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As the capital market in China is still developing, several constraints on a Chinese-listed firm’s financing strategy have a direct impact on its financial flexibility. The purpose of this paper is to reconstruct traditional financial flexibility index (FFI) derived from the western context, provide empirical evidence within eastern context by modified FFI and examine how the managerial efficiency of Chinese-listed firms is demonstrated with modified FFI to escort corporate life cycle hypothesis.

By tailored FFI to fit the contemporary operations of Chinese-listed firms, this study investigates how managerial efficiency varies across different life stages to demonstrate the moderating power in the firm performance of financially flexible firm.

It is found that financially flexible firms in the Chinese stock market generally experience good firm performance, yet the managerial efficiency could gradually be diminishing at their mature stage even firms’ financial flexibility remains consistent with the agency theory. This paper sheds light on the necessity to reexamine the components in financial flexibility based on the eastern context, and provides avenue to further understand the managerial behavior of Chinese listed firms when considering firm life cycles.

Although it is difficult for this current study to offer the precise weights on each factor in calculating financial flexibility, the judgment matrix method is adopted to at least provide reliable estimates in accordance with Chinese business contexts with less than 10 percent errors in contrast to the actual weights.

This modified FFI is particularly suitable for Chinese-listed firms under certain unique financial reporting regulations by adjusting a number of weights and factors. This study may help practitioners understand the managerial conduct of publicly listed firms in China.

The paper constructs a modified FFI with Chinese stock market characteristics embedded, and provides insightful evidence to explain the new pecking order theory by considering the life cycle stage of Chinese-listed companies.

The purpose of this paper is to provide empirical evidence about the relationship between working capital financing (WCF) and firm profitability in six key manufacturing sectors of Indian Economy. It also aims to capture the change in the financing of working capital requirement over different scenarios of price-cost margin and financial flexibility.

The study is undertaken on a sample of 1,211 firms from 6 key manufacturing sectors of Indian economy from 2000 to 2016. The non-linear relationship between WCF and profitability is studied using two-step generalized model of moments (GMM) estimator.

The study finds a convex relationship between WCF and profitability among firms in chemical, construction, and consumer goods sectors. Firms in these sectors can finance larger portion of their working capital requirements through short-term debt without negatively impacting profitability. However, a concave pattern of relationship for firms in machinery, metal, and textile industries implies increasing debt financing of working capital requirement would increase profitability for the firms who have financed lower portion of their working capital by short-term bank borrowing. But when a higher proportion of working capital requirements are already financed by short-term debt, a further increase in debt financing may impact profitability negatively. Moreover, the study finds that firms with high financial flexibility and high price-cost margin (except textile) can increase profitability by financing larger portion of working capital requirement through short-term debts and the continuation with risky WCF could increase profitability.

The study contributes to the literature on working capital in a number of ways. First, no previous study has been undertaken to explore the non-linear relationship between WCF and corporate profitability over a large sample of firms from six key manufacturing sectors of Indian economy. Second, the study uses a quadratic function to explore the non-linear relationship between WCF and profitability. Third, the study explores the relationship between WCF and profitability with respect to the price-cost margin and financial flexibility of firms under different manufacturing sectors of Indian economy. Finally, the study uses advanced two-step GMM, the panel data techniques to handle unobservable heterogeneity and issues of endogeneity within the data sample.

In this paper, the relationship between operations strategy and performance through flexibility as a moderating variable is analysed within the service setting of engineering consulting firms in Spain. A framework for service strategy dimensions is suggested while manufacturing flexibility dimensions are applied to service operations considering necessary adaptations. A path analysis model is applied in order to enhance the understanding of interactions. This research proves that service operations strategy has a significant positive and direct effect on service delivery performance. The fact that is especially relevant is that flexibility plays a more intense moderating role for efficiency performance measures than for customer satisfaction performance measures.

Real estate is an inherently inflexible asset, yet corporate real estate managers increasingly need to find ways in which flexibility can be achieved. Shorter planning horizons, increasing corporate experimentation and growth through mergers and acquisition are but a few of the influences which have led to the need for more flexible resources. One way in which corporate real estate managers can gain a greater insight into the problem is by recognising that real estate is often considered from a variety of perspectives: as a physical, functional and financial asset. Each of these perspectives leads to a different source of flexibility. As a physical asset, corporate real estate managers are concerned with aspects of design, including floorplate sizes, column placement and building services. As a functional asset, corporate real estate managers consider what activities can actually be undertaken inside a building. As a financial asset, corporate real estate managers examine the terms of contracts and the ability (and cost) to terminate those obligations. Each of these types of flexibility is required, but at different times and for different purposes within the life cycle of an organisation. Possibly the most appropriate way to look at the issue is on a portfolio‐wide basis, considering what are an organisation’s core and periphery real estate requirements. This approach requires a different type of examination of the assets but can provide a corporate real estate manager with a firm base for working towards the elusive goal of flexible real estate.

The purpose of this paper is to examine the relationship between strategy and flexibility in new product development, and the operational and financial performance in the supply chain context. The motives for conducting this research are to introduce the supply chain strategies and new product development flexibility (NPDF) as constructs that could have the potential to contribute to the success of supply chain performance. Based on the relational view of the firm, the authors propose that supply chain strategy is an antecedent of NPDF and can create value for the buying firm in terms of better financial and non-financial performance.

The structural equation modeling approach was used to evaluate the proposed model and analyze hypothesized relationships. The analysis, based on data collected from 175 small- and medium-sized (SME) Canadian manufacturing companies.

The analysis shows that there are direct positive effects from strategy on NPDF. The findings indicate also a direct positive association between NPDF and performance and showed that the total effect (direct and indirect) positively influenced performance.

The literature did not reveal any study which attempted to examine strategy, NPDF, and performance in the supply chain context of SMEs. The current study fills this important gap in the literature.

The main objective of this study is to examine whether firms follow the financing hierarchy as suggested by the Pecking Order Theory (POT). The External Funds Needed (EFN) model offers a financing hierarchy that can be used for examining the POT. As far as the EFN considers growth of sales as a driver for changing capital structure, it follows that shall firms plan for a sustainable growth of sales, a sustainable financing can be reached and maintained. This study uses data about the firms listed in two indexes: Dow Jones Industrial Average (DJIA30) and NASDAQ100. The data cover quarterly periods from June 30, 1999, to March 31, 2012. The methodology includes (a) cointegration analysis in order to test for model specification and (b) causality analysis in order to show the generic and mutual associations between the components of EFN. The results conclude that (a) in the majority of the cases, firms plan for an increase in growth sales but not necessarily to approach sustainable rate; (b) in cases of observed and sustainable growth of sales, firms reduce debt financing persistently; (c) firms use equity financing to finance sustainable growth of sales in the long run only, while in the short run, firms use internal financing, that is, retained earnings as a flexible source of financing; and (d) the EFN model is quite useful for examining the hierarchy of financing. This study contributes to the related literature in terms of utilizing the properties of the EFN model in order to examine the practical aspects of the POT. These practical considerations are extended to examine the use of the POT in cases of observed and sustainable growth rates. The findings contribute to the current literature that there is a need to offer an adjustment to the financing order suggested by the POT. Equity financing is the first source of financing current and sustainable growth of sales, followed by retained earnings, and debt financing is the last resort.

This paper aims to discover the underlying mechanisms by which corporate financial policies, cash holdings, capital structure and dividend payouts, transmit their effects on firm value in the “Middle East and North Africa” (MENA) emerging markets.

The authors employ a novel integration of path modelling with parallel multiple mediation analysis to empirically test the hypothesised indirect effects through the mechanisms represented by the value of financial flexibility (VOFF) and agency costs.

The authors do not find any evidence of the association between cash holdings, dividend payouts, and firm value when the mechanisms through the VOFF and agency costs are considered. While these two forces, i.e. the VOFF and agency costs, have balanced mediation effects on the relationship between cash holdings and firm value, they represent equivalent and complementary mechanisms by which dividend payouts transmit their positive impact on firm value. Moreover, we document a significant negative partial mediation effect of agency costs on the relationship between leverage and firm value; however, we do not find any evidence supporting the mediation effect of the VOFF on such a relationship.

This paper sheds new light on the forces that govern the nature of the relationships between corporate financial policies and firm value.

Coronavirus disease 2019 (COVID-19) has had a tremendous negative effect on the economies around the world by infusing uncertainty into supply chains. In this paper, the authors address two important research questions (RQs): (1) did COVID-19 wage subsidies impact small and medium enterprises (SMEs) to become more flexible towards the SMEs' business customers and (2) can such flexibility be a source for greater resilience to the crisis? As a result, the authors investigate the relationship between governmental wage subsidies and SMEs' flexibility norms towards the SMEs' business customers (study 1). The authors further uncover when and how flexibility towards existing customers contributes to SME resilience (study 2).

The authors frame the inquiry under the resource dependence theory (RDT) and behavioural additionality principle. The authors use survey methodology and test the assumptions in study 1 (n = 225) and study 2 (n = 95) on a sample of SMEs from various business-to-business (B2B) industries in Croatia.

Overall, in study 1, the authors find that SMEs that receive governmental wage subsidies have greater flexibility norms. However, this relationship is significantly conditioned by SMEs' competitive profile. SMEs that strongly rely on innovation are more willing to behave flexibly when receiving subsidies, whereas SMEs driven by branding do not. Study 2 sheds light on when flexibility towards existing customers increases SME resilience. Findings show that flexibility norms are negatively related to resilience, but this relationship is becoming less negative amongst SMEs with lower financial dependence on the largest customer.

This study extends RDT in the area of firm–government relationships by showing that wage subsidies became a source of power for the Government and a source of dependency for SMEs. In such cases, the SMEs receiving those subsidies align with the governmental agenda and exhibit higher flexibility towards the SMEs' customers. Drawing arguments from behavioural additionality, the authors show that this effect varies due to SMEs' attention and organisational priorities resulting from different competitive profiles. Ultimately, the authors showcase that higher flexibility norms can contribute to resilience if the SME restructures its dependency by having a less-concentrated customer base.

The research question which this paper aims to address is: To what extent does (labour) flexibility contribute to crisis resistance at establishment level? More specifically, the authors seek to analyse the determinants of variation in the extent to which establishments showed resistance to the global financial crisis (GFC), i.e. the extent to which they were affected by the crisis, focusing on an available secondary dataset related to organizational, industry‐level, and (numerical) labour flexibility.

Based on a unique cross‐sectional dataset of 8,000 establishments in Germany, the authors use binary logistic regression to assess the link between organizational characteristics, industry‐specific factors and workforce characteristics, and the fact that some establishments were affected by the GFC while others were not affected.

Establishment size, being located in western Germany and business problems before the crisis were positively associated with being affected by the crisis. The sector of economic activity also played a significant role. Contrary to predictions relating to the strategies employed by flexible firms, the extent to which they made use of temporary agency workers or of fixed‐term employees showed no significant association with crisis resistance.

The dependent variable measures the management respondent's (subjective) perception of being affected by the crisis, although it does not specify the ways in which a company has been affected, for example by a drop in demand or by difficulty in extending credit. The set of independent variables permits several tentative conclusions regarding numerical and functional flexibility, but it does not take alternative forms of flexibility into account.

Using a unique and representative dataset, the findings suggest a less important role for numerical flexibility in establishment performance and crisis resistance when compared to other variables, at least within the authors’ research framework and its exceptional external economic circumstances.

The purpose of this paper is to propose a new measure of earnings management flexibility based on the limits of the allowable set of accruals, prior discretionary accruals used, and the reversal rate of these accruals.

Quarterly financial data from Compustat for the period 1990‐2009 were used to construct the flexibility measure. Then the author examined how well this measure captures flexibility by investigating its effect on a firm's probability of meeting analysts' forecasts.

The results show that this flexibility measure better captures the firm‐specific flexibility than that of Barton and Simko which captures mainly the difference in flexibility across industries. Further, the positive effect of their measure on a firm's probability of meeting/beating analysts' forecasts is not observed in the extended sample period.

The flexibility measure proposed here can assist investors, analysts, or researchers to compare earnings management flexibility across firms in the same industry, which is useful in evaluating the quality of a firm's financial reports, stock picking or credit granting decisions.

This paper contributes to the earnings management literature by incorporating both the variation in flexibility used and that in flexibility limits. Second, evidence in this paper suggests that while financial benefits motivate managers to undertake earnings management, flexibility determines the extent of earnings management they can undertake. Third, this study points out that the unreversed discretionary accruals impose a constraint on the level of discretionary accruals a manager can incur in the current period, and hence have an indirect influence on current reported earnings.