Managerial Finance最新文献

Purpose

The objective of the study is to shed light on the notion of quality investing in the Indian stock market. The study also attempts to combine the value and quality metrics to test their ability to generate a higher risk-adjusted return.

Design/methodology/approach

The paper employs asset pricing models to examine the excess risk-adjusted returns and panel regression model (random estimates) to determine the price of quality in the cross-section of Bombay Stock Exchange (BSE) listed stocks from 2003 to 2020.

Findings

The results indicate that the quality-only strategy failed to produce substantial risk-adjusted returns in the Indian stock market. The returns to long/short hedging strategy quality-minus-junk (QMJ) are significantly positive with the majority of the returns attributable to the short leg of the stock portfolio. The findings further discovered that the explanatory effect of quality on prices is limited. In particular, a strategy that combines value and quality investing generated positive and significant alphas as well as a higher Sharpe ratio.

Practical implications

The study provides investors and portfolio managers with valuable insights for navigating undervalued high-quality equities in the Indian stock market.

Originality/value

This is the first research of its kind to examine the performance of quality (Q score indicator) combined with value investing in the Indian stock market. As majority of research have concentrated on developed economies, this study offers out-of-sample evidence to validate the strategy’s success in an emerging market.

Purpose

The purpose of this study is to examine the linear and non-linear relationship between capital structure (CS) and firm performance (FP) and the moderating and mediating roles of agency costs in the CS-FP nexus.

Design/methodology/approach

This study used static and quadratic panel data regression models to examine the linear and non-linear relationships and structured equation models to analyze the mediating effect of agency costs in the CS-FP nexus of 38 listed non-financial Mauritian firms from 2009 to 2019.

Findings

Leverage has a significant negative effect on FP supporting the pecking order theory. Agency costs are significantly and positively associated with FP. There is a strong non-linear relationship between leverage and FP supporting the trade-off and agency cost theories. Agency costs are an important moderator and mediator in the CS-FP nexus. Overall, the sensitivity analyses showed that the results were robust.

Practical implications

Firms need to carefully consider the levels and types of debt and equity in their CS involving the use of dynamic strategies to adjust CS in response to changing economic conditions and FP. The moderating effect of agency costs may guide firms in optimizing CS and may contribute to corporate governance discussions, emphasizing the importance of aligning interests to foster sustainable business practices.

Originality/value

This study adds to the extant literature by providing new evidence on the non-linear relationship between leverage and FP and the moderating and mediating roles of agency costs in the CS-FP nexus in emerging capital markets, where such studies are rare.

Purpose

We aim to analyze the capital structure heterogeneity for manufacturing and service sector firms. Additionally, we analyze the impact of the COVID-19 pandemic on the leverage adjustments of corporate firms.

Design/methodology/approach

This study applies the two-step system generalized method of moments (system-GMM) and panel data of 1,115 manufacturing and 482 service sector firms listed with the Bombay Stock Exchange (S&P BSE) from 2010 to 2023. We developed and analyzed three models. Model 1 analyzes the leverage determinants and speed of adjustment (SOA) for the manufacturing and service sectors. Model 2 evaluates the leverage SOA for various sub-sectors, and Model 3 analyzes the impact of the COVID-19 pandemic on the leverage SOA.

Findings

This study suggests the three following. First, the direction of leverage determinants suggests that manufacturing firms are highly tangible. In contrast, service sector firms are high-growth firms and recorded a higher SOA (12.01%) than manufacturing (9.09%). Second, analyzing the leverage heterogeneity, we found that SOA varies across the sub-sectors. For manufacturing, food and beverage sub-sector recorded the highest SOA (12.58%), while consumer durables reported the lowest (6.38%). Communication recorded the highest (24.15%) for services, while industrial services recorded the lowest (11.18%). Third, firms across sectors and sub-sectors increased their SOA during COVID-19 pandemic.

Research limitations/implications

This in-depth analysis of leverage heterogeneity for different sectors and subsectors will assist policymakers, corporate managers and other stakeholders in making agile financial decisions.

Originality/value

The analysis of leverage heterogeneity for the manufacturing and service sector from the emerging Indian economy marks a novel contribution to existing literature.

Purpose

Considering the important development that research on debt financing decisions of family firms (FFs) has undergone in recent years, we aim to assess the current state of the literature with the latest advances in this field.

Design/methodology/approach

We undertake a systematic review of 42 journal articles published on this topic in recent years.

Findings

As a result of our work, new directions for the advancement of this research field are established, such as the consideration of different methodologies and sources of heterogeneity of FFs, the need for an integration of the supply and demand side of funds or the importance of evaluating a diversity of firm-specific and contextual factors affecting the debt financial behaviour of FFs.

Originality/value

Considering the notable development of the field of debt financing decisions of FFs in recent years, we find it opportune and valuable to revise the advances and trends published in the most recent papers. Thus, by connecting previous and current knowledge, we provide an updated integrative model of the state of the art and posit key research questions to solve in the future.

Purpose

Given the difficulties in finding significant exchange rate exposure in the extant literature, this paper attempts to resolve the so-called “exposure puzzle” by investigating whether currency movements have any significant impact on international industry returns.

Design/methodology/approach

This paper utilizes the multivariate Generalized AutoRegressive Conditional Heteroskedasticity (MGARCH) methodology to estimate both symmetric and asymmetric exchange rate exposures for each industry common across 12 countries simultaneously.

Findings

The empirical results show that exchange rate exposure is not only statistically significant but also economically important based on the estimation of an asymmetric three-factor exposure model using MGARCH methodology. This is an extremely important finding as it suggests that the “exposure puzzle” may not be a puzzle at all once a better methodology is utilized in the estimation.

Research limitations/implications

Because this study tries to resolve the exchange rate exposure puzzle by focusing on whether exchange rate movements affect ex-post returns as opposed to ex ante expected returns and given the significant exposures with respect to different risk factors found in the study, it is interesting to see if any of these risk factors commands a risk premium. In other words, a natural extension of this study is to test whether any of these risk factors is priced in international industry returns.

Practical implications

The findings of the study have interesting implications for international investors who would like to diversify their portfolios across different industries and are concerned about whether the unexpected movements in the bilateral exchange rates will affect their portfolio returns in addition to its interest rate and world market risk exposures.

Originality/value

The study utilizes the MGARCH methodology, which has not been fully exploited in the exchange rate exposure literature.

Purpose

A major source of external funding for US airports comes from issuing municipal bonds. Credit rating agencies evaluate the bonds using multiple factors, but the judgments behind the ratings are not well understood. This paper examines if airport rate-setting methods affect the bond ratings of US airports.

Design/methodology/approach

Using a set of unbalanced panel data for 58 hub airports from 2010 to 2019, we examine the effect of the rate-setting methods and other airport characteristics on Fitch’s airport bond rating.

Findings

We find that compensatory airports consistently receive a very high bond rating from Fitch. The probability of getting a very high Fitch rating increases by ∼28 percentage points for a compensatory airport. Additionally, the probability of getting a very high rating is about 33 percentage points higher for a legacy hub.

Research limitations/implications

The study uses Fitch bond ratings. Future studies could examine if S&P’s and Moody’s ratings are also influenced by airport rate-setting methods and legacy hub status.

Practical implications

The results uncover the linkage between bond ratings and their determinants for US airports. This information is important for investors when assessing airport creditworthiness and for airport operators as they manage capital project financing.

Originality/value

This is the first study to evaluate the effects of rate-setting methods on airport bond rating and also the first to document a statistically significant relationship between airports’ legacy hub status and bond ratings.

Purpose

This study aims to investigate limited partners’ (LPs) influence on venture capital (VC) fund returns.

Design/methodology/approach

We merge data from Preqin and SDC’s VentureXpert spanning from 1993 to 2014 and conduct multiple regression analysis to examine the influence of LPs on VC fund performance. Additionally, we conduct three distinct robustness tests to verify the credibility of our findings.

Findings

Our empirical analysis demonstrates that newbie LPs consistently exert a significant positive influence on VC fund returns.

Research limitations/implications

VC and LP data is self-reported, and there is no comprehensive dataset as some LPs prefer to maintain anonymity.

Originality/value

Extant literature on LPs’ contribution to VC fund performance is limited. The general assumption is that the role of LPs in VC fund performance is confined to funding. We introduce a new variable, LP track record, as a proxy for LP experience to examine if this variable influences VC performance.

Purpose

The purpose of our study is to investigate the impact of corporate culture on sales order backlog.

Design/methodology/approach

The authors use regression analysis to examine the relation between corporate culture and the level of sales order backlog, an important leading indicator of firm performance.

Findings

Using a large panel sample of US firms for the period of 2003–2021, the authors find a significant and positive relation, suggesting that firms with strong corporate culture have a higher level of sales order backlog.

Originality/value

The study findings contribute to two separate areas of research: corporate culture in management literature and sales order backlog in accounting literature. Prior study has focused on the impact of corporate culture on current firm performance. This study extends prior research by investigating the impact of corporate culture on order backlog, an important leading indicator of future performance.

Purpose

This research attempts to examine bank dividend policy in Indonesia by applying the life cycle theory of dividends.

Design/methodology/approach

This research used secondary data gotten from two sources: banks’ annual financial statements from 2005 to 2019 and the number of observation samples was 510 from 42 banks. Random Effects Logit Model (RELM) is used to detect the influence of independent variables on Propensity to Pay Dividends (PPD) and Random Effects Tobit Model (RETM) is used to test the influence of independent variables on Dividend Payout Ratio (DPR).

Findings

The RELM results show that Retained Earnings to Total Equity (RE/TE), Retained Earnings to Total Asset (RE/TA) and bank age have a positive impact on the propensity to pay dividends (PPD) while bank growth (GRW) has a negative impact. The RETM results reveal that RE/TE, ROA and bank size have a positive impact on the dividend payout ratio (DPR) while GRW has a negative impact. This analysis also discovers that the capital adequacy ratio (CAR) and Non-performing Loans (NPL) is one important factor considered by banks in Indonesia in determining their dividend policy.

Research limitations/implications

This study contributes to enriching literature in finance, especially in the life cycle theory of dividends. Also, it can be a guide to consider by investors before deciding to put their shares in banks in Indonesia.

Originality/value

Research on bank-specific life cycle theory is very difficult to find, especially in the Indonesian context, so this research can enrich the body of knowledge on dividend decisions.