research limitations/implications

Financial performance can be affected by several factors, including available funds, investment amount, investment efficiency and managerial capability. However, this paper only considers the investment amount and external financing as the channels through which debt structure improves future financial performance. This study has the potential to contribute to one of the most important issues in finance and business fields, despite its probable trivial drawbacks.

Practical implications

Financing strategies as one of the most controversial topics have been meticulously scrutinized in this paper and practical implications are made to facilitate the process of decision-making regarding the optimal type of debt financing.

Originality/value

This study extends the literature by analyzing the direct link between debt structure and firm performance in firms domiciled in developing markets.

Details

International Journal of Managerial Finance, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1743-9132

Keywords

Article
Publication date: 10 January 2022

Ehsan Poursoleyman, Gholamreza Mansourfar, Saeid Homayoun and Zabihollah Rezaee

Employing a large sample consisting of 3,701 corporations domiciled in developed and emerging countries, this paper aims to analyze the mediating role of investment…

Abstract

Purpose

Employing a large sample consisting of 3,701 corporations domiciled in developed and emerging countries, this paper aims to analyze the mediating role of investment efficiency in the association between business sustainability performance and corporate financial performance.

Design/methodology/approach

Four different aspects of corporate sustainability offered by the ASSET4 database are used as proxies for business sustainability performance, including economic, corporate governance, social and environmental dimensions. In addition to these aspects, the aggregate measure of business sustainability performance is also employed. In order to test the association between business sustainability and corporate performance via investment efficiency, ordinary least squares, fixed-effect, random-effect and generalized method of moments statistical models were employed.

Findings

The results suggest that business sustainability performance is positively associated with corporate financial performance, indicating that sustainable corporations enjoy higher financial performance. Moreover, Sobel, Aroian and Goodman tests confirm that investment efficiency mediates the positive relationship between business sustainability performance and financial performance. Finally, further analyses show that the positive association between sustainability performance and investment efficiency is stronger for those firms headquartered in developed countries than in those located in emerging nations.

Originality/value

This paper contributes to the literature by investigating how growth opportunities advance the influence of business sustainability to corporate financial performance using a large sample from 43 countries.

Details

Managerial Finance, vol. 48 no. 2
Type: Research Article
ISSN: 0307-4358

Keywords

1 – 4 of 4