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This paper examines the influence of financial leverage on the financial sustainability of microfinance institutions (MFIs) and the moderating role of the percentage of female borrowers (PFB).

The study uses a global sample of 646 MFIs drawn from the World Bank Mix Market and panel data for 2010–2018. The study employs ordinary least squares (OLS) and the one-step system generalized method of moments (SGMM) as regression estimation methods.

The findings of this study reveal that financial leverage and the PFB have a negative and significant effect on financial sustainability. The findings further show that the interaction between financial leverage and the PFB positively affects the financial sustainability of MFIs.

The findings inform MFIs' managers on the adverse effect of financial leverage and the PFB in their quest for financial sustainability. The findings also demonstrate that MFIs can leverage female borrowers to reverse the adverse effect of financial leverage on financial sustainability of MFIs.

Previous studies examined the direct effect of financial leverage and reported incongruent results. Because female borrowers are at the epicenter of MFI lending, this study fills the gap in the literature by examining whether the proportion of female borrowers moderates the relationship between financial leverage and MFIs' financial sustainability using a global dataset.

The purpose of this paper is to investigate whether air pollution has significant impact on corporate cash holdings and financial leverage.

The data of 199 firms listed on Istanbul Stock Exchange during the period 2009–2020 is analyzed by using pooled ordinary least squares and two-step system generalized method of moments models.

The results indicate that firms in regions with high air pollution tend to increase cash level. In addition, the positive effect of air pollution on cash level is stronger and more significant for environmentally sensitive firms and firms with low operational and distress risk. The results also show insignificant effect of air pollution on financial leverage.

Firms in regions with high air pollution should conduct proactive environmental protection procedures and enhance their eco-efficiency instead of holding excess cash that could negatively affect financial performance. In this context, policymakers should provide financial facilities to firms located in regions with high air pollution and that have low ability to finance environmental investments. On the other hand, the environmental laws and regulations introduced by regulatory authorities can enhance the economic development and firm performance by decreasing the adverse influences of air pollution on corporate financial policies.

To the best of the author’s knowledge, this research is one of few that examines the impact of air pollution on corporate cash holdings and financial leverage in emerging markets.

Intangible capital (IC) is an important factor for economic growth and firm performance. The role IC has played has become even more crucial in recent decades, possibly influencing debt capacity and default risk assessment. This paper studies how entrepreneurial and employee-based IC affects financial leverage.

Employer–employee unbalanced panel data provided by Statistics Finland that refer to Finnish small and medium-sized enterprises (SMEs) are used. Intangibles are measured with an expenditure-based method. Employee-based IC and entrepreneurial knowledge are used to explain debt financing in SMEs.

The findings imply that IC-intensive firms have less debt capacity due to weak pledgeability and asymmetric information between borrower and lender. Entrepreneurs with managerial or financial knowledge increase the firm's debt capacity compared to other entrepreneurs, especially in knowledge-intensive services (KIS). One explanation is that the entrepreneurs are more competent in negotiating with lenders as the entrepreneurs possess better financial skills. Entrepreneurs with technical knowledge decrease the firm's debt capacity in all industries.

While some earlier research focused on the IC–financial leverage relationship, hardly any study has looked at entrepreneurial IC. This paper provides new insights by including entrepreneurial IC alongside employee-based IC.

This study aims to measure impact of several firm-specific factors on alternative measures of leverage. The authors also aim to study impact of the subprime crisis on such associations.

The authors utilized an unbalanced panel data of 973 firm-year observations on 47 UK listed non-financial firms for the years 1990–2019. Book-based and market-based long-term and total leverage measures have been used as explained variables. The explanatory variables are profitability, size, two measures of growth, asset tangibility, non-debt tax shields, firm age and product uniqueness. Fixed effect and random effect models with clustered robust standard errors have been utilized for data analysis. To find the effect of subprime crisis, original dataset was split to create pre-crisis and post-crisis datasets.

The authors find that profitability significantly reduces leverage while firms having more tangible assets use significantly more debt in capital structure. Firm size and non-debt tax shield have statistically insignificant positive impact on leverage. Having more unique products reduces use of external debt, albeit insignificantly. Growth, when measured as market-to-book ratio, has inconsistent impact, whereas capital expenditure insignificantly reduces leverage. Age is found to be an insignificant predictor of leverage. After the subprime crisis, firms started relying more on internal fund instead of external debt, more particularly short-term debt. Having more collateral is gradually becoming more important for availing external debt.

Data limitations restrict generalization of the findings.

This is one of the pioneering attempts to show how subprime crisis altered the theoretical domain of capital structure research in the UK.

This study aims to analyze the relationship between Islamic governance (IG) and leverage and examine the interaction of corporate social responsibility disclosure (CSRD) in the relationship between IG and leverage.

This study used 444 observational data comprising Asian, European and African Islamic banks (IBs) and analyzed using the regression analysis method to answer the research hypothesis.

This study finds that IG had a significant positive effect on leverage, indicating that it can increase the leverage of IBs. In other words, IG boosts the public confidence to entrust their funds to IBs through current accounts and savings. However, this study shows that CSRD weakens the relationship between IG and leverage. In addition, this study includes the control variables of board size, Islamic supervisory board size and company size, where all three variables showed their effect on leverage. These results were obtained through additional analysis by categorizing our sample based on CSRD.

The results of this study show that IG significantly positively affects IB leverage globally. This can be used as a basis for policymakers to include the ICG variable in analyzing IBs leverage. The weakness of this study is the use of IG variables based on disclosure so that IG components that affect leverage cannot be analyzed accurately. Future research can use the IG variable by using specific IG component values such as the number of meetings, member attendance and remuneration of SSB members in analyzing IB leverage globally.

To the best of the authors’ knowledge, this research is the first study to discuss the interaction of CSRD with IG on leverage in Islamic banking in Asia, Europe and Africa, thus adding to the existing literature on Islamic banking.

As of 2022, the scope of the engagement and interest of debt capital providers in ESG reporting is mainly untapped. However, a vast amount of literature has produced conflicting findings about the importance of debt capital (leverage) as a factor in sustainability reporting (SR). This is the first meta-analysis reconciling the mixed results of 85 single country studies containing 131 effect sizes across 24,482 firms conducted over past three decades (1999–2022) investigating the influence of leverage on SR. The study emphasizes the significance of contextualizing research by identifying the macro-environmental elements modifying debt's impact on SR, through the use of the institutional theory. Eleven country variables were tested on the collected dataset, spread across 36 countries.

Meta-analysis technique for aggregation of existing extant empirical work. Continuous and categorical variable-based moderator analysis to demystify the influence of country characteristics affecting the leverage–SR relationship.

Results show positive significant impact of debt capital providers on SR. Country's level of development, GDP, extent of capital constraints in a country, financial sector development within a nation, country governance factors and corruption levels, country's culture, number of sustainability reporting instruments operational in a country and geographical location proved to be significant moderators.

The study details relevant meaningful research gaps, worthy of uptake by researchers to produce targeted research.

Governments must increasingly go beyond their mandated disclosure role and acknowledge the important institutional factors that have contributed to the expansion of ESG reporting through the creation of nation-specific tools, incentive structures and disclosure-encouraging regulations. To secure a steady flow of funding and prevent negative effects on company value and cost of capital in the midst of prolonged global economic upheaval, businesses must address the information requirements of lenders. The limited total effect size emphasizes the necessity for debt providers to step up their ESG activism and exercise their maximum power and potential in stimulating extensive SR firm-level practices.

The present study is the first meta-analysis reconciling the mixed results of 85 single-country studies containing 131 effect sizes across 24,482 firms conducted over the past three decades (1999–2022) investigating the influence of leverage on SR and demystifying the macro-environmental factors affecting the leverage–SR association.

The purpose of this paper is to investigate the relationship between CEOs' inside debt holdings (pension benefits and deferred compensation) and the operating leverage of the firms they manage, with the aim to examine whether CEO incentives play a role in corporate risk-taking.

The authors investigate the relation between CEO inside debt holdings (CIDH) (pension benefits and deferred compensation) and the operating leverage (DOL) of the firms they manage. Using a sample of 11,145 US firm-year observations over the period 2006–2017, the authors find a strong negative association between CIDH and DOL. Additional analyses reveal that the relationship between CIDH and DOL is more pronounced in firms with heightened agency issues, powerful CEOs and for CEOs with stronger professional networks. The results are robust to various sensitivity and endogeneity tests.

The authors find strong evidence confirming the expected negative association between CEO inside debt and DOL suggesting that firms with higher inside debt tend to maintain lower levels of operating leverage. These findings continue to hold with the alternative measure for the inside debt and operating leverage, and across a range of tests designed to rule out the possibility that the primary findings are in any way driven by potential endogeneity. In addition, the findings demonstrate that the presence of manager-shareholder agency conflicts can strengthen the inside debt–DOL relationship suggesting the strong role of inside debt in reducing firm risk.

Findings in this paper have implications for design of compensation structures so that corporate boards can establish incentives as a tool for risk management. A limitation of this study is that it is focused on one market, i.e. US listed companies, so the findings may not be applicable on a global scale.

To the best of the authors’ knowledge, this is the first study that links firm-level management of operating leverage through design of CEO inside debt incentives (two obvious choices for risk-reduction at the CEOs’ disposal include reducing financial risk through reduction of firm leverage and reducing operating risk through reduction of operating leverage). While use of firm leverage as an instrument of choice has been explored in the past, use of operating leverage to achieve risk reduction when CEO possess high inside holding, has received very little attention.

This chapter focuses on testing optimal capital structure theory: The role of intervening variable debt to equity ratio (DER) on the influence of the financial performance, Ownership Structure of Independent Board of Commissioners (IBCO), Audit Committee (ACO), and Institutional Ownership on Firm Value. The research design was explanatory research using path analysis. Using purposive sampling, 61 manufacturing companies, observation period from 2014 to 2018 with 286 N samples. The research novelty empirically can prove the role of intervening variable DER on the effect of return on assets (ROA) on firm value and shows the market response to the ROA is fully reflected by DER, indicating the existence of an optimal capital structure. The role of DER on the effect of ROE and IBCO on firm value is a partial mediation with the inverse direction. This phenomenon shows that the mechanism of forming a balance between the responses of investors and creditors relates to debt financing.

This study investigates the empirical association between environmental, social and corporate governance (ESG) performance and top executive compensation in the US financial services industry. Considering that financial firms can inflict systemic shocks across the economy, it has been argued that they must conduct ethical and sustainable business in accordance with ESG principles. This study examines whether ESG efforts are beneficial to managers.

The authors use CEO compensation and ESG performance ratings data for all US financial firms (SIC 6000–6799) from 2015 to 2019. Employing fixed effects regressions, the authors test whether lagged ESG performance is related to CEO compensation, after controlling for other firm characteristics such as size, financial performance, leverage and CEO stock ownership.

The authors find that lagged ESG ratings are strongly associated with all forms of compensation. An increase of one standard deviation in the composite ESG rating is associated with a 14%–16% increase in the total pay. Among the three ESG pillars, only S (social) and G (governance) exhibit persistent and significant associations with both short- and long-term executive pay. The authors also document the significant moderating effects of ESG on the relationships among firm performance, size, leverage, ownership and executive pay, identifying how ESG is associated with compensation.

The authors conclude that managers receive ESG incentives implicitly and explicitly. The novel finding of direct and indirect associations between ESG and top executive compensation contributes to the growing ESG literature on the financial sector and ongoing debate about the explicit inclusion of ESG targets in compensation design.

The purpose of this study is to examine the impact of firm financial and operational characteristics on the level of forward-looking information disclosure (FLID) by Egyptian-listed non-financial companies. The present research also aims to investigate the moderating role of gender diversity on the board of directors.

The sample incorporates the non-financial companies included in the EGX 100 of the Egyptian Stock Exchange (ESE), whose reports were available during the study period from 2013 to 2018. The final sample comprises 49 companies with 294 observations. Statistical analysis is performed using multiple regression analysis.

This study found a significant positive impact of return on assets, leverage, company size and age on the level FLID, while external audit firm type and industry were found to impact the level of FLID negatively. Further, the board gender diversity (BGD) is found to have a moderating impact as it strengthens the effect of financial and operational characteristics on the level of FLID.

The present study has some implications for Egyptian companies, investors in the Egyptian market and regulators in emerging economies, which include paying more attention to BGD when selecting the board members by companies as well as following up the female representation in all the listed companies by regulators.

To the best of the authors’ knowledge, this is the first study to investigate the moderating role of BGD and its impact on the level of FLID in emerging markets. This extends the disclosure literature as the present study brings new evidence from an emerging market regarding BGD moderating role as early research concentrated on the direct impact of BGD on the level of FLID.