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1 – 10 of over 11000
Open Access
Article
Publication date: 12 October 2023

Jianchang Fan, Zhun Li, Fei Ye, Yuhui Li and Nana Wan

This study aims to focus on the optimal green R&D of a capital-constrained supply chain under different channel power structures as well as the impact of capital constraint…

Abstract

Purpose

This study aims to focus on the optimal green R&D of a capital-constrained supply chain under different channel power structures as well as the impact of capital constraint, financing cost, channel power structure and cost-reducing efficiency on green R&D and supply chain profitability.

Design/methodology/approach

A two-echelon supply chain is considered. The upstream firm engages in green R&D but has capital constraints that can be overcome by external financing. Green R&D is beneficial to reduce production costs and increase consumer demand. Based on whether or not the upstream firm is capital constrained and dominates the supply chain, four models are developed.

Findings

Capital constraints significantly lower green R&D and supply chain profitability. Transferring leadership from the upstream to the downstream firms leads to higher green R&D levels and downstream firm profitability, whereas the upstream firm's profitability is increased (decreased) if green R&D investment efficiency is high (low) enough. Greater financing costs reduce green R&D and downstream firm profitability; however, the upstream firm's profitability under the model in which it functions as the follower increases if the initial capital is sufficient. More importantly, empirical analysis based on practice data is used to verify the theoretical results reported above.

Practical implications

This study reveals how upstream firms in supply chains decide green R&D decisions in situations with capital constraints, providing managers and governments with an understanding of the impact of capital constraint, channel power structure, financing cost and cost-reducing efficiency on supply chain green R&D and profitability.

Originality/value

The major contributions are the exploration of supply chain green R&D by taking into consideration channel power structures and cost-reducing efficiency and the validation of theoretical results using practice data.

Details

Modern Supply Chain Research and Applications, vol. 5 no. 3
Type: Research Article
ISSN: 2631-3871

Keywords

Article
Publication date: 20 May 2021

Xiangyuan Meng, Xue Li, Wenyan Xiao and Jie Li

The authors provide firm-level evidence that external financing affects international trade in a way different from internal financing.

Abstract

Purpose

The authors provide firm-level evidence that external financing affects international trade in a way different from internal financing.

Design/methodology/approach

The authors separate new entrants from incumbent exporters and investigate the roles of external and internal financing in export market participation and export quantity.

Findings

The authors find that external financing is of particular importance, as well as internal financing, in helping a firm become a new exporter. By contrast, external financing, unlike internal financing, is not significantly important for an incumbent exporter to stay in the international market. Regarding export quantity, a firm's internal financing is positively associated with more export quantity, whereas external financing is not.

Originality/value

The authors’ findings are consistent with the existence of significant fixed cost for entering the export market and external financing is particularly needed to cover such cost. Meanwhile, the financial need for maintaining the export status is much less and can be satisfied via internal financing.

Details

International Journal of Emerging Markets, vol. 18 no. 4
Type: Research Article
ISSN: 1746-8809

Keywords

Open Access
Article
Publication date: 27 September 2023

Deepak Kumar, B.V. Phani, Naveen Chilamkurti, Suman Saurabh and Vanessa Ratten

The review examines the existing literature on blockchain-based small and medium enterprise (SME) finance and highlights its trend, themes, opportunities and challenges. Based on…

1778

Abstract

Purpose

The review examines the existing literature on blockchain-based small and medium enterprise (SME) finance and highlights its trend, themes, opportunities and challenges. Based on these factors, the authors create a framework for the existing literature on blockchain-based SME financing and lay down future research paths.

Design/methodology/approach

The review follows a systematic approach. It includes 53 articles encompassing multiple dimensions of blockchain-based SME finance, including peer-to-peer lending platforms, supply chain finance (SCF), decentralized lending protocols and tokenization of assets. The review critically evaluates these approaches' theoretical underpinnings, empirical evidence and practical implementations.

Findings

The review demonstrates that blockchain-based SME finance holds significant promise in addressing the credit gap by leveraging blockchain technology's decentralized and transparent nature. Benefits identified include reduced information asymmetry, improved access to financing, enhanced credit assessment processes and increased financial inclusion. However, the literature acknowledges several challenges and limitations, such as regulatory uncertainties, scalability issues, operational complexities and potential security risks.

Originality/value

The article contributes to the growing knowledge of blockchain-based SME finance by synthesizing and evaluating the existing literature. It also provides a framework for the existing literature in the area and future research paths. The study offers insights for researchers, policymakers and practitioners seeking to understand the potential of blockchain technology in filling the SME credit gap and fostering economic development through improved access to finance for SMEs.

Details

Journal of Trade Science, vol. 11 no. 2/3
Type: Research Article
ISSN: 2815-5793

Keywords

Article
Publication date: 29 November 2022

Xiaofang Jia and Xingan Wang

This study intends to explore the relationship between digital finance and the vertical specialization of firms. The following questions are discussed: (1) As a representative new…

Abstract

Purpose

This study intends to explore the relationship between digital finance and the vertical specialization of firms. The following questions are discussed: (1) As a representative new financial development model, what is the role of digital finance in the vertical specialization of firms? (2) If digital finance improves the level of vertical specialization of firms, what is the mechanism behind such improvement? (3) How does digital finance impact the vertical specialization of firms in different regions, industries, and firms?

Design/methodology/approach

A two-way fixed-effect model of panel data is proposed to verify the relationship between digital finance and the vertical specialization of firms. This model is constructed by matching the city-level data of digital finance with the data of China's A-share listed companies from 2011 to 2018. Meanwhile, the instrumental variable (IV) method and difference-in-difference (DID) method are adopted to deal with the endogeneity problem of the model.

Findings

The authors' study finds that digital finance has significantly improved the level of vertical specialization of firms. The result is robust under the endogeneity consideration and a series of robustness tests. After the dimensionality of the index is reduced, the depth of digital finance usage is more conducive to the improvement of the vertical specialization of firms compared with the width of digital finance coverage and the level of financial digitization. Digital finance mainly improves the level of vertical specialization of firms by reducing transaction costs and increasing the market thickness of the intermediate products. Moreover, digital finance has certain heterogeneity in promoting the vertical specialization of firms, an effect that is more significant in the eastern region, manufacturing industry and state-owned enterprises (SOEs).

Research limitations/implications

The first limitation is the mechanism test. This research only analyzes the mechanism from transaction cost and the market thickness of the intermediate products. With the rapid development of information technology, digital finance will be further integrated into people's production and life. There will then be more mechanisms that should be explored between digital finance and the vertical specialization of firms. Another limitation is the data sample of this paper. The conclusions of this research are based only on the data of listed companies. However, in the authors' opinion, the specialization level of small and medium-sized enterprise (SMEs) should be higher. Therefore, the conclusions of this work are underestimated, which can be considered as the lower limit of digital finance for enterprise specialization.

Social implications

As a favorable financing channel to supplement traditional financial service functions, digital finance plays a critical role in the operating efficiency of enterprises and the effective allocation of macro resources. The authors' research shows that digital finance has significantly improved the vertical specialization of firms. This conclusion provides guides to improve the production efficiency of enterprises and the quality of economic development.

Originality/value

This paper has three main contributions. (1) The relationship between financial development and the vertical specialization of firms is innovatively discussed from the perspective of digital finance, which implies that digital finance can effectively promote the level of vertical specialization of firms. (2) This paper provides new perspectives and ideas to reveal the impact mechanism of digital finance on the real economy by systematically analyzing the mechanism of digital finance on the vertical specialization of firms from the perspectives of transaction costs and financing constraints. (3) The regional differences in the development of digital finance, industry differences in the vertical specialization of firms and differences in the nature of enterprise property rights are all under consideration, which improves the effectiveness and pertinence of digital finance in promoting the vertical specialization of firms.

Details

Kybernetes, vol. 53 no. 1
Type: Research Article
ISSN: 0368-492X

Keywords

Open Access
Article
Publication date: 29 March 2024

Runze Ling, Ailing Pan and Lei Xu

This study examines the impact of China’s mixed-ownership reform on the innovation of non-state-owned acquirers, with a particular focus on the impact on firms with high financing…

Abstract

Purpose

This study examines the impact of China’s mixed-ownership reform on the innovation of non-state-owned acquirers, with a particular focus on the impact on firms with high financing constraints, low-quality accounting information or less tangible assets.

Design/methodology/approach

We use a proprietary dataset of firms listed on the Shanghai and Shenzhen Stock Exchanges to investigate the impact of mixed ownership reform on non-state-owned enterprise (non-SOE) innovation. We employ regression analysis to examine the association between mixed ownership reform and firm innovation.

Findings

The study finds that non-state-owned firms can improve innovation by acquiring equity in state-owned enterprises (SOEs) under the reform. Eased financing constraints, lowered financing costs, better access to tax incentives or government subsidies, lowered agency costs, better accounting information quality and more credit loans are underlying the impact. Additionally, cross-ownership connections amongst non-SOE executives and government intervention strengthen the impact, whilst regional marketisation weakens it.

Originality/value

This study adds to the literature on the association between mixed ownership reform and firm innovation by focussing on the conditions under which this impact is stronger. It also sheds light on the policy implications for SOE reforms in emerging economies.

Details

China Accounting and Finance Review, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1029-807X

Keywords

Article
Publication date: 19 January 2024

Moncef Guizani

This study aims to investigate the influence of economic policy uncertainty (EPU) and geopolitical risk (GPR) on the relationship between internal cash flow and external financing…

Abstract

Purpose

This study aims to investigate the influence of economic policy uncertainty (EPU) and geopolitical risk (GPR) on the relationship between internal cash flow and external financing in an emerging market, Saudi Arabia. It also examines the role of asset tangibility and financial crisis in establishing this relationship.

Design/methodology/approach

The sample was taken from non-financial sector companies listed on the Saudi Stock Exchange between 2002 and 2019. The data were analyzed using panel data regression analysis, including ordinary least squares and fixed effects model. The author addresses potential endogeneity through the generalized method of moments.

Findings

This study found that both EPU and GPR reduce the sensitivity of external financing to internal cash flow. This implies that firms depend more on internally generated funds during periods of increased EPU and GPR. Besides, this study found that the influence of EPU and GPR on the sensitivity of external financing to internal cash flow is more (less) negative for more tangible firms (during the financial crisis period). This result implies that Saudi firms boasting a higher level of tangibility are more flexible when it comes to seeking external financing. However, the presence of uncertainty during the crisis period makes the external financing costly, and therefore, firms will be less likely to raise funds from external sources.

Practical implications

This study has important implications for managers, policymakers and regulators. First, the paper findings provide insights for corporate decision-makers in helping them to focus on internal funds to finance their investment during uncertain times. Second, the findings help managers to understand the role of asset tangibility in raising external funding when firms face financial constraints due to uncertainty. Third, this study also helps corporates to focus on internal funds to finance their investment during the crisis period because EPU and GPR increase the cost of external finance. Finally, the results provide guidelines for policymakers and regulators to make appropriate policy measures to increase the easy availability of external finance during periods of increased EPU and GPR.

Originality/value

This paper is the first to shed light on the impact of internal funds on external financing while paying close attention to the role of EPU and GPR.

Details

Journal of Financial Economic Policy, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1757-6385

Keywords

Article
Publication date: 28 February 2023

Ons Triki and Fathi Abid

The objective of this paper is twofold: first, to model the value of the firm in the presence of contingent capital and multiple growth options over its life cycle in a stochastic…

Abstract

Purpose

The objective of this paper is twofold: first, to model the value of the firm in the presence of contingent capital and multiple growth options over its life cycle in a stochastic universe to ensure financial stability and recover losses in case of default and second, to clarify how contingent convertible (CoCo) bonds as financial instruments impact the leverage-ratio policies, inefficiencies generated by debt overhang and asset substitution for a firm that has multiple growth options. Additionally, what is its impact on investment timing, capital structure and asset volatility?

Design/methodology/approach

The current paper elaborates the modeling of a dynamic problem with respect to the interaction between funding and investment policies during multiple sequential investment cycles simultaneously with dynamic funding. The authors model the value of the firm in the presence of contingent capital that provides flexibility in dealing with default risks as well as growth options in a stochastic universe. The authors examine the firm's closed-form solutions at each stage of its decision-making process before and after the exercise of the growth options (with and without conversion of CoCo) through applying the backward indication method and the risk-neutral pricing theory.

Findings

The numerical results show that inefficiencies related to debt overhang and asset substitution can go down with a higher conversion ratio and a larger number of growth options. Additionally, the authors’ analysis reveals that the firm systematically opts for conservative leverage to minimize the effect of debt overhang on decisions so as to exercise growth options in the future. However, the capital structure of the firm has a substantial effect on the leverage ratio and the asset substitution. In fact, the effect of the leverage ratio and the risk-shifting incentive will be greater when the capital structure changes during the firm's decision-making process. Contrarily to traditional corporate finance theory, the study displays that the value of the firm before the investment expansion decreases and then increases with asset volatility, instead of decreasing overall with asset volatility.

Research limitations/implications

The study’s findings reveal that funding, default and conversion decisions have crucial implications on growth option exercise decisions and leverage ratio policy. The model also shows that the firm consistently chooses conservative leverage to reduce the effect of debt overhang on decisions to exercise growth options in the future. The risk-shifting incentive and the debt overhang inefficiency basically decrease with a higher conversion ratio and multiple growth options. However, the effect of the leverage ratio and the risk-shifting incentive will be greater when the capital structure changes during the firm's decision-making process.

Originality/value

The firm's composition between assets in place and growth options evolves endogenously with its investment opportunity and growth option financing, as well as its default decision. In contrast to the standard capital structure models of Leland (1994), the model reveals that both exogenous conversion decisions and endogenous default decisions have significant implications for firms' growth option exercise decisions and debt policies. The model induces some predictions about the dynamics of the firm's choice of leverage as well as the link between the dynamics of leverage and the firm's life cycle.

Details

China Finance Review International, vol. 13 no. 2
Type: Research Article
ISSN: 2044-1398

Keywords

Article
Publication date: 7 September 2021

Aisha Javaid, Mian Sajid Nazir and Kaneez Fatima

This paper contributes to the existing literature by extending the empirical work on the relationship between corporate governance and capital structure by analyzing the mediating…

1730

Abstract

Purpose

This paper contributes to the existing literature by extending the empirical work on the relationship between corporate governance and capital structure by analyzing the mediating role of cost of capital in the non-financial firms listed on the Pakistan Stock Exchange (PSX).

Design/methodology/approach

The sample for this study includes non-financial firms listed on the Pakistan Stock Exchange (formerly Karachi Stock Exchange) for the period of 2004–2016. Based on 1800 firm-year observations, three approaches of panel data analysis are applied for the step-wise analysis of the underlying study. Firstly, Pooled OLS is applied. Secondly, fixed and random effect panel regression followed by the Hausman test to check the unobservable individual heterogeneity of the data. Hausman test indicates that the fixed-effects model is the most appropriate model for the sample panel data.

Findings

The study's findings are that board size, board composition, CEO/Chair duality, institutional ownership and managerial ownership have statistically significant direct effect on the firm's financing decisions. However, CEO/Chair duality, institutional ownership and managerial ownership have significant indirect effect on firm's capital structure decisions. The interesting finding of the paper is on the evidence of mediating role of cost of capital in the nexus of corporate governance and capital structure. Moreover, some conventional determinants of capital structure, including the firm's size, asset structure of the firm, profitability, business risk and growth, are found as determinants of capital structure decisions of the firms.

Research limitations/implications

There are a few limitations to our study which could be addressed by upcoming research. We did not include all the four mechanisms of corporate governance including board structure, audit structure, compensation structure and ownership structure. However, we used only five important attributes including board size, board composition and CEO/Chair duality form board structure, managerial ownership and institutional ownership form ownership structure of corporate governance as our explanatory variables to examine their impact on the capital structure choices of the firms. Future studies may fill this research gap by involving some other attributes of corporate governance and analyzing their effectiveness and impact on value relevant capital structure decisions. Further, due to limited time and resources, we only tested the mediating role of cost of capital, hence, future researchers can analyze the mediating and moderating roles of different variables which may influence the relationship between corporate governance and capital structure choices of the firms.

Practical implications

The study has many valuable guidelines and practical implications for the financial managers of the corporations. Our results will facilitate the policymakers in setting their corporate governance policies and practices and making the value relevant capital structure decisions in compliance with the implications of corporate governance mechanism. In addition, our study provides the empirical evidence in accordance with the argument that good governance practices, particularly the voluntary disclosures by the firm may reduce the information asymmetry which, ultimately, reduces the agency cost and the cost of capital for the firm. However, while deciding the financial policy of the corporations, managers can use our findings in order to assess the effectiveness of corporate governance practices employed by the firm in achieving the optimal capital structure at which the weighted average cost of capital is at its minimum level.

Originality/value

This paper contributes to the literature by investigating the mediating role of the cost of capital in the relationship between corporate governance and capital structure decisions of the firms. This paper provides empirical evidence that corporate governance indirectly affects capital structure decisions through the mediating role of cost of capital.

Details

Journal of Economic and Administrative Sciences, vol. 39 no. 4
Type: Research Article
ISSN: 1026-4116

Keywords

Article
Publication date: 14 December 2022

Mohammad Hendijani Zadeh, Karen Naaman and Najib Sahyoun

This study aims to examine whether a company’s corporate social responsibility (CSR) transparency (reflected in two separate dimensions of social transparency and environmental…

Abstract

Purpose

This study aims to examine whether a company’s corporate social responsibility (CSR) transparency (reflected in two separate dimensions of social transparency and environmental transparency) affects a company’s dependence on expensive trade credit (TC) financing.

Design/methodology/approach

The authors use a panel of S&P 500 index companies between 2012 and 2019 and ordinary least squares estimators. Transparency ratings represented by Bloomberg scores capture both the quantity and quality of verified CSR practice information.

Findings

CSR transparency (CSRT) is negatively associated with a firm’s dependence on expensive TC financing. This study’s results continue to hold after a battery of robustness tests like substitute proxies for TC, use of two-stage least squares regression, industry-adjusted dependent variable, generalized linear model and bootstrapping approach. This association is stronger among companies with higher information asymmetry (IASY) and lower quality regarding governance and financial reporting. Further investigation indicates that potential channels through which CSRT mitigates a company’s reliance on TC financing are the cost of debt (CoD) and stock liquidity. This study’s findings suggest that transparent companies have a lower CoD and higher stock liquidity. This helps these companies to be more financially flexible and eventually less dependent on expensive TC financing.

Originality/value

By combining two separate research lines of TC and CSR, this study adds to both works of literature as it is the first (to the best of the authors’ knowledge) to present evidence of the effect of CSRT proxied by Bloomberg scores on a company’s reliance on TC (a real economic decision and financial policy). Additionally, this study documents the moderating effects of financial reporting quality, IASY and corporate governance on the relationship between CSRT and TC financing. In conclusion, this study provides empirical evidence regarding the potential mechanisms of CoD and stock liquidity, through which CSRT influences a company’s reliance on TC financing.

Details

International Journal of Accounting & Information Management, vol. 31 no. 2
Type: Research Article
ISSN: 1834-7649

Keywords

Article
Publication date: 12 October 2022

Gong-Bing Bi, Wenjing Ye and Yang Xu

Existing literature demonstrates the important role of information transparency in enterprise development and market surveillance. However, little empirical research has examined…

Abstract

Purpose

Existing literature demonstrates the important role of information transparency in enterprise development and market surveillance. However, little empirical research has examined the information transparency effect in supply chain management. This study aims to fill this gap by exploring the significant role of information transparency on supply chain financing and its mechanism, taking trade credit as the starting point.

Design/methodology/approach

From the data set comprising 3,880 Chinese firms with A-shares listed on the Shenzhen and Shanghai Stock Exchanges from 2011 to 2020, we obtain the basic picture of information transparency and trade credit. Panel fixed effects regression is used to test the hypotheses concerning the antecedents to trade credit.

Findings

The empirical results show that: first, information transparency can significantly support corporate access to trade credit and is found to facilitate financing by mitigating perceived risk. Second, among companies with higher levels of financing constraints, weaker market power and more concentration of suppliers, information transparency promotes trade credit more markedly. Third, the outbreak of COVID-19 causes a substantial increase in uncertainty and risk in external circumstances and then the effect of information transparency is weakened. Fourth, the contribution to trade credit is likely to be stronger for disclosures containing management transparency elements compared to single financial transparency.

Originality/value

To the best of our knowledge, this study is one of the first to explore the positive role of information transparency to supply chain financing, which to a certain extent makes up for the lack of information transparency research in the supply chain. It provides new ideas for enterprises to obtain trade credit financing and promote the improvement of supervision departments’ disclosure policies.

Details

Kybernetes, vol. 53 no. 1
Type: Research Article
ISSN: 0368-492X

Keywords

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