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1 – 10 of over 4000Harshani Shashikala Wijerathna, Niluka Anuradha and Roshan Ajward
This study aims to explore the relationship between institutional and macroeconomic factors and corporate financial flexibility while also investigating the moderating impact of…
Abstract
Purpose
This study aims to explore the relationship between institutional and macroeconomic factors and corporate financial flexibility while also investigating the moderating impact of selected board governance mechanisms on this relationship.
Design/methodology/approach
The sample of the study comprises 174 firms listed on the Colombo Stock Exchange for a period of eight years, from 2014 to 2021. Data were collected from secondary sources, and both descriptive and inferential statistical techniques were used for analyses.
Findings
Corporate financial flexibility is notably affected by profitability as an institutional factor and by gross domestic product growth rate and banking sector development as macroeconomic factors. Furthermore, the relationship between a company’s profitability and corporate financial flexibility is found to be moderated by selected board governance mechanisms. However, these governance mechanisms do not influence the relationship between corporate financial flexibility and other institutional factors (i.e. other than profitability) and macroeconomic factors considered in this study.
Originality/value
This study adds a fresh perspective to the existing body of knowledge in the field of corporate finance by emphasizing the interaction effect of board governance mechanisms on the association between macroeconomic and institutional variables and financial flexibility of firms. The findings are expected to be useful for business decision-makers in managing their corporate financial flexibility effectively and maximizing the use of their financial resources.
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Elżbieta Bukalska and Michał Bernard Pietrzak
Poland was coined a ‘green island’ during the Global Financial Crisis (GFC) of 2007–2009 with a stable growth in Gross Domestic Product (GDP), while other countries experienced a…
Abstract
Research Background
Poland was coined a ‘green island’ during the Global Financial Crisis (GFC) of 2007–2009 with a stable growth in Gross Domestic Product (GDP), while other countries experienced a dramatic drop in the GDP growth. We assumed that this is due to the stronger resilience of Polish economy and Polish companies.
Purpose of this Chapter
The aim of the research is to identify the companies' stability (resilience) in the crisis situations (especially the GFC and COVID-19 crisis). We also wonder whether corporate resilience is accompanied by the financial flexibility.
Methodology
We use GDP growth rate and Profitability as the measures of the resilience. Additionally, we include in our research financial flexibility measured by debt and cash ratio as factors affecting corporate resilience. Our research covers the period 2000–2021. Our data refer to three European countries: France and Germany as the leading European countries and Poland as the leader of changes in Central and Eastern Europe.
Findings
We found that Polish economy – against German and French – have higher GDP growth and profitability ratio over the 2000–2021 period. These ratios also show lower volatility around the trend. We proved that higher corporate resilience is accompanied by higher financial flexibility of Polish companies.
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This study examines the influence of economic policy uncertainty on financial flexibility before and during the coronavirus disease 2019 (COVID-19) pandemic. Few prior studies…
Abstract
Purpose
This study examines the influence of economic policy uncertainty on financial flexibility before and during the coronavirus disease 2019 (COVID-19) pandemic. Few prior studies have examined this association specifically for debt and cash flexibility.
Design/methodology/approach
Using quarterly data from 2016 to 2022, 1014 observations were collected from the S&P Capital IQ database for listed tourism companies in India. The pre-pandemic period is defined as 2016 Q1 to 2020 Q1, whereas the pandemic period is from 2020 Q2 to 2022 Q3. The data are analysed using ordinary least squares, probit, logit and difference-in-difference (DID) estimation.
Findings
The evidence of this study suggests a negative association of economic policy uncertainty with debt flexibility during the COVID-19 pandemic. The findings also suggest that COVID-19 induced economic policy uncertainty results in high cash flexibility. This meets the expectations for the crisis period, as firms are likely to hold more cash and less debt capacity to manage their operations. The results are robust for various estimation techniques.
Research limitations/implications
This study is limited to one emerging country and is specific to one non-financial sector. Future research could extend to more emerging countries and include other non-financial sector companies.
Practical implications
The findings of this research are useful for tourism sector managers as they can effectively manage their cash and debt flexibility during crisis periods. They will need to prioritise cash flexibility over debt flexibility to manage operations effectively. Policymakers need to provide clear and stable economic policies to help firms manage their debt levels during a crisis.
Originality/value
To the best of the author's knowledge, no existing studies have investigated the influence of economic policy uncertainty on the financial flexibility of tourism companies before and during the COVID-19 pandemic. Furthermore, this study establishes a novel set of critical determinants, such as economic policy uncertainty.
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Mohammad Akhtar and Mohammad Asim
To develop a fuzzy causal model of enterprise flexibility dimensions in a case study of Indian pharmaceutical industry.
Abstract
Purpose
To develop a fuzzy causal model of enterprise flexibility dimensions in a case study of Indian pharmaceutical industry.
Design/methodology/approach
The eight dimensions of enterprise flexibility were identified based on literature review. Fermatean fuzzy decision-making trail and evaluation laboratory (FF-DEMATEL) technique is applied to develop the cause-and-effect interrelationship model among various enterprise flexibility dimensions.
Findings
The information technology flexibility, supply chain flexibility, technical flexibility and marketing flexibility are found to be causing/influencing other flexibilities and contributing to overall enterprise flexibilities. Therefore, more attention needs to be paid to develop and sustain them for competitive advantage.
Research limitations/implications
Fermatean fuzzy sets offer more flexibility and more accurate handling complex uncertain group decision making. FF-DEMATEL is a more accurate method to develop inter-dependencies and causal model than ISM, TISM. Ratings from the limited number of decision experts (DEs) from few pharmaceutical firms were done. Future study should take bigger sample of firms and more number of DEs to generalize the findings.
Practical implications
The model will help managers in pharmaceutical industry to prioritize the dimensions of enterprise flexibility to achieve agility, responsiveness, resilience and competitive advantage.
Originality/value
To the best knowledge of the authors, causal modeling enterprise flexibility dimensions using FF-DEMATEL has been studied for the first time in a developing economy context.
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Mengjiao Chen, Jinjuan Ren and Jingying Zhao
This paper aims to investigate the impact of corporate culture on stock price crash risk and explore the underlying mechanisms.
Abstract
Purpose
This paper aims to investigate the impact of corporate culture on stock price crash risk and explore the underlying mechanisms.
Design/methodology/approach
This paper uses a novel firm-level culture measure of Li et al. (2020), which evaluates corporate culture from the perspectives of integrity, teamwork, innovation, respect and quality. Using a sample of 4,017 US firms from 2001 to 2018, this paper uses panel data regressions to explore the impact of corporate culture on stock price crash risk.
Findings
This paper finds that among five cultural dimensions, integrity reduces crash risk and quality increases crash risk. The mitigating effect of integrity culture on crash risk is concentrated among firms with a strong incentive or ability to hoard bad news. The exacerbating effect of quality culture on crash risk is concentrated among firms with low managerial flexibility.
Social implications
This paper helps investors and regulators to understand the determinants of stock price crash risk, which facilitates investors’ wealth management and stabilizes social welfare.
Originality/value
To the best of the authors’ knowledge, this is the first study that uses time-varying firm-level measure of corporate culture to investigate its impact on stock price crash risk, contributing to the literature on the determinants of crash risk. Besides, this is the first study that explores the possible mechanism of managerial flexibility in influencing stock price crash risk.
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Common institutional ownership is a phenomenon that has extended throughout the capital markets in recent years and has a significant impact on business strategy decisions. The…
Abstract
Purpose
Common institutional ownership is a phenomenon that has extended throughout the capital markets in recent years and has a significant impact on business strategy decisions. The study intends to investigate the effect of common institutional ownership on corporate over-financialization and potential functioning mechanisms.
Design/methodology/approach
Using panel data from Chinese-listed companies over the period of 2003–2021, the authors conduct regression models which controlled year-, industry- and regional fixed effects to explore the impact of common institutional ownership on corporate over-financialization.
Findings
This study concludes that corporate over-financialization may be prevented via common institutional ownership. The mechanism test suggests that common institutional ownership inhibits corporate over-financialization by improving internal control quality and enhancing financial flexibility. Besides, heterogeneity analysis shows that the inhibiting effect of common institutional ownership on corporate over-financialization is more pronounced in stability-oriented institutional investors and high financing constraints firms.
Originality/value
This paper makes a valuable contribution to the current studies on effective strategies to prevent enterprises from becoming overly financialized by recognizing common institutional ownership. Furthermore, this paper adds to the research on common institutional ownership’s economic consequences. Finally, this study provides management implications for how to optimize corporate governance structures, curb the financialization of entities in practice and promote the development of the real economy.
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Daniel Amos and Naana Amakie Boakye-Agyeman
This study aims to establish the statistical relationships between corporate real estate added value indicators of cost reduction, increasing productivity, risk reduction and…
Abstract
Purpose
This study aims to establish the statistical relationships between corporate real estate added value indicators of cost reduction, increasing productivity, risk reduction and flexibility and organizational financial and non-financial performance.
Design/methodology/approach
The study adopted a mixed methods approach which encompasses initial expert interviews and subsequent questionnaire surveys. Partial least squares structural equation modelling was applied to test the proposed hypotheses of the study.
Findings
The results highlight the significant influence of three added value indicators on organizational performance while highlighting the need for strategic corporate real estate risk management to enhance performance.
Practical implications
The results of the study are useful to identify relevant added value indicators that can improve organizational performance as well as potential added value indicators that deserve attention for performance improvement. Moreover, it presents knowledge on corporate performance indicators which is sparsely explored in corporate real estate management literature.
Originality/value
This study makes a novel contribution to corporate real estate management literature by presenting a parsimonious model to alert corporate real estate managers on essential added value parameters towards organizational performance. The model set the theoretical debates to exploit additional added value dimensions and organizational performance.
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Wei Wu, Chau Le, Yulu Shi and Fadi Alkaraan
Financial flexibility and investment efficiency are of vital importance in strategic choices at boardrooms, particularly in post-crisis recovery strategies. This study examines…
Abstract
Purpose
Financial flexibility and investment efficiency are of vital importance in strategic choices at boardrooms, particularly in post-crisis recovery strategies. This study examines the moderating effects of investment efficiency and investment scale on the relationship between financial flexibility and firm performance.
Design/methodology/approach
The authors use sample of 10,755 US-listed firms over the period 2010–2021 to examine the relationships between investment scale, investment efficiency, financial flexibility and firm performance. Particular attention is paid to overinvestment and underinvestment.
Findings
Findings of this study reveal that financial flexibility mitigates investment inefficiency through reducing overinvestment. Financial flexibility contributes to boost a firm’s accounting and market performance. Additionally, investment efficiency and investment scale have moderating effects on the relationship between financial flexibility and firm performance. However, the influence of investment efficiency is greater than the influence of investment scale. Finally, the authors find that the direct and indirect effects of financial flexibility are stronger on market performance than accounting performance, implying that market is more sensitive to corporate financial policies.
Research limitations/implications
Findings of this study have implications for scholars, decision-makers policymakers, investors and other stakeholders.
Practical implications
This study has its own limitations due to the sample selection issues, country context and the research model adopted by this study.
Originality/value
The novel contribution to the extant literature is incorporating the influence of investment scale and investment efficiency into the relationship between financial flexibility and firm performance.
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Thomas Vogl, Marko Orel and Rianne Appel-Meulenbroek
This study aims to enrich our understanding of the characteristics of non-urban coworking spaces (CSs) that focus on corporate users, as well as the benefits that companies expect…
Abstract
Purpose
This study aims to enrich our understanding of the characteristics of non-urban coworking spaces (CSs) that focus on corporate users, as well as the benefits that companies expect to gain from incorporating those CSs into their corporate real estate (CRE) portfolios.
Design/methodology/approach
This study leverages a series of in-depth interviews with owners and managers of CSs in non-urban locales that focus on serving corporate clients.
Findings
The research reveals various CS characteristics and forms within non-urban areas, focusing on corporate clients. It suggests that implementing a CS in corporate premises is perceived to enhance CRE use-value strategies with a focus on the employee's well-being, innovation and the attraction of talents. Moreover, exchange-value strategies with a focus on portfolio flexibility may benefit from the implementation of a CS. However, strategies related to life-cycle cost optimization or gains are not perceived to be supported. Social events for the surrounding neighborhood and the choice of location emerge as critical success factors for non-urban CSs. Besides infrastructure and connectivity, non-urban corporate-centric CSs built their location decisions rather on a personal connection to the location and place of residence of potential users than on lower rental prices.
Originality/value
This research pioneers in providing a comprehensive understanding of non-urban CSs, particularly in the context of their perceived implications for corporate real estate management. The nuanced perspectives it offers are invaluable for stakeholders looking to leverage CSs as part of their corporate strategies.
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Ajaya Kumar Panda, Swagatika Nanda and Apoorva Hegde
This paper aims to empirically investigate the evidence of the transmission of monetary policy impulses to firm profitability via manufacturing firms’ short-term and long-term…
Abstract
Purpose
This paper aims to empirically investigate the evidence of the transmission of monetary policy impulses to firm profitability via manufacturing firms’ short-term and long-term corporate financing decisions.
Design/methodology/approach
This study decomposes the receptiveness of firm profitability to monetary policy shock under circumstances of financial flexibility. Additionally, the study extends its scope to undertake a sector-wise analysis of manufacturing firms from 2008 to 2020. Generalized methods of moments (GMM) and quantile regression models are employed.
Findings
The profitability of firms in the chemical, food and machinery sector are positively impacted by short-term financing, whereas the metal sector is positively impacted. But during the tight monetary policy, short-term financing does not appear to be a significant parameter while explaining the firms’ profitability. Secondly, the profitability of firms in the consumer goods and metal sector is positively impacted by long-term financing. Therefore, debt financing of assets could be more appropriate to maximize profitability in these sectors.
Originality/value
Analyzing the transmission of monetary policy impulses to firm profitability by clustering firms with financial flexibility across six key manufacturing sectors makes the study unique.
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