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Corporate Financing and Investment Decisions When Firms Have Information That Investors Do Not Have

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... The other major development is the pecking order theory (POT) of Myers and Majluf (1984). The POT ranks the different sources of funds i.e. retained earnings, debt and equity. ...
... According to the POT, retained earnings is preferred to debt and debt is preferred to equity. In explaining the POT, Myers and Majluf (1984) focused on the adverse selection problem due to the presence of information asymmetry regarding the actual valuation of the firm. For internal financing (retained earnings), there is no adverse selection problem. ...
... As explained by POT, larger firms or more profitable firms practice debt conservatism because of the availability of internal funds whereas small firms with lack of sufficient internal funds will choose debt over equity. But Myers and Majluf (1984) do not explain why managers should act in the existing shareholders' interest in maximizing the value of the existing shares (Myers 2001). ...
Article
: The purpose of this paper is to explain the manufacturing stagnation in India, particularly, examining the hypothesis that financial stress caused the stagnation. Using a sample of 804 large, mid, and small cap manufacturing firms in India from Prowess database, the paper examines the performance of manufacturing sector during 2005-19 using simple financial indicators and dynamic panel data regression analysis. We estimate the structural equations of investments, leverage and profitability using a two-step Generalized Methods of Moments estimation. We do not find substantial support for the hypothesis that financial stress explains the investment slowdown in these firms. Our findings suggest that manufacturing firms, particularly the larger firms, are practicing debt conservatism. We also find that the declining growth in sales is a major determinant in explaining the slowdown in fixed investments and profits of these firms. In addition, the size of the firms measured in terms of sales also matters for small cap firms. We therefore suggest that measures to increase demand can help in reviving the sales growth of firms and thereby private investments and profits.
... According to trade-off theory and pecking order theory, various firms' characteristics such as growth opportunities, net working capital, liquid assets, leverages and size are determinant of cash holding. As per the pecking order theory, Myers (1984) opines that firms finance investments firstly with retaining earnings, then with safe debt and risky debt, and finally with equity. When current operational cash flows are sufficient enough to finance new investments, firms repay debt and accumulate cash. ...
... The pecking order theory of Myers (1984) and Myers and Majluf (1984) asserts that to minimize asymmetric Information costs and other borrowing risks would be financed first by companies with retained earnings, followed by stable debt and volatile debt, and lastly by equities. Extending this principle to clarify the determinants of cash leads to the assumption that there is no optimal amount of cash, but that cash is seen as a bridge between remaining earnings and spending requirements. ...
... The pecking order theory of Myers (1984) and Myers and Majluf (1984) asserts that to minimize asymmetric Information costs and other borrowing risks would be financed first by companies with retained earnings, followed by stable debt and volatile debt, and lastly by equities. Extending this principle to clarify the determinants of cash leads to the assumption that there is no optimal amount of cash, but that cash is seen as a bridge between remaining earnings and spending requirements. ...
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Article
Cash holding decision is one of the most significant decisions taken by the financial managers of any manufacturing firms. The decision not only depends upon the theoretical view but also the firm-specific variables of the economy. This study therefore examines effect of firm-specific characteristics on cash holding of listed manufacturing firms in Nigeria.
... Later, others such as Stiglitz (1974); Merton (1990) have removed the assumptions of risk class. Myers (1984) said that lifting these restrictions, one at a time, start possible causes for the capital structure puzzle. While the M&M capital structure irrelevance theorem clearly rests on unrealistic assumptions, it can serve as a starting point to search for the factors that influence corporate leverage policies. ...
... This theory asserts that there is a trade-off between advantages and disadvantages associated with debt financing, which leads to the existence of an optimal mix of debt and equity. Myers and Majluf (1984) suggest that the capital structure can help to mitigate inefficiencies in a firm's investment program that are caused by information asymmetries. The information costs associated with debt and equity issues has led Myers (1984) to argue that a firm's capital structure reflects the accumulation of past financial requirements. ...
... Myers and Majluf (1984) suggest that the capital structure can help to mitigate inefficiencies in a firm's investment program that are caused by information asymmetries. The information costs associated with debt and equity issues has led Myers (1984) to argue that a firm's capital structure reflects the accumulation of past financial requirements. There is a pecking order of corporate financing: (i) firms prefer internal finance; (ii) if internal finance is not sufficient and firms require external finance, they issue the cheapest security first. ...
... The pecking order theory is based on the problem of information asymmetry (Myers, 1984;Myers & Majluf, 1984) and assumes that due to incomplete information for investors, borrowing costs will increase (Degryse et al., 2012). The highest costs arise with the issue of equity, as the risks for the investors will be higher with this financing type because they are not sure whether the firm is overvalued or not (Myers & Majluf, 1984). ...
... The pecking order theory is based on the problem of information asymmetry (Myers, 1984;Myers & Majluf, 1984) and assumes that due to incomplete information for investors, borrowing costs will increase (Degryse et al., 2012). The highest costs arise with the issue of equity, as the risks for the investors will be higher with this financing type because they are not sure whether the firm is overvalued or not (Myers & Majluf, 1984). In that case, the added value of the new investors will flow towards the current investors. ...
... The pecking order theory is based on the problems related to the presence of asymmetric information (Myers, 1984;Myers & Majluf, 1984). Typically, managers have more information about the firms' value than outsiders. ...
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Article
Family firms are one of the most ubiquitous forms of business organizations worldwide. Their survival and growth are thus not only crucial for the firms themselves but also for the overall economy. One of the factors that influence their survival and development are their financing decisions. These decisions are generally described through the pecking order theory. However, not much is known about the applicability of this theory in private family firms. Given the shortcomings (both theoretically and empirically) of the current literature, we analyze 1087 incremental financing decisions from 277 family firms to develop and test a specific family firm pecking order. We integrate the elements of the socioemotional wealth perspective to theoretically explain the preferred order and introduce family capital into the pecking order model. Our findings indicate that family firms first prefer internal financing, next debt financing, followed by family capital, and last external capital. We also find that SEW considerations play a role in this financing decision. Especially the retention of control over the firm and the aim to pass the firm to the next generation appear to play an important role in determining this order. These dimensions ensure that family firms try to avoid extra capital. However, when it is needed, they will opt for family capital over external capital. This paper thus provides more insight into the reasoning behind financing decisions in private family firms. Plain English Summary How do family firms finance their investments? When looking for ways to finance their investments, firms have several options. According to traditional finance theories, they generally follow a so-called pecking order: they prefer to first use their internal funds, before turning to external financing. For family firms, the most ubiquitous form of business organization worldwide, two important aspects have been ignored in this research until now. First, socioemotional aspects influence decision-making in family firms and thus probably also financing decisions. Next, the business family itself can act as an external source of finance, which is not yet accounted for in the current pecking order model. In this research, we take these issues into account in order to develop—theoretically and empirically—a family firm pecking order. We investigate over a thousand financing decisions of 277 privately held family firms. Our results show that they prefer internal financing, followed by bank debt, family capital, and external capital. Especially the retention of control over the firm and the aim to pass the firm to the next generation appear to play an important role in determining this order. Our research thus indicates that future research should pay attention to the peculiarities of family firms when investigating their financing decision.
... Firm-specific resources can facilitate the development of organizational capabilities as competencies that are conducive to environmental practices (Chan, 2005), such as CE practices, to enhance firms' competitiveness. Scholars claim that the lack of support from public institutions, resources, and technical expertise, along with the cost of meeting regulations and complexity of administrative procedures, are the main barriers for SMEs to shift towards CE practices (Rizos et al., 2016;Ormazabal et al., 2018;García-Quevedo et al., 2020;Mura et al., 2020). Further, barriers related to entrepreneurs' commitment and employees' skills in CE implementation as well as concerning the use of information systems to support CE and sustainability have been discussed in recent studies (Ormazabal et al., 2018) When referring to the use of information systems, studies have also underlined how strategic performance measurement tools that support environmental monitoring often lack to consider the peculiarities of SMEs (Johnson and Shaltegger, 2016). ...
... Policies to promote sustainability and provide access to financial resources in the form of tax credits, financing, and subsidies are key to SMEs' CE engagement (Mura et al., 2020). When SMEs can access public financial support, the literature shows that it bolsters environmental innovations, eco-innovation, and ultimately, CE practices. ...
... For instance, Scarpellini et al. (2018) reported that public incentives promote eco-innovation, which reduces the risk associated with those investments and improves their profitability. Cecere et al. (2020) examined the role of private and public funding in promoting SMEs' eco-innovation, where private funding sources generally include bank loans, business angels' capital, venture capital, corporate venturing, and crowd funding, while public funding sources consist of public loans and guarantees, publicly owned equity, and subsidies (prizes, tax credits, grants, etc.) (Cecere et al., 2020 based on Myers and Majluf, 1984;Hall, 2002;OECD 2012;Olmos et al., 2012). The availability of public funding and access to fiscal incentives are levers of eco-innovation, especially for small businesses that suffer from a lack of external private fund sources, and public funding is effective when it is complemented by private sector funding (Cecere et al., 2020). ...
Article
Purpose: Specific interventions enabling innovative small and medium enterprises (SMEs) to access finance during a time of crisis are essential for their survival. In Europe, the recovery plan prioritises specific funds to support SMEs’ sustainability transition. This creates an opportunity for SMEs to innovate and survive during the pandemic. However, the role of public policies in supporting SMEs’ sustainability innovation during the COVID-19 crisis has not been explored. Based on the Italian context, the present study aims to analyse how COVID-19 related incentives for innovative SMEs, issued by the Italian government, have supported circular economy (CE) practices, as well as the development of consistent competences and resources during the pandemic period. Methodology: The population of Italian innovative manufacturing SMEs was surveyed. Firms were required to indicate the extent to which they adopted CE practices in the Take, Make, Distribute, Use, and Recover fields of action, the consistent competences and resources they developed, and what incentives they accessed. The association between such incentives and CE practices, competences, and resources was tested using one-way analysis of variance. Findings: COVID-19 related incentives were granted to 43.43% of the innovative SMEs. Firms that accessed incentives had higher levels of CE practices, competences, and resources, with slight differences considering the type of incentives. Practical and social implications: This study argues that governmental COVID-19 related incentives may have played a role in enhancing CE practices of innovative SMEs. Public support allows firms to invest in the development of internal assets that are needed to capture new business opportunities. This study provides managers with resource and competence knowledge that allows for the adoption of CE practices in a time of crisis. Originality: The study sheds light on the relevance of dedicated incentives to include innovative SMEs in perspective policies’ decisional processes, which contribute to their sustainability transition.
... The study employed multiple regressions as a tool of analysis for the study covering a period of 10 years (2001)(2002)(2003)(2004)(2005)(2006)(2007)(2008)(2009)(2010).Using leverage as dependent variable measured as the book value of long-term debts divided by capital employed while firm size, growth, firm age, profitability, and tangibility of assets were used as explanatory variables. The results revealed that a positive and significant relationship exist between profitability and financial leverage which is in conformity with Trade of Theory but in disagreement with Pecking Order Theory (Myers and Majluf 1984). ...
... The findings of this study are in line with the prediction of Pecking Order Theory which asserted that firms tend to use their retain earning first since is cheaper and then letter resort to external financing as the second option. The findings are consistent with that of Myers & Majluf (1984). Other studies consistent with this finding include: Rajan and Zingales (1995); Booth et al. (2001); Chen (2004);Bhutani, et al. (2009); Mutalib (2010); Awan and Amin (2014) all find profitability to be negatively related to financial leverage. ...
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Article
This study examines the impact of Firm-Specific Attributes and Financial Leverage of quoted Diversified firms in Nigeria. The populations of the study are the six (6) quoted Diversified Firms in Nigerian Stock Exchange Market as at 31 st December 2014. The sample of the study consists of all the six (6) quoted diversified firms and census sampling technique was adopted. Multiple regression models based on ordinary least square (OLS) was employed in analysing the panel data obtained from audited annual reports and an account of the sampled firms for the period of eight years ranging from 2007-20014. The study reveals a statistically negative and significant effect of profitability on financial leverage. In the same vein, a positive and statistically significant impact was found between the volatility of earnings, firm age and financial leverage. On the contrary, the complexity of business has a positive but statistically insignificant effect on financial leverage of quoted diversified firms in Nigeria. The study concludes that profitability, volatility of earnings and firm age are the major firm-specific attributes that impact on financial leverage of quoted Diversified firms in Nigeria. Thus, the study recommends that expansion in the number of subsidiaries should be based on viability and not just for competition in absolute numbers. This should be done in such a way that, such expansion will not result in agency conflict among stakeholders.
... Managers normally have an advantage over the market in predicting firm specific events, which creates information asymmetry between the firm management and the market. Ross [6], Myers and Majluf [7] introduced information asymmetry models that predict firm value based on the changes in capital structure. In particular, assuming that all other things are equal, the announcement of a new equity issue releasing negative information about the firm will create a drop in the market value of the firm. ...
... Likewise, POT suggests that the managers of a company know more about the actual value of their firms than outsiders. As such, the cost of adverse selection arising from information asymmetry leads to the priority of debt financing rather than equity financing [7]. According to POT theory, information asymmetry plays an important role in many corporate finance decisions. ...
Article
Managers normally have an advantage over the market in predicting firm-specific events. This creates information asymmetry between managers of the firm and the market. The purpose of this paper is to investigate the relationship between firm value and information asymmetry in Vietnam. Our data include 202 non-financial companies with 606 firm-year observations collected from the two main stock exchange markets in Vietnam including Hanoi Stock Exchange and Ho Chi Minh Stock Exchange, covering 3 years from 2017-2019. The finding of this study indicates that two variables measuring information asymmetry (ASYDISP, ASYDUM) negatively impact firm value. Besides, control variables such as return on assets, leverage, firm size, and intangible assets are found to have significant effects on firm value.
... Besides, smaller firms face severe asymmetric information costs and thus have higher costs of issuing debts or equity compared to larger firms (Byoun, 2008;Ozkan, 2001;Rajan & Zingales, 1995;Titman & Wessels, 1988). Since dividend payout disseminates a favourable signal in the financial market (Myers & Majluf, 1984), small firms, with higher information costs, can use dividend payments for increasing their accessibility in the debt market. These arguments suggest a positive impact of dividend payment on leverage for smaller firms. ...
... The coefficients of profitability have negative signs which are in line with the predictions of pecking order theory (Myers, 1984;Myers & Majluf, 1984). The sources of external finance (both debt and equity) suffer from adverse selection costs due to information asymmetry between insiders and outsiders and, because of that, firms generally prefer internally generated funds over external sources of finance. ...
Article
This article investigates the impact of firms’ dividend payment decision on its capital structure. It also examines whether firm size moderates the relationship between dividend decision and capital structure. It relies on a large dataset of 4,116 listed firms over the period 2002–2019 in the Indian scenario comprising 37.21% firm-year observations as dividend payers and 62.79% firm-year observations as dividend non-payers. Fixed effect regression is used for analysis based on the results of the Hausman test for model specification. The study observes negative impact of dividend payment on firms’ leverage ratios. Ability of dividend payment to mitigate the free cash flow agency conflict together with the availability of substantial volume of retained earnings to meet the financing requirements internally are found to be possible explanations for lesser demand of debts in case of dividend paying firms. The study also finds heterogeneous impact of dividend payment on leverage ratios for small and large firms, thus confirming the moderating role of firm size. The higher level of free cash flow for dividend payers compared to non-payers in case of small firms is found to be the only possible explanation for such results. Financial managers may refer to the findings of the study as a guide while deciding their financing choices.
... The pecking order, as postulated by Myers and Majluf (1984) and Myers (1984), acknowledges the roles of information asymmetry in the agency relationship and hence notes that firms follow an order of hierarchy financing (Khemiri and Noubbigh, 2018). That the managers adopt a financial hierarchy while acting in the interest of the shareholders, starting with the retained earnings, debt, and issue of new equity. ...
... That the managers adopt a financial hierarchy while acting in the interest of the shareholders, starting with the retained earnings, debt, and issue of new equity. Myers and Majluf (1984) emphasised that firms prefer debt to equity if they need external funds, as further explained by Oino and Ukaegbu (2015). They noted that investors expect a higher return on equity despite equity being riskier than debt. ...
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Article
This study conceptually examines the effect of speed of adjustments on capital structure decisions. The study provides a conceptual and theoretical underpinning focused on the review of several studies on the effect of speed of adjustments on capital structure decisions. The study discovered firm size, assets, growth, profitability, and other factors that influence the speed of adjustments. The findings from a prior study showed that estimators of the speed of adjustments include the regression analysis, generalized methods of moments (GMM) and stochastic frontier analysis (SFA) models without a predictive model. The study recommends for a generalized predictive model that determines the speed of adjustments to the optimum capital structure of firms.
... Anyway, by now we are aware of a number of real-life deviations from the simplifying picture of the perfect capital market underlying the irrelevance theorem, and hence the choice between equity and debt really matters. The pecking order theory by Myers and Majluf (1984) offers reasons for the sequence in which different types of financing should be chosen and helps to explain why in particular situations a certain facility is selected. The classical survey by Harris and Raviv (1991) examines the pecking order theory as well as other models concerning firm capital structure and related empirical evidence. ...
... The message to investors is that they should be careful when planning to invest into firms with large equity intent according to the text of their 10-K files, because this intention will expose them to above average risk for a stock price crash. The same message is known from the pecking-order theory: as investors should generally be quite skeptical about the prospects of firms issuing equity, Myers and Majluf (1984) recommend using equity financing only as a means of last resort to avoid negative stock market reactions triggered by suspicious investors. ...
... The capital structure theory and Myers Pecking Order Theory (1984) will be used in this study. According to Myers (2004), the Pecking Order Theory (POT) suggests that there is no well-defined optimal capital structure; instead the debt ratio is the result of hierarchical financing over time. The foundation of POT is that firms have no defined debt-to-value ratio. ...
... This view suggests that financing is based on the ownermanager being able to assess these agency costs for each type of financing, and then select the lowest cost method of financing the firm's activities. One weakness of this explanation is that no one has yet been able to measure agency costs, even in large firms (Myers, 2004). ...
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Article
Sustainability has become an integral component of many government, commercial, and non-profit agricultural research efforts, and it is beginning to be woven into agricultural policy in developing countries. Although, increasing numbers of farmers and ranchers have embarked on their own paths to sustainability, incorporating integrated and innovative approaches into their own enterprises. The growing demand for agricultural products and sustainable productivity growth in agriculture is a vital issue. Also, the challenges of sustainability in agribusinesses are now more complex than ever as a result of the rising population in Nigeria. The study examines the effect of entrepreneurial initiatives on agribusiness sustainability among the clusters in Kwara, Kogi and Niger State. The study adopted a thematic analysis using Nvivo 12 by conducting three focus group discussions among the cluster members in the selected States. The findings revealed that ensuring agribusiness sustainability requires derisking initiatives, cultural orientation, entrepreneurial orientation, networking and technology as basic entrepreneurial initiatives components required. It was recommended that agricultural insurance can play an important role in securing clusters and boasting efficiency of agribusiness. Agribusiness insurance should be mandatory for all forms of agribusinesses within the clustered farmers. Government should take the strategic lead for financial inclusion and insurance for clusters by ensuring that insurance is included in the regional agric policy as a broader strategy that creates capacities and incentives for risk management.
... One of these is the existence of information asymmetries, that is, at the time of any transaction, one of the agents has more or better information than the other party. This creates an imbalance in the market, giving rise to situations of moral hazard and adverse selection as explained by Akerlof (1970) in his famous study on the lemon market, and by works of Stiglitz and Weiss (1981) and Myers and Majluf (1984). Moral hazard occurs when an economic agent changes its behavior after granting credit, in accordance with the different contexts that present themselves, and fails to comply with what was previously agreed (Jensen and Meckling, 1976). ...
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Article
This study analyzes the relationship between innovation and financial constraints. To this end, a database extracted from the Community Innovation Survey (CIS) and the System of Business Accounts (SCIE) was used. The sample consisted of 24,679 active companies operating in Portugal in the manufacturing and service industry between 2008 and 2016. A Recursive Bivariate Probit Model (RPBM) was used for making estimates. When analyzing the relationship between innovation and financial constraints, the results reveal a negative relationship between the two, confirming that firms that are financially constrained are more limited in their investments in R&D, and innovation is less accessible to them. The severity of the effects of financial constraints is heterogeneous across economic activities, strongly affecting innovative industries, while service industries appear to be the least affected. It was also observed that larger companies are better able to innovate. There was a positive relationship between innovation and the variables sales and exports, indicating that innovation will positively affect the financial results of companies.
... In practice, however, more profitable companies tend to have lower levels of debt. Consequently, the Pecking Order Theory appeared, which established that there is a hierarchy in the selection of sources of finance based on information asymmetries between managers and investors in the market [52,53]. When a company needs resources, it will first make use of any available internal sources of finance. ...
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Article
The natural stone sector is an important driver of the Spanish and Italian economies, which underwent internationalization after the financial crisis of 2008 as part of a survival and development strategy. This article aims to study the financial and economic profitability of this sector in the two leading European production countries, as well as its determinants. For this purpose, the economic-financial data of a sample composed of 453 companies (203 Spanish and 250 Italian) from 2015-2019 were analyzed using the multiple linear regression methodology. To address the problems of possible endogeneity and omission of variables in the model, the dependent variable was used as a regressor with one and two lags, and panel data with fixed effects were considered after performing the Hausman test. The results show significant differences between the two countries, with higher profitability in Italy. Company size, company growth (measured as the change in assets), and the variation in the country's GDP all positively affected profitability. At the same time, the level of indebtedness showed a negative relationship. The country's inflation rate and gender diversity in top management were shown to be non-relevant variables. The research conducted indicates that, to increase profitability, Spanish and Italian companies in the natural stone sector should undergo mergers in order to grow in size, increase efficiency in the use of assets, reduce their dependence on external financing, and promote equity capital. In addition, Ital-ian companies should reduce the average period of payment to suppliers to lower deferral costs, and boost exports to become less dependent on the country's domestic economy.
... Leverage -Leverage is estimated by total obligations separated by total resources (Myers & Majluf, 1984;Waddock & Graves, 1997;Orlitzky et al., 2003;Black et al., 2006;Ioannou & Serafeim, 2012;Kumar & Firoz, 2018a). ...
Article
Corporate sustainability practices have become a proxy for a better management culture and good governance. As a result, environmental, social, and governance (ESG) disclosures are considered significant factors in the value creation procedures of the organisations. However, definitive guidelines on ESG reporting are still missing. Motivated by this research gap, the present study explores the types of industry-specific and firm-specific characteristics that motivate organisations to report on their ESG activities by utilizing a sample of top 100 Indian Standard and Poor's Bombay stock exchange, (S&P BSE) firms for the period 2015-2019. Based on the multivariate-regression analysis, the findings of this examination indicate that the size of the firm, cross border listing, and the industry play a crucial role in defining a firm reporting on ESG parameters. However, the current study did not find any evidence to support that a firm's book to market Value (BTMV), leverage, growth, age, Returns on the Capital Employed (ROCE), and ownership affect the ESG disclosures. But the Indian firms started emphasising the process of replacing their profit-maximising goals with sustainable ESG goals.
... Internal financing reflects managers' motivation to maintain control over the firm, reduce agency costs, and reduce negative market reactions to equity issuance announcements (Lewis et al., 1999). Then, Myers and Majluf (1984) continued their research and made two key assumptions about manager behavior in a company, namely: 1) Managers have better information about investment opportunities faced by companies rather than investors, and 2) The manager will act in the best interests of the existing shareholders. ...
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Article
This study examines the effect of the biodiesel program factor 20, return on assets (ROA), and debt to equity ratio (DER) on the stock prices of companies in the oil palm plantation sub-sector for the period 2016-2021. The selected research sample is seven oil palm plantation sector companies listed on the Stock Exchange Indonesian Effect (IDX) Panel data regression method was applied to estimate and analyze the research model. The results showed that return on assets (ROA), and debt to equity ratio (DER) have a positive effect but no significance on stock price, while the program of biodiesel 20 does not affect the stock price.
... These information costs are considered to be nil for internal funds and very high when raising external funds. Myers (1984) and Myers and Majluf (1984), supported the negative relationship between profitability and debt, and that successful companies with high profitability do not need external debt to finance their investments but internal funds created by retained earnings. Titman and Wessels (1988) state that firms with a high index of profitability tend to maintain a low index of debt, while Daskalakis (2009), andHall et al. (2000) conclude that internal cashflows are the preferred form of new investment financing for SMEs. ...
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Following recent literature on the specific field of industry effects on capital structure determination (Kumar et al., 2017; Daskalakis et al., 2022), the main purpose of this paper is to reintroduce the importance of industry effects in the determination of financial leverage, focusing on SMEs. We investigate whether SMEs capital structure is determined differently across different industries. We construct a three-stage econometric model, built around industry differentiations in capital structure determination, aiming to investigate the following two aspects: a) the relationship between the debt ratio and specific capital structure determinants, taking the industry factor under consideration, b) any potential differentiation in capital structure determinants across the selected industries. We not only show that the different capital structure determinants affect financial leverage in different ways across industries (different signs), but we also show that the level of intensity is different (statistically different coefficients) even in case the signs are the same.
... Pecking order theory (Myers and Majluf, 1984) assumes that a company uses resources to finance assets in the following order: internal funds, debt issue and equity issue. A company that has sufficient internal resources to finance (real) investments, therefore, does not use external resources at all; in the event of their shortage, it issues debt, while shares issue and owners' deposits, respectively, are a last resort. ...
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Article
This article examines the macroeconomic aspects of capital structure of companies in EU countries in the international context during the period 2011–2020. It aims at evaluating the capital structure of European non-financial companies in general, followed by the application of market timing theory and convergence tendencies in the companies within the EU countries. Our results suggest that the equity ratio of examined companies has grown over the last decade at the expense of credit sources of financing. Although our research could not confirm the possibility of market timing theory application, this was due to the limitations of our analysis caused also by an inappropriate data structure. The general result of the examination of convergence suggests that the historical capital structure has a strong impact on the current structure. Analysis of the capital structure of companies in individual European countries also shows that there are still significant differences between these countries, which have been reduced only partially in the medium term, and thus convergence trends are insignificant.
... The use of cash payment positively affects bidder returns as it suggests that the bidder is undervalued (Graham et al., 2002;Shleifer & Vishny, 2002). Equity-financed deals might generate negative returns due to adverse selection problems (Myers & Majluf, 1984). Cross-border deals create positive returns for acquirer shareholders when acquirers are in bettergoverned countries (Ellis et al., 2017;Martynova & Renneboog, 2008). ...
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Article
This paper explores the role of bargaining ability in corporate mergers and acquisitions (M&As) by focusing on acquiring firms with ex-ante market power-powerful bidders. Drawing from a bargaining power theoretical stance, we argue that powerful bidders create value from M&A activity by paying comparatively lower premiums. We test our empirical proposition using a sample of 9327 M&A deals announced between 2004 and 2016 by bidders across 30 countries. Contrary to the stylized fact that bidders do not gain from M&A activity, we uncover evidence suggesting that powerful bidders pay lower bid premiums and, consequently, earn positive (and relatively higher) cumulative announcement returns (CARs) from M&A deals. On average, the mean returns to powerful bidders (1.3%) are at least twice those of their less powerful counterparts (0.6%). We identify ''low financial constraints'' as a potential channel through which higher bidder power translates to improved deal performance. Overall, our results provide new evidence on how industry dynamics, notably bargaining power, influences M&A outcomes.
... Perusahaan harus menentukan sumber dana atau struktur modal yang terbaik untuk pendanaan perusahaan [12]. Pecking order theory menyatakan bahwa perusahaan cenderung menggunakan dana internal dan jika perusahaan membutuhkan dana eksternal untuk memenuhi kegiatan operasionalnya, maka perusahaan akan menggunakan hutang dengan biaya yang paling rendah. ...
Article
This study aims to analyze the determinants of capital structure in manufacturing industries listed on the Indonesia Stock Exchange. The data used is taken from the financial statements of manufacturing companies whose shares are still actively traded on the Indonesia Stock Exchange. The variables used are profitability proxied by return on equity (ROE), sales growth, asset structure, liquidity proxied by current ratio (CR), tax, business risk and capital structure proxied by debt-to-equity ratio (DER). Sampling using purposive sampling method, and data analysis using multiple regression. The results show that liquidity (current ratio) has a negative effect on capital structure at a significance of less than 1%. Meanwhile, profitability (return on equity), sales growth, asset structure, tax and business risk have no effect on capital structure. Keywords: profitabilias, sales growth, asset structure, liquidity, tax, business risk, capital structur
... Pecking Order Theory merupakan sebuah tingkatan dalam pencarian dana perusahaan yang menunjukkan bahwa perusahaan lebih memilih menggunakan dana internal dalam membiayai investasi dan mengimplementasikannya sebagai peluang pertumbuhan (Myers & Majluf, 1984). Teori ini menjelaskan tentang keputusan pendanaan yang akan diambil terlebih dahulu oleh perusahaan yang dimana berbeda dari teori struktur modal lainnya. ...
Article
This study aims to analyze the effect of liquidity, capital structure, firm size, and operational risk on the company's financial performance. The population of manufacturing companies listed on the Indonesia Stock Exchange for the 2018-2020 period. Sampling used the purposive sampling method so as to produce 123 manufacturing companies that matched the criteria. Analysis of the data in this study using multiple linear regression. The results of the study prove that liquidity has no effect on the company's performance, capital structure has a positive and significant effect on the company's performance, the size of the company has a positive and significant effect on the company's performance, the company's operational risk has a negative and insignificant effect on the company's performance
... This can be explained by the fact that, while there is a positive and significant relationship between pre-pandemic cash levels and investment, there is also a portion of cash that is used as a buffer from the financial crisis's impact. Companies will prefer to finance themselves using internal funds, according to the pecking order theory (Myers & Majluf 1984). As a result, when the Covid-19 pandemic struck, companies with larger cash reserves were able to finance constrained operations more quickly than companies with smaller cash reserves. ...
... Over the decade, fund rising decision has become a common focus in corporate finance research. The most prominent theoretical approaches stem from the trade-off theory [17], peaking order theory [18], and market-timing theory [19]. ...
Article
Raising capital not only helps firms to meets the capital needs for production and business's development, but also supports them to endure financial risks. Hence, the problem of proactively choosing a reasonable financing structure between equity and debt to maximize corporate value becomes more and more imperative. This paper aims to investigate the relationship between corporate governance, especially ownership structure, and funding decision of Vietnamese listed firms. The study data include 209 non-financial companies with 1,045 firm-year observations obtained from two main stock exchange in Vietnam, including Hanoi Stock Exchange and Ho Chi Minh Stock Exchange, covering a 5-year period from 2014 to 2018. The finding of this study reveals that CEOs, state government, and foreign ownership significantly impact on capital structure, whilst there is no evidence to support the correlation between board ownership and funding decision. As for capital structure specific control variables, including firm size (Size), current ratio (CAR), cash ratio (OPCFTA), tangibility ratio (PPETA), and profitability (ROA) significantly effect on firm leverage.
... Favorable economic conditions increase the firms' sales and minimize the receivable time period. We find that OCF and sales growth have a significant impact on CCC in Pakistan, India, and Sri-Lanka, with higher cost of external financing, firms giving priority to internally generated funds (Myers and Majluf, 1984). In Bangladesh, operation activities are smaller as compared to other selected SAARC countries, which may explain why firms are not using OCF and sales growth to manage WCM. ...
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The paper analyzed the determinants of Working Capital Management (WCM) of listed manufacturing firms across South Asian Association of Regional Corporation (SAARC) countries from 2000 to 2020. Employing a Generalized Method of Moments, we found that operational risk and market risk are key hurdles to efficient working capital management. Our results are providing an important managerial implication for the use of operational risk and market risk in selected countries. Firms in selected countries can manage an optimal level of WCM through controlling operational risk and market risk, therefore should develop a ranking system about WCM activities to boost up their firm value.
... This study measures profitability as the ratio of return on assets (roa). Myers and Majluf (1984) observed a negative impact of profitability on leverage as internal sources such as retained earnings can be used to meet capital requirements while external finance such as debt increase the cost due to obligation of payment. Many organizations prefer external sources of finance to avoid agency problems and cost (Easterbrook 1984). ...
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Article
This paper identifies the determinants of the capital structure of conventional and Islamic banks in Bangladesh. A multivariate regression model has been established to test the influence of return on asset, tangibility, liquidity, growth, and financial market development on the leverage of 23 conventional and 8 Islamic banks listed on the Dhaka Stock Exchange. Data have been collected from the audited annual reports of the selected banks from 2015 to 2020. It is observed that the variables have positive impact on the leverage except tangibility. Return on asset, tangibil-ity and liquidity have significant impact while other variables have insignificant impacts. It is expected that the empirical outcome-based recommendations of this study will benefit the bankers, policymakers and investors to formulate appropriate policies through striking an ideal balance of leverage.
... Researchers have been trying to shed light on this interesting field from different angles, highlighting different features of the capital structure puzzle via suggesting theoretical approaches and providing the respective evidence. From the seminal work of Modigliani and Miller (1958) and their famous 'capital structure irrelevance' proposition to the agency costs approach of Jensen and Meckling (1976), Myers (1977) and Harris and Raviv (1990), to the signaling attributes of Ross (1977) the information asymmetries of Myers and Majluf (1984) and Myers (1984), researchers have been trying to reach an optimal capital structure conclusion, until the striking statement of Myers (2001, 81) that: 'There is no universal theory of the debt-equity choice, and no reason to expect one'. ...
Article
The paper explores whether, and how, capital structure determinants differ across industries. Specifically, we investigate whether the typical capital structure determinants of size, profitability, asset tangibility, non-debt-tax-shields and liquidity affect, in a statistically different way, how capital structure is determined across four different industries: manufacturing, commerce, services, and tourism. We show that even though industry effects have been looked at in the various capital structure determination studies, they have not been thoroughly studied in capital structure literature. We apply an interaction effects methodological approach and show that capital structure determinants do differ in terms of magnitude and direction across industries, concluding that industry specifications should be investigated more thoroughly when exploring the capital structure determination puzzle.
... The theory hypothesizes that significant asymmetric information costs force firms to opt for securities with nominal information costs (Barclay & Smith, 1999). Myers and Majluf (1984) The theory suggests that a firm is more likely to issue debt than equity, avoiding the information effects of new share issues. The pecking order theory hypothesizes that firms follow the least resisted path and work through a pecking order by issuing the cheapest type of financing. ...
... Financing sources of hotels include equity (claims on assets of shareholders) and debt (firms' obligations to creditors, which consist of short-term debt and long-term debt). Notable capital structure theories (including information asymmetry, agency conflicts, and transaction costs) argue that debt financing is less expensive than external equity financing (Jensen and Meckling, 1976;Myers and Majluf, 1984). Therefore, firms in general and hotels in particular, often opt for debt to serve their capital-intensive expansion when they do not have sufficient internal funds (Brealey et al., 2018). ...
Article
Due to the detrimental effects of the Covid-19 pandemic on the hotel sector, pandemic crisis management research has received lots of academic attention, from studies in sales-marketing to human resource management. However, financial management has been largely overlooked in the agenda of pandemic crisis management and hotel resilience. Therefore, this paper aims to address the research gap by exploring the role of capital structure management in maintaining financial stability and resilience capacities of hotel firms during this evolving and unpredictable Covid-19 pandemic. Using a database of 1882 firm-quarter observations of 196 hotel firms in 30 countries from Quarter 3 2018 to Quarter 2 2021, it is found that low debt capital structure mitigates the adverse impact of the pandemic on hotel firms’ financial stability during this turbulent time; particularly the negative impacts caused by government restrictions on both domestic and international travel. The benefit of low debt levels is more pronounced for more vulnerable hotels such as small, less diversified, and slow growing hotel firms. Also, hotel firms that have less long-term debt are more financial stable and resilient during pandemic period. Research outcomes suggest that financial management, in particular capital structure policies should be a critical part of hotel resilience building and crisis management strategy for hotel firms.
... Besides, a firm might not be willing to issue new shares to finance profitable investment opportunities because managers act in the interest of existing shareholders. With asymmetric information, share issuance will be perceived as bad signal by market participants and thereby reduce the price of existing shares (Myers & Majluf, 1984). Accordingly, the pecking-order model predicts that the preferred finance option for investment is internal finance, the second-best option is debt finance, and the least option is equity finance (Myers, 1984). ...
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Conference Paper
Previous literature has studied extensively the factors affecting R&D investment decisions and the effects of financialization on physical capital formation. This paper adds to this literature by arguing that dividend payouts have a negative effect on firm-level R&D. External financing constraints imply that firms tend to use internal funds to finance R&D investment but, due to shareholder-oriented corporate governance and the growing importance of financial performance indicators, managers often prioritize the payout of dividends over investment. To verify empirically the existence of a trade-off between dividend payouts and R&D investment, we use a dynamic two-step system GMM estimator and financial information from ORBIS for a sample of 6,787 publicly listed firms from 72 countries during the period 2010-2018. The regression results show that dividend payouts have a negative impact on firm-level R&D investment. This finding indicates that short-term shareholder value orientation undermines firm-level R&D activities and gives support for the view that stakeholders that are interested in the long-term growth of the firm should be empowered. JEL Classification: G35; O3
... 29 We also test whether the positive relationship between UTSA adoption and stock price crash risk varies depending on firms' market-to-book ratios. We predict that high stock crash risk following the adoption of the UTSA will be more pronounced in firms with high market-to-book ratios because there is higher uncertainty for firms with more growth opportunities and intangible assets (Jung et al., 1996;Myers & Majluf, 1984). This is in line with the previous finding that lower analyst forecast errors are found in firms with stable growth and less variability in earnings (Lang et al., 2004;Lys & Soo, 1995). ...
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Article
This paper provides evidence that the trade secrets protection increases stock price crash risk. Using a quasi‐experimental setting with the Uniform Trade Secrets Act (UTSA), we find that firms headquartered in states adopting the UTSA tend to have higher stock price crash risk. The results are robust to controlling for other trade secrets laws and the choice of crash risk measures, and they are more pronounced in small firms and firms with high market‐to‐book and low leverage ratios. A detailed mechanism analysis reveals that increased crash risk following the UTSA is attributed to an opaque information environment and investment inefficiency.
... This is shown in Table 6 column 4 where an the beta coefficient for relative spreads have significant positive value at <0.01 significant level, similar like findings in Fang et al. (2012). The result somehow relates to pecking order theory (Myers & Maljuf, 1984) suggesting that firms tend to have its financing rely on stock issuance when less information-sensitive sources like debts and internal financing have been exhausted. This translates into firms having less information asymmetry, will have higher inclination to use equity financing as they have less degree of asymmetric information. ...
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Conference Paper
This study investigates the impact of market-based earnings quality on firm's valuation via stock liquidity, based on data from Indonesian stock market comprising 73 non-financial firms listed in Kompas100 Index between 2013 and 2016. Using 2 Stage Least Regression (2SLS), the paper introduces stock liquidity as an endogenous variable. predicted by market-based earnings quality, to estimate firm's valuation. The paper finds statistical evidence that higher quality of earnings positively affects Indonesian firm's value through its ability to increase stock liquidity in the ways that positively influence investor's perception and operational performance.
... Bir başka çalışmada ise Wheeler ve Mody (1992) Türkiye'nin de dahil olduğu 42 ülke arasından uluslararası yatırım bölgesi kararının verilmesi üzerine analizler yapmışlardır. Myers ve Majluf (2002), bazı varsayımlar altında yatırım kararı geliştirilmesi üzerine çalışma yapmışlardır. Surz vd. ...
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Günümüzde sadece ürünler değil, hizmetler, kişiler, ülkeler gibi kentler de markalaşmaktadır. Kentler için markalaşma, küresel bir gereklilik olarak karşımıza çıkmaktadır. Dünyanın her tarafında kentler markalaşmaya uygun konuma gelmek için, benzer nitelikteki diğer kentlerle her alanda rekabet içerisindedir. Bu anlamda markalaşma, kentin ekonomik ve kültürel açıdan güçlenmesini ve çekicilik kazanmasını sağlayacaktır. Bu çalışmanın amacı, Isparta kentinin markalaşması konusunda, yerel halkın, çeşitli kurum ve kuruluşların algılarını ve görüşlerini incelemektir. Isparta’nın markalaşmış bir kent olabilmesi için sahip olması veya öne çıkarılması gereken niteliklerinin tespit edilmesi amacıyla çalışmada yarı yapılandırılmış görüşme tekniği kullanılmıştır. Araştırma verileri halkın yoğun olarak görüldüğü alanlarda ve çeşitli kurum ve kuruluşlar ziyaret edilerek toplanmıştır. 400 katılımcı ile yüz yüze görüşme yapılarak araştırma soruları yöneltilmiştir. Çalışmadan elde edilen bulgular, marka kent olma yolunda ilerleyen Isparta’nın turizm açısından zengin bir potansiyeli olduğunu, gelenek ve göreneklerine bağlı bir şehir olduğunu, turizmde popülerliğinin artmakta olduğunu ancak tanıtım faaliyetlerinin yetersiz olduğunu göstermiştir. Çalışmadan elde edilen sonuçlar, kentin markalaşma açısından önemli kaynaklara sahip olduğunu ve bu kaynakların değerlendirilmesi gerektiğini göstermiştir.
... Because QFII has strict procedures before, during, and after the investment process, this process will produce a certain spillover effect, which can convey to the market what kind of enterprise is a better enterprise, thus attracting more interests related attention and tracking. Further combined with the spillover effect of signal transmission, the entry of QFII can not only directly reduce the financing constraints of enterprises but also attract more investors and ease the financing constraints of enterprises by reducing the level of information asymmetry in the process of enterprise innovation When the level of enterprise information asymmetry is relatively high), they usually face higher financing costs (Myers and Majluf, 1984). Qualified foreign institutional investors can play the role of information transmission at a certain level to ease the level of information asymmetry between enterprises and investors. ...
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Whether qualified foreign institutional investors can effectively play a governance role in the capital market and guide the transformation of corporate innovation from “high-volume and low-quality” to “high-volume and high-quality” is an important issue in the process of foreign capital introduction at the present stage. From the perspective of how QFII shareholding affects the innovation model of firms, this study analyzes the data of China’s A-share listed companies from 2007 to 2018 and finds that the shareholding of qualified foreign institutional investors has significantly improved the innovation level of the invested firms, which is reflected in the increase of innovation output and the improvement of innovation quality. The mediating effect shows that QFII shareholding can improve the innovation level of corporates by slowing down insider tunneling of holding companies and increasing the number of analysts to follow, which indicates that QFII is conducive to improving the governance structure of listed companies and improving their qualities. Further research finds that QFII shareholding has a positive impact on corporate efficiency by improving the level of corporate innovation. The above conclusions provide experience and reference for China to further introduce foreign capital.
... To respond to these concerns, we may say that "overly" large capital reserves can have negative consequences for smaller banking sectors, such as reduced lending (Schoors, 2002). Given that the regulatory requirement depends on the number of loans granted, a link between bank capital and lending is established, with the additional assumption that banks face an imperfect market for their equities (Calomiris & Hubbard, 1993;Cornett & Tehranian, 1994;Myers & Majluf, 1984;Stein, 1995). The increasing regulator's reliance on capital requirements makes some issues: How banks react to capital requirements? ...
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Objective: This study aims to investigate how banks determine their capital buffer. Return on Equity (ROE), Non-Performing Loans (NPL), Capital Buffer Lag (BUFFt-1), Loan to Total Assets (LOTA), and Income Diversification (IDIV) are some of the variables examined in this study. Research Design & Methods: Purposive sampling was used to collect samples for this study. It was 20 of the 42 conventional commercial banks that were listed on the Indonesia Stock Exchange in 2012-2016. In this study, multiple regression analysis was used, as well as the ordinary and two-stage least squares methods. Findings: The results of this study have shown that the capital buffer has a negative impact on return on equality (ROE) and income diversification (IDIV). The capital buffer was affected by Lag of Capital Buffer. This research examines how a bank can make a profit from the negative impact of ROE. Based on the results of the tests, the Indonesian Bank has not pursued the highest possible capital buffer. Implications & Recommendations: Companies will use their profit to further profitable activities when they fulfill a minimum capital buffer requirement. Contribution & Value Added: The results of this study try to give an idea for the management of capital and capital buffers and to determine the ideal strategy for investors and banks to meet the Basel and Government regulation. This research tries to add insight into the internal factors that determine capital buffers at conventional commercial banks in Indonesia, as well as research references in the field of financial management, particularly capital buffers.
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El presente artículo quiere establecer los factores que debe conocer los gerentes financieros o directores de empresas para la realización de los procesos de fuentes de financiación de las organizaciones. Se desarrolla bajo tres aspectos: el primero esboza la relación de la financiación con las tres grandes cuentas generadas en el estado de situación financiera. El segundo aspecto presenta el flujo de coordinación entre lo que se financia (costo) y donde se debe invertir la empresa (rentabilidad). Para terminar, se relaciona las decisiones de operación inversión y financiación. El resultado es que el director conozca los factores que inciden en la toma de decisiones en el momento de escoger las fuentes de financiación. Se pretende como fin responder la pregunta de investigación: ¿cuáles son las fuentes de financiación que tiene el CEF en la organización? Este proceso se enmarca en el tipo de investigación cualitativa, con la metodología de revisión documental de los diferentes trabajos académicos propuestos hasta el momento. Para consolidar este documento, se pretenden desarrollar tres grandes objetivos; el primero hace referencia a identificar las diferentes fuentes de financiación dentro de la organización, el segundo objetivo es conocer las fuentes fuera de la organización y como tercer objetivo es establecer los usos mediante la toma de decisiones en las fuentes de financiación. Como resultado principal que se deriva del presente trabajo, es que las personas que se dedican a la administración del recurso financiero conozcan los factores principales internos como externos y busquen la mejor decisión de inversión con el fin de maximizar la rentabilidad de la organización.
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The aims of this study were to find some factors that effect to firm value. The objective of this study is to prove the indirect effect of Good Corporate Governance which is proporated by Audit Committee, Board Of Directors and Board Independen Commissioner. This study takes sample from 11 companies in the food and beverages sub sector at the Indonesia Stock Exchange, which were listed from 2013-2017. Sampling method in this study used purposive sampling. The method of analysis in this research used multiple regression. The results of this study show that audit committee, board Independen Commissioner, profitability, and firm growth had positive significant influence to firm value. Meanwhile, debt policy and board of directors had negative significant influence to firm value. Firm Size on the other hand had not significant influence to firm value. The contribution of this research is: Keywords: GCC, Debt Policy, Firm Size, Firm Value
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This study was designed to determine the nature of the association between the financial structure decision and shareholders' wealth—dividend payments—of firms listed on one of the largest stock markets in oil‐based economies, the Saudi stock market. The study used panel data for all nonfinancial firms listed in Saudi Arabia's primary stock market (TASI) during the period from 2000 to 2018. The pooled ordinary least squares, quantile, generalized method of moments and U‐tests were conducted to evaluate the association between the financial structure decision and dividend payment. The preliminary findings revealed a positive effect of financial leverage on dividend payments using a linear model. However, when a nonlinear model was used, the study found a nonlinear relation between the financial structure decision and dividend payouts, which exhibited an inverted U‐shaped curve driven by levels of debt. This nonlinear relation verifies the tenets of the trade‐off theory of optimum debt level based on the costs and benefits of the debt. Further, the study found a negative influence of firm performance, size, and age on dividend payments. The outcomes of this study may provide useful insights for policymakers, managers, and lenders into the optimal level of financial leverage and efficient dividend policies.
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This paper examines whether the market reaction to investment announcements is conditional on company excess cash holdings. Cash may convey significant price‐relevant information about the future cash flows and strategic direction of a company. Using a sample of 4,256 corporate investment announcements by firms listed on the London Stock Exchange over the period 2005–2019, we show that market reactions to new company investment announcements are higher for firms with excess cash holdings. Furthermore, we provide evidence on the relationship between excess cash holdings and market valuation of various investment classes. The results reveal that organic investments are valued more highly by the market than inorganic investments, and the positive impact of excess cash holdings is more pronounced for the set of organic investment decisions, particularly product launches and R&D. Lastly, we evaluate how the motive for holding cash affects the market perception of excess cash holdings. The market views excess cash holdings as positive when cash is held as a result of high exposure to risk, high debt capacity, and high bid–ask spread. Market perception of excess cash holdings reverses from negative before to positive after the global financial crisis.
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Research defines coopetition as a mix of cooperation and competition among firms oriented towards producing innovation, and generating net value added or economic benefit. The importance of studying the determinants of firms’ innovative behaviour, based on those coopetition relationships, has warranted increasing attention from scholars. However, the role played by micro-, small-, and medium-sized enterprises in this process have been neglected, even as research on economic geography, clusters, entrepreneurship, and innovation, has become pre-eminent. This represents an opportunity for scholars, policymakers, entrepreneurs, and practitioners to discuss the importance of micro-, small-, and medium-sized enterprises in determining the innovative behaviour of government, industry, higher education institutions (HEIs), and citizens in environments that mix competition and cooperation. Despite the importance of the institutional and network approaches explored in the literature, much remains unknown regarding the role played by the referred different types of enterprises in determining innovative and economic performance. Another gap found in the literature is concerning entrepreneurial and open innovative ecosystems. There is increasing literature suggesting reasons behind ecosystems emergence, but it fails to examine, in detail, the exact mechanisms behind it, namely, the role played by endogenous production factors (for example, human capital, social or relational capital, organizational capital, and knowledge), using an organizational economics approach. This gap may be addressed by linking, for example, coopetition, innovative behaviour, clusters, or industrial districts. If agglomeration improves the quality of the match between government, firms, HEIs, and citizens, then clusters will ensure enduring productivity and sustainable competitive advantages. The collection of 13 contributions is quite impressive, in the sense that congregates in the same volume several benchmarks of international practices of open innovation, revealing the importance of micro-, small-, and medium-sized firms for reinforcing the evolutionary innovation pathway undercut with established firms, public institutions, and civil society. Research avenues are provided to scholars, policymakers and practitioners that are interested in moving forward with the open innovation paradigm, recovering the importance of the open debate devoted to the innovative nature of new entrepreneurial units, which are responsible for creating qualified work, innovations, and new specializations.
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يتمثل هدف هذه الدراسة في تحديد الدور الذي تلعبه المرونة المالية في الرفع من قدرة المؤسسة على الاستثمار، وهذا باستخدام عينة واسعة تكونت من 280 شركة صناعية في الفترة 2010-2014، ومن أجل اختبار ما إذا كانت المرونة المالية لها أي تأثير على القدرة الاستثمارية للشركات محل الدراسة. تم استخدام نموذج الاستثمار المعزز بالمتغير الوهمي للمرونة المالية بالإضافة الى التفاعل بين هذا المتغير الوهمي ونسبة التدفق النقدي للشركة. وتبين لنا من خلال النتائج أن وضع المرونة المالية في الواقع ليس له أي تأثير على القدرة الاستثمارية للمؤسسات محل الدراسة. كما توصلت الدراسة إلى أن تباين قيمة المرونة المالية بين المؤسسات ليس له علاقة بقدرة المؤسسة على الاستثمار. أي ان هذه المؤسسات سواء كانت صغيرة أو كبيرة لن تتأثر سياستها الاستثمارية بمدى اتباعها لسياسة رفع مالي متحفظة على عكس ما كان متوقع.
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This study examined the influences of financial slack resources and risk taking behaviour on investment decisions of insurance companies in Nigeria. Insurance companies in Nigeria may be crippled by weak risk taking behavior as well as large catastrophic loss if their financial slack resources, current assets, working capital, size, previous performance and other internal reserves are not large enough to cover certain risk exposures, which will in turn discourage them from taking more risk especially in making investment decisions. The researcher employed the use of ex post facto design in which secondary data were obtained from CBN statistical Bulletin from 1996 to 2021. The data were analyzed using the inferential methods of Co-integration bound Test, short run and long run Autoregressive Distributed Lags (ARDL) estimation tests. The finding was that financial slack resources influenced investment decisions of insurance companies in Nigeria positively and significantly in the short-run while risk taking behaviour maintained negative and insignificant influence. On the contrary, there are no significant long-run effects of current asset ratio, working capital ratio and risk taking behaviour on investment decisions of insurance companies in Nigeria. Recommendations were that there is need for insurance companies to maintain large amount of financial slack keeping higher level of liquidity, more working capital and current assets reserves and channel these financial slack resources into short term investments. Efforts should be made to improve the company risk taking behaviour on investment decisions for higher returns on investments.
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Objetivo: A pesquisa busca verificar se o caixa moderado pelas contingências ambientais (munificência e dinamismo) medeia a relação entre diversificação internacional e desempenho das empresas brasileiras exportadoras listadas na B3. Método: Foram analisadas empresas brasileiras exportadoras listadas na B3, no período de 2010 a 2020 e realizadas análises multivariadas com dados em painel com efeitos fixos e dinâmicos, nesse caso, utilizando-se o método System-GMM, por meio do modelo de mediação moderada proposto por Muller, Judd e Yzerbyt (2005). Resultados: Os resultados indicam que o caixa, moderado pela instabilidade e crescimento do setor, medeia a relação entre a diversificação internacional e desempenho das empresas exportadoras da amostra. O efeito indireto da diversificação internacional no desempenho é melhor por meio de maior liquidez das empresas exportadoras em um ambiente menos instável e munificente. Os achados sugerem que os gestores de empresas exportadoras devem analisar as reservas de caixa na expansão dos negócios para o mercado externo, levando em consideração o ambiente de tarefas no qual a empresa atua. Contribuições: O presente estudo traz contribuições para a teoria por expandir os estudos dos efeitos da diversificação internacional no desempenho das empresas, sugerindo que a liquidez tem valor estratégico na expansão dos negócios para o mercado externo. Empiricamente, traz implicações práticas importantes sobre o processo de tomada de decisão de constituição e gestão da liquidez, mostrando que os gestores de empresas exportadoras devem analisar os custos e benefícios da liquidez, observando a instabilidade e crescimento do setor para melhorarem o desempenho das empresas.
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