Managerial Finance最新文献

Purpose

This study examines the implications of real asset liquidity for accounting conservatism. We investigate whether the liquidity of a firm’s physical assets mitigates lenders’ demand for conservatism by increasing the amount lenders can recover if the firm is liquidated, a theoretical prediction in Göx and Wagenhofer (2009).

Design/methodology/approach

We use an asset redeployability index as a proxy for firm-level real (physical) asset liquidity and adopt ordinary least squares (OLS) regressions in the test. We also investigate the differential impact of real asset liquidity on conservatism in two unique settings where lenders’ demand for accounting conservatism varies (loan initiation and bank deregulation).

Findings

We find that accounting conservatism decreases as real asset liquidity increases. The negative effect of real asset liquidity on conservatism increases as the quantity of the firm’s real assets increases, and the negative association is strengthened when firms face high financing constraints and have access to public debt markets. The moderating effect of real asset liquidity on lenders’ demand for conservatism increases (decreases) when real asset liquidity is more (less) important to lenders.

Originality/value

This study provides direct empirical evidence for the theoretical prediction in Göx and Wagenhofer (2009). Prior research shows that real asset liquidity impacts a firm’s capital structure and investment decisions (Campello and Giambona, 2013; Kim and Kung, 2017; Ortiz-Molina and Phillips, 2014; Williamson, 1988). We complement this literature by providing evidence that real asset liquidity also plays a role in financial reporting by reducing accounting conservatism.

Purpose

The study investigates the impact of the interaction effect of product market competition and rollover risk on the default risk of the firms.

Design/methodology/approach

The study used the sample of unbalanced panel data from Indian corporates without any survivability bias over the period from 2009 to 2020 consisting of 30,396 firm-year observations of 6,718 firms spread across 143 industry groups. The panel data regression tests the interaction effect in the context of the asset substitution problem, predation threat theory, competitive shock, and competitive risk.

Findings

The empirical results highlighted the dominance of the predatory effect of competition over the disciplinary advantage of short-term debts. The competitive shock to the industry results in a higher credit spread for refinancing short-term debt and significantly increases rollover risk for firms. Smaller firms have higher default risk from rollover losses than larger firms in the face of competition due to asset-substitution problems and strong rivalry. For firms with weaker fundamentals, the interaction effect of rollover risk and competition exacerbates the flight-to-quality problem, resulting in a systemic event.

Practical implications

The investors can benefit by factoring ex-ante the interdependence of competition, debt market illiquidity, and default premia while calculating the credit risk. The shareholders of competitive firms can reduce the moral hazard of refinancing the rollover losses and defaulting at a higher fundamental default threshold, by reducing sub-optimal utilization of funds by managers and agency costs.

Originality/value

As per the best of author knowledge, the present study is the first to study the moderating effect of product market competition in exacerbating default risk through the rollover channel.

Purpose

This paper studies the impact of societal trust on the conservative financing policy puzzle, aiming to cover a gap in the relationship between cultural values and the conservative financing policy.

Design/methodology/approach

We use a sample of 14,509 privately held medium-sized manufacturing firms from 26 European countries between 2015 and 2020 and rely on logistic regression methods controlling for firm-specific and macroeconomic factors.

Findings

We show that societal trust decreases the odds of being a zero-leverage or almost zero-leverage firm. Also, the probability of being a conservatively financed firm increases for older and more profitable firms and decreases with tangibility. In more trustworthy national environments, firms are less averse to debt as a source of financing. Our results are robust to the specific measure of trust, estimation methods, sampling procedures, and annual financial constraint status. Moreover, we show that the effect is noticed both in the long-term debt and the short-term debt with a lower economic impact in the latter situation and that increased societal trust attenuates (reinforces) the effect of being a financially constrained (unconstrained) firm on the odds of adopting a conservative financing policy.

Research limitations/implications

Societal trust strategically impacts debt financing policy and could help foster firms’ growth, particularly for those facing heavier financial constraints.

Originality/value

Novel evidence on the impact of societal trust on the conservative financing policy, for privately held medium-sized European firms.

Purpose

Digital transformation (DT) has great potential to improve operations and stimulate business growth. It has attracted widespread attention from businesses around the world. However, firm performance in DT implementation (DTI) cannot be neglected. This study examines the benefits and costs of DT and its effects on operations and financial performance of DT.

Design/methodology/approach

Based on the financial report data from S&P 500 firms, we measure the financial performance, productivity and market value of DTI with a baseline in 2020. In addition, we collect secondary data to construct linear regression models for three dummy variables, including DT adopters, first movers and better performers.

Findings

Empirical results demonstrate that digitally transformed firms are positively correlated with business performance, while the performance among first movers has a partially positive impact. DT has also had a significant impact on long-term performance as shown by our long-term observations. Empirical findings indicate that DT has varying impacts on organizational performance in different dimensions and provides DT target-setting guidance to enterprises.

Originality/value

There are no studies so far that could proffer certain evidence to reveal the influence of DTI on firm performance. Such evidence is necessary for managers to convince their investors and stakeholders to believe that DTI can create new revenue for enterprises.

Purpose

This paper investigates the moderating role of uncertainty in the impact of monetary policy on bank liquidity creation.

Design/methodology/approach

Utilizing data from Vietnam spanning 2007–2022, the paper measures uncertainty in the banking industry through the dispersion of shocks to crucial bank-level variables and considers both interest rate- and quantity-based tools of the monetary policy regime. The study regresses economic models using different econometric methods, including the generalized method of moments (GMM) estimator in the main section and the least squares dummy variable corrected (LSDVC) estimator for the robustness check.

Findings

Monetary expansion enhances banks’ ability to create liquidity, affirming the existence of the bank liquidity creation channel. Further analyses suggest that monetary policy adjustments aimed at regulating bank liquidity creation may be less effective in the presence of higher uncertainty in the banking system. This observation holds for both interest rate- and quantitative-based monetary policy tools, emphasizing the functioning of the monetary policy transmission mechanism through bank liquidity creation and the mitigating effect of uncertainty.

Originality/value

This study contributes novel insights to the existing literature by presenting the first attempt to explore the dynamics of monetary policy transmission through the bank liquidity creation channel in the context of banking sector uncertainty. Moreover, our contribution extends to examining a multi-tool environment, incorporating both interest rate- and quantitative-based indicators.

Purpose

Prior literature on the cultural determinants of cash holdings focuses on time-invariant cultural variables measured at the geographical level. These measures of culture do not capture the firm-level variation in corporate culture. Using a validated time-variant measure of firm-level corporate culture, specifically teamwork, we examine the effect of teamwork on a firm's cash holdings.

Design/methodology/approach

In this paper, we explore the effect of corporate teamwork culture on firms' cash holdings. Using sudden CEO turnover as an exogenous shock to a firm's teamwork culture, we find teamwork increases cash holdings. Also, we test and find two channels—financial constraint and agency—and two new labour-related channels—human capital quality and labour inefficiency—through which teamwork culture affects cash holdings. Our results are robust to endogeneity tests.

Findings

We find that teamwork increases the cash holdings of firms. We find that a firm with a high teamwork culture has higher cash holdings: an increase of one standard deviation in teamwork leads to a 14.6% rise in the mean cash holdings.

Originality/value

To our knowledge, our study is the first to introduce the firm-level teamwork cultural construct as a determinant of cash holdings.

Purpose

This paper scrutinizes the relationship between idiosyncratic risks and stock returns at different quantiles, especially the extremely low and high ones, to explore the applicability of the Prospect Theory’s rationale in Vietnam’s stock market.

Design/methodology/approach

The Prospect Theory demonstrates that investors’ attitudes towards risks can change from risk-seeking in the loss domain to risk-averse in the gain domain. This can be observed by the negative (positive) connection between idiosyncratic risks and returns for the losing (winning) stocks. To explore if the aforesaid patterns occur in Vietnam’s stock market, this paper employs the quantile regression method which is suitable for inspecting the relationship at the high and low tails of the stock returns.

Findings

The estimation results acknowledge the changes in attitudes towards risks as mentioned by the Prospect Theory.

Practical implications

The negative relationship between idiosyncratic risks and stock returns confirms investors’ risk-seeking behavior in the loss domain, which is in line with the prediction of the Prospect Theory. This behavior may cause worse investment performance as the losing stocks in investors’ portfolios remain overvalued, leading to subsequent negative returns. Therefore, investors should establish and follow their investment disciplines to protect themselves from larger losses.

Originality/value

Existing research found little evidence for the Prospect Theory’s rationale in Vietnam’s stock market, which can stem from the usage of the conditional-mean regression methods. Different from the prior studies, this paper is the first to apply the quantile regression method and provide new evidence supporting the Prospect Theory’s rationale in Vietnam’s stock market.

Purpose

The main objective of this study is to analyze the mediating role of intellectual capital in the relationship between diversification, financial stability, and efficiency of the banking sector in Ethiopia.

Design/methodology/approach

Secondary data for this study was obtained from audited financial statements of 17 Ethiopian commercial banks for a decade starting in 2013. A descriptive and explanatory research design with a quantitative research approach was employed. The seemingly unrelated Hierarchical regression analysis is used to estimate diversification’s effect on banks' financial stability and efficiency, considering the interaction between diversification and intellectual capital as a mediating variable.

Findings

The Mediation analysis reveals that asset diversification improves the financial stability of commercial banks when mediated by intellectual efficiency. Investment diversification negatively impacts risk-adjusted return on asset and Z score. Intellectual capital significantly enhances commercial banks' efficiency and financial stability in Ethiopia and mediates the relationship between geographic diversification, financial stability, and efficiency. The mediation analysis also indicates that intellectual capital significantly mediates the relationship between income diversification and efficiency.

Practical implications

This study highlights the importance of intellectual capital and promotes its strategic allocation by management and regulatory bodies to enhance the financial stability and operational effectiveness of the banking industry in Ethiopia.

Originality/value

To the best of the researcher’s knowledge, this study is one of the rare attempts to investigate the mediating role of intellectual capital on the nexus between diversification, financial stability, and efficiency of commercial banks in Ethiopia.

Purpose

This paper aims to present a comprehensive assessment of the literature about the research agenda for future studies on risk management in small and medium-sized businesses (SMEs) with a research agenda for bibliometric analysis. The author's goals are to point out inconsistencies and gaps in the literature and to suggest directions for future study.

Design/methodology/approach

A total of 147 papers were analyzed in terms of bibliographic information, research design, and findings. These included publication by year, most cited documents, citation by year, publication by authors, publication by subject area, publication by country, publication by affiliation, funding sponsor, network representation of keyword co-occurrence, and cluster visualization of keyword co-occurrence. This study used bibliometric analysis methods, keyword searches, and suitability assessment for bibliometric analysis.

Findings

The bibliometric research revealed a number of potential risk categories for small and medium enterprises (SMEs). In addition, an analysis of the risk-related elements aimed to avoid or reduce their adverse effects, the published study highlights how crucial a risk management procedure is for SMEs. Risk factors were also shown to be unavoidable; as a result, everyone needs to practice social responsibility in order to reduce the detrimental effects on the economy.

Research limitations/implications

Future studies are required on risk identification, analysis, plan implementation, and control in the context of small and medium-sized enterprise risk management.

Originality/value

This work represents the first in a bibliometric analysis of risk management in small and medium-sized enterprises (SMEs) for the future research agenda.