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Abstract

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The Handbook of Road Safety Measures
Type: Book
ISBN: 978-1-84855-250-0

Article
Publication date: 31 March 2023

Pankaj Sinha and Sandeep Vodwal

The subprime crisis (SPC) (2007–2008) has severely affected the economies across the globe. The Indian economy was also troubled because the SPC led to a sharp reduction in…

Abstract

Purpose

The subprime crisis (SPC) (2007–2008) has severely affected the economies across the globe. The Indian economy was also troubled because the SPC led to a sharp reduction in foreign trade and investment, a rise in the exchange rate volatility and disproportionate foreign-currency reserves. The present paper analyzes the financing pattern of Indian listed companies during the SPC. This study aims to ascertain the impacts of the SPC-2008 on the long-term and short-term financing decisions of Indian listed companies using novel data set and appropriate robust methodology.

Design/methodology/approach

The study uses fixed effect model autoregressive of order 1 (FEM AR (1)) and system generalised method of moments (GMM) methodology on a sample data of 1,032 Indian non-financial listed companies on the Bombay Stock Exchange (BSE) for the period 1999 to 2019 to analyze the financing pattern during the crisis.

Findings

The study finds that the Indian firms opted for de-leveraging, shortening the maturity of debt and short-term borrowing. This significant decline in the leverage and maturity of debt indicates that the companies in India generally followed the “rat race” model of the financing mix in the crisis. After the crisis, the firms have re-leveraged and expanded the maturity of debt up to 90%. This considerable expansion in leverage and maturity implies that the Indian firms are exposed to the “rollover risk.” This re-leverage risk is asymmetrically distributed for manufacturing and services firms. Manufacturing firms are found to be more exposed to this risk. Furthermore, tangibility, free cash flows and the liquidity available within the firms are the compelling elements of the financing decision during the crisis.

Research limitations/implications

The study has not included the private firms and unorganized sectors in India. Moreover, the study has not analyzed disasters such as the Asian liquidity crisis, the information technology (IT) bubble crisis, the euro bond crisis and coronavirus disease 2019 (COVID-19) pandemic.

Practical implications

The study finds that Indian firms are exposed to higher risk during the financial crisis and this risk is further aggravated by the rollover risk. Therefore, investors and creditors should consider these additional risks in the financial decisions and take more precautions. The study suggests that the regulators should make necessary adjustments in lending policy, corporate restructuring and tax policy to deal with the menace of a financial crisis.

Social implications

Indian firms should avoid following the rate race financing model.

Originality/value

This study aims to ascertain the impacts of the SPC-2008 on the long-term and short-term financing decisions of Indian listed companies using novel data set and appropriate robust methodology.

Details

Journal of Advances in Management Research, vol. 20 no. 3
Type: Research Article
ISSN: 0972-7981

Keywords

Abstract

Details

Financial Derivatives: A Blessing or a Curse?
Type: Book
ISBN: 978-1-78973-245-0

Article
Publication date: 31 January 2020

Corey Garriott, Sophie Lefebvre, Guillaume Nolin, Francisco Rivadeneyra and Adrian Walton

This paper aims to present four blue-sky ideas for lowering the cost of the Government of Canada’s debt without increasing the debt’s risk profile.

Abstract

Purpose

This paper aims to present four blue-sky ideas for lowering the cost of the Government of Canada’s debt without increasing the debt’s risk profile.

Design/methodology/approach

The authors argue that each idea would improve the secondary-market liquidity of government debt, thereby increasing the demand for government bonds, and thus, lowering their cost at issuance.

Findings

The first two ideas would improve liquidity by enhancing the active management of the government’s debt through market operations used to support the liquidity of outstanding bonds. The second two ideas would simplify the set of securities issued by the government, concentrating issuance in a smaller set of bonds that would each be more highly traded.

Originality/value

The authors discuss the ideas and give an account of the political, legal and operational impediments.

Details

Journal of Financial Economic Policy, vol. 12 no. 4
Type: Research Article
ISSN: 1757-6385

Keywords

Abstract

Details

The Corporate, Real Estate, Household, Government and Non-Bank Financial Sectors Under Financial Stability
Type: Book
ISBN: 978-1-78756-837-2

Article
Publication date: 23 September 2022

Mohammad Hendijani Zadeh

The purpose of this study is to examine whether audit quality influences auditees' liquidity policy.

Abstract

Purpose

The purpose of this study is to examine whether audit quality influences auditees' liquidity policy.

Design/methodology/approach

The author uses ordinary least squares (OLS) estimators, and we focus on a panel of US publicly traded companies (36,118 company-year observations) over the period of 2004–2019 to examine the effect of audit quality on auditees' cash reserves.

Findings

The author finds that high quality audits are negatively related to auditees' cash reserves. Additional analyses show that the potential channel by which audit quality influences these reserves is financial constraints (FC). Particularly, his results suggest that an auditee's FC serve as an intermediary in the association between audit quality and auditee's cash reserves. Ultimately, we show that high quality audits raise the market value relevance of an extra dollar in cash reserves.

Originality/value

By linking two distinct research lines of audit quality and corporate cash reserves, this study adds to both lines of literature, as it is a novel one (to the best of the author’s knowledge) to provide evidence about the effect of audit quality on the auditees' liquidity policy (a real economic decision and internal financial policy) that ultimately boosts the auditees' investment efficiency. The author’s findings are consistent with influential monitoring and an insurance-like function of high quality audits in reducing information asymmetry and its consequences. His results also support the argument that auditees' transparency through high quality audits can be a pivotal determinant of their liquidity policy.

Details

International Journal of Managerial Finance, vol. 19 no. 4
Type: Research Article
ISSN: 1743-9132

Keywords

Article
Publication date: 18 April 2023

Zilong Liu, Hongyan Liang and Chang Liu

In theory, the impact of debt liquidity risk (DLR) on the firm's future growth is ambiguous. This study aims to examine the empirical relationship between the DLR and firms'…

Abstract

Purpose

In theory, the impact of debt liquidity risk (DLR) on the firm's future growth is ambiguous. This study aims to examine the empirical relationship between the DLR and firms' growth rate using annual data for USA companies from 1976 to 2020.

Design/methodology/approach

Given the longitudinal nature of the data, the author uses OLS (ordinary least squares) regression methodology with fixed effects to control for unobserved characteristics that might affect the dependent variable. Instrument variable regression is also used to address the potential endogeneity problem.

Findings

The results show that firms having higher DLR, as proxied by more short-term debt, experience lower growth rate. An increase in firms' short-term debt decreases the firms' future growth rate as evidenced by lower assets, revenue and employee growth rate. Moreover, the authors' results show that small firms or firms with more investment opportunities grow fast if the firms take higher DLR. Finally, cyclical firms with higher DLR exhibit lower growth rate during the credit tighten period. The authors' results hold for both the pre-zero lower bound (ZLB) era and ZLB period.

Originality/value

To the authors' best knowledge, this is one of the earliest studies to carefully examine the effects of DLR on firms' growth rate. While prior research finds that firms with higher growth potential, measured by market-to-book (MTB) ratio, use more short-term debt, the authors' research directly addresses whether DLR affects firms' future growth rate. The authors’ findings also help explain why firms with high growth potential use more short-term debt.

Details

International Journal of Managerial Finance, vol. 20 no. 1
Type: Research Article
ISSN: 1743-9132

Keywords

Article
Publication date: 5 January 2015

Vittore Cossalter, Alberto Doria, Marco Ferrari, Enrico Giolo, Nicola Bianchi, Claudio Martignoni and Fabio Bovi

Velomobiles or bicycles cars are human-powered vehicles, enclosed for improving aerodynamic performance and protection from weather and collisions. The purpose of this paper is to…

Abstract

Purpose

Velomobiles or bicycles cars are human-powered vehicles, enclosed for improving aerodynamic performance and protection from weather and collisions. The purpose of this paper is to design and develop a three-wheeled velomobile equipped with a hybrid human-electric propulsion system.

Design/methodology/approach

The mechanical layout has been developed in order to improve safety, a CAD code has been used for the design and the dynamic performances have been studied by means of specific multi-body codes. The electric propulsion system has been designed both with analytical and FEM methods.

Findings

A special three-wheeled tilting vehicle layout equipped with a four-bar linkage connection has been developed. A particular synchronous reluctance machine has been developed, which is very suitable for human-electric hybrid propulsion. A MATLAB code for integrated mechanical and electrical analysis has been developed.

Originality/value

A new kind of light vehicle has been conceived. A new synchronous reluctance machine with high efficiency has been developed. A performance analysis in electric, human and hybrid working modes has been presented, which takes into account the specific features of both the electric motor and the pedaling legs. A prototype of the vehicle has been built.

Details

COMPEL: The International Journal for Computation and Mathematics in Electrical and Electronic Engineering, vol. 34 no. 1
Type: Research Article
ISSN: 0332-1649

Keywords

Article
Publication date: 6 October 2020

Mohammad Hendijani Zadeh

This study explores whether a firm's environmental and social (E&S) transparency affects corporate payout policies having two forms of dividend payout and stock repurchase payout…

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Abstract

Purpose

This study explores whether a firm's environmental and social (E&S) transparency affects corporate payout policies having two forms of dividend payout and stock repurchase payout.

Design/methodology/approach

Focusing on a large sample of S&P 500 firms, and utilizing Tobit estimators, the author examines whether a firm's environmental transparency and social transparency affect the levels of each dividend payout and stock repurchase payout. Transparency reflects comprehensive scores compiled by Bloomberg, capturing both the quantity (in terms of the number of data points) and the quality (with respect to objective and industry-relevant data points) of verified E&S information attributed to a firm's E&S practices.

Findings

The findings demonstrate that transparency, both environmental and social, relates to higher corporate payouts (i.e. higher dividend payout and higher stock repurchase payout). These positive relationships are magnified for firms suffering from high information asymmetry, low financial reporting quality and for those with weak governance. Moreover, the author finds that dividend payout is more stable in high E&S transparent firms than in low E&S transparent firms. The study findings continue to hold after a battery of robustness and sensitivity checks such as alternative measures, specifications, estimators, use of the instrumental variable regression approach and mitigation of omitted variable bias

Research limitations/implications

The study findings suggest that investors' interests (demanding for high corporate payouts) and other stakeholders' interests (demanding for high E&S transparency) are not necessarily in conflict, and investors' demands can be met while maintaining commitment to high E&S transparency. In addition, the study results imply that higher E&S transparency complements higher corporate payouts and signals to the market both a firm's commitment to E&S transparency and its ability to have high corporate payouts. In this line, the study findings clarify the high value of E&S transparency screening in investors' decision-making process as such transparency leads to higher corporate payouts for investors (i.e. facilitating wealth transfer to shareholders). Finally, the study findings are relevant to standard setters and regulators who emphasize the importance of E&S transparency.

Originality/value

By integrating two distinct streams of literature on corporate finance and corporate social responsibility (CSR), the author introduces E&S transparency as a novel nonfinancial driver of corporate payout policies. Finally, the study findings are in line with the notion that firm transparency (reflected in E&S transparency) can be a crucial element in justifying a firm's corporate payout policies and, in an overall view, firm policies.

Details

International Journal of Managerial Finance, vol. 17 no. 5
Type: Research Article
ISSN: 1743-9132

Keywords

Article
Publication date: 29 December 2021

Mohammad Hendijani Zadeh, Michel Magnan, Denis Cormier and Ahmad Hammami

This article aims to explore whether a firm's corporate social responsibility (CSR) transparency alleviates a firm's cash holdings.

Abstract

Purpose

This article aims to explore whether a firm's corporate social responsibility (CSR) transparency alleviates a firm's cash holdings.

Design/methodology/approach

CSR transparency ratings encompass both the quantity and the quality of CSR practices, as validated by Bloomberg. While based upon firm-specific disclosure, transparency ratings impound additional information gathered independently by Bloomberg and thus bridge the gap between CSR disclosure and CSR performance. The authors use ordinary least squares estimators, and the authors concentrate on a panel of S&P 500 index companies over the period of 2012–2018 to examine the effect of CSR transparency on corporate cash holdings.

Findings

The authors document that a higher level of CSR transparency induces a lower level of corporate cash holdings. Additional results imply that this negative relationship is more pronounced for firms suffering from high information asymmetry, with low financial reporting quality and for those with weak governance. Further analyses document that higher CSR transparency can help firms to enjoy lower cost of debt and to be less financially constrained, enabling high CSR transparent firms to obtain external financing more easily and at a lower cost, thus lowering the need to hoard cash. Ultimately, the study findings suggest that CSR transparency increases the market value relevance of an additional dollar in cash holdings.

Originality/value

The authors contribute to both research streams of CSR and corporate cash holdings as they provide evidence about the influence of CSR transparency as a monitoring and insurance-like mechanism on corporate cash holdings.

Details

International Journal of Managerial Finance, vol. 19 no. 1
Type: Research Article
ISSN: 1743-9132

Keywords

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