scholarly journals R&D activity and financing constraints: Evidence from Turkey

2020 ◽  
Vol 67 (4) ◽  
pp. 557-571 ◽  
Author(s):  
Armağan Gezici ◽  
Özgür Orhangazi ◽  
Cihan Yalçın
Keyword(s):  
Balance Sheet ◽  
Negative Relationship ◽  
Capital Intensity ◽  
Export Market ◽  
Financing Constraints ◽  
Time Varying ◽  
Firm Level ◽  
Data Set ◽  
Income Statement ◽  
The Relationship

We analyze the relationship between financing constraints and firms? R&D activity using a rich and comprehensive firm-level balance sheet and income statement data set of manufacturing firms in Turkey for the period 1996 to 2013. Using a firm-specific, time-varying financing constraints index, we find that financing constraints have a negative relationship with firms? R&D activity, after controlling for other determinants of R&D such as firm size, capital intensity and export market participation.

Bank soundness and liquidity creation

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ahmad Sahyouni ◽  
Mohammad A.A. Zaid ◽  
Mohamed Adib
Keyword(s):  
Balance Sheet ◽  
Negative Relationship ◽  
Capital Adequacy ◽  
Rating System ◽  
Content Type ◽  
Mena Countries ◽  
Earning Ability ◽  
Asset Quality ◽  
The Relationship ◽  
Bank Soundness

PurposeThe purpose of this paper is to investigate how much liquidity banks create and how liquidity creation changed over time in the MENA countries and to examine the soundness of banks in these countries based on the CAME rating system, in addition to investigating the relationship between CAME ratios and liquidity creation of these banks.Design/methodology/approachThe study regresses the CAME ratios together with other control variables to model liquidity creation. The robustness of the results is evaluated by using a different measure of liquidity creation and by excluding the observations of the Islamic banks.FindingsThe results show that the CAME rating system, as an indicator of bank soundness, is negatively related to bank liquidity creation. Specifically, capital adequacy, management efficiency and earning ability ratios affect the on-balance sheet components of liquidity creation, while asset quality ratio affects its off-balance sheet component.Practical implicationsThe paper offers insights to regulators and banks managers in terms of better understanding of the negative relationship between CAME rating system and bank liquidity creation.Originality/valueThis paper sheds more light on the relationship between bank soundness and liquidity creation by using the ratios of the CAMEL rating system as an indicator of bank strength and soundness.

Teuer Furniture (A): Discounted Cash Flow Valuation

2017 ◽  
pp. 1-23
Author(s):  
Mitchell A. Petersen
Keyword(s):  
Cash Flow ◽  
Firm Value ◽  
Capital Investment ◽  
Balance Sheet ◽  
The United States ◽  
List Type ◽  
Discounted Cash Flow ◽  
Firm Level ◽  
Income Statement ◽  
Pro Forma

Teuer Furniture is a privately owned, moderately sized chain of upscale home furnishing showrooms in the United States. The firm survived the economic recession and by the end of 2012, it has regained its financial footing. Now that the firm is more secure financially, some of its long-term investors have asked to cash out their investments. This will be the first time that Teuer has repurchased its equity; the company has paid dividends since 2009. Chief financial officer Jennifer Jerabek and her team have been given the task of valuing Teuer using a discounted cash flow approach. The discount rate is given in the case, and the students need to build a pro forma income statement, balance sheet, and cash flow statement and then calculate a per-share value for Teuer. Estimate firm value using a discounted cash flow approach Construct firm-level estimates of the pro forma income statement, balance sheet, and cash flow from assets based on store-level estimates Recognize how forecasts of revenues, costs, and capital investment are constructed, how the individual estimates relate to each other, and how the forecasts depend upon the underlying economics of the business Evaluate and defend the validity of the firm’s forecasts and the valuation model

Firm-level determinants of job creation by SMEs: Swedish empirical evidence

2015 ◽  
Vol 22 (4) ◽  
pp. 666-679 ◽  
Author(s):  
Darush Yazdanfar ◽  
Peter Öhman
Keyword(s):  
Method Of Moments ◽  
General Pattern ◽  
Generalized Method Of Moments ◽  
Job Creation ◽  
Financial Leverage ◽  
Firm Level ◽  
Data Set ◽  
Content Type ◽  
Industry Sectors ◽  
The Relationship

Purpose – Using a resource-based approach, the purpose of this paper is to examine the effects of the firm-level determinants financial leverage and liquidity on job creation at small and medium-sized enterprises (SMEs) in six industry sectors in Sweden. Design/methodology/approach – The generalized method of moments system model was used to analyse an extensive panel data set of 26,721 Swedish SMEs over the 2008-2011 period. Findings – The empirical results indicate that job creation is positively related to SMEs’ financial leverage and liquidity, and to their size and age. SMEs’ financial leverage and size are the most important firm-level determinants of job creation. Although there are differences between industry sectors, the results confirm the general pattern of the effect of financial leverage and liquidity on job creation. Research limitations/implications – Due to the importance of job creation for economic growth, the relationship between SMEs’ capital structure and job creation should be of interest to researchers, practitioners, and policymakers. In investigating the importance of financial leverage and liquidity to labour demand dynamics, this study analyses the firm-level factors that influence job creation by SMEs. Originality/value – Since there is limited empirical research focusing on this relationship at firm level in the context of SME, the current research aims at investigating the determinants of job creation at the firm level empirically.

Goodwill impairment loss and bond credit rating

2017 ◽  
Vol 25 (1) ◽  
pp. 2-20 ◽  
Author(s):  
Li Sun ◽  
Joseph H. Zhang
Keyword(s):  
Regression Analysis ◽  
Credit Rating ◽  
Credit Ratings ◽  
Negative Relationship ◽  
Least Squares Regression ◽  
Firm Level ◽  
Content Type ◽  
Goodwill Impairment ◽  
The Impact ◽  
The Relationship

Purpose The purpose of this study is to examine the impact of goodwill impairment losses on bond credit ratings. Design/methodology/approach The authors use regression analysis to examine the relationship between goodwill impairment losses and bond credit ratings. Findings The empirical results show a negative relationship between the amount of goodwill impairment losses and bond credit ratings, suggesting that firms with goodwill impairment losses receive lower credit ratings. The authors perform various additional tests, including subsamples in good or bad market time, changes analysis, first time goodwill impairment firms vs subsequent impairment and the two-stage least squares regression analysis to address potential endogeneity issues. The main results persist. Originality/value This paper links and contributes to two streams of literature: goodwill impairment in accounting literature and bond credit ratings in finance literature. Whether a firm’s goodwill impairment losses affect the firm’s bond credit rating remains an interesting question that has not been examined previously. To the best of the authors’ knowledge, this is the first study that directly examines the relationship between goodwill impairment losses and bond ratings at the firm level.

scholarly journals Inflation and Economic Growth: a Review of The International Literature

2017 ◽  
Vol 20 (3) ◽  
pp. 41-56 ◽  
Author(s):  
Foluso A. Akinsola ◽  
Nicholas M. Odhiambo
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
Negative Relationship ◽  
Threshold Level ◽  
Data Set ◽  
Developed Economies ◽  
The Impact ◽  
The Relationship ◽  
Over Time ◽  
Country Specific

This paper surveys the existing literature on the relationship between inflation and economic growth in developed and developing countries, highlighting the theoretical and empirical indications. The study finds that the impact of inflation on economic growth varies from country to country and over time. The study also finds that the results from these studies depend on country‑specific characteristics, the data set used, and the methodology employed. On balance, the study finds overwhelming support in favour of a negative relationship between inflation and growth, especially in developed economies. However, there is still much controversy about the specific threshold level of inflation that is appropriate for growth. Most previous studies on this subject just assume a unidirectional causal relationsship between inflation and economic growth. To our knowledge, this may be the first review of its kind to survey, in detail, the existing research on the relationship between inflation and economic growth in developed and developing countries.

scholarly journals The Net Worth Trap: Investment and Output Dynamics in the Presence of Financing Constraints

Mathematics ◽  
2020 ◽  
Vol 8 (8) ◽  
pp. 1327
Author(s):  
Jukka Isohätälä ◽  
Alistair Milne ◽  
Donald Robertson
Keyword(s):  
Global Financial Crisis ◽  
Negative Relationship ◽  
Risk Exposure ◽  
Financing Constraints ◽  
Net Worth ◽  
Empirical Modelling ◽  
The Great Depression ◽  
Preference Functions ◽  
The Global Financial Crisis ◽  
The Relationship

This paper investigates investment and output dynamics in a simple continuous time setting, showing that financing constraints substantially alter the relationship between net worth and the decisions of an optimizing firm. In the absence of financing constraints, net worth is irrelevant (the 1958 Modigliani–Miller irrelevance proposition applies). When incorporating financing constraints, a decline in net worth leads to the firm reducing investment and also output (when this reduces risk exposure). This negative relationship between net worth and investment has already been examined in the literature. The contribution here is providing new intuitive insights: (i) showing how large and long lasting the resulting non-linearity of firm behaviour can be, even with linear production and preferences; and (ii) highlighting the economic mechanisms involved—the emergence of shadow prices creating both corporate prudential saving and induced risk aversion. The emergence of such pronounced non-linearity, even with linear production and preference functions, suggests that financing constraints can have a major impact on investment and output; and this should be allowed for in empirical modelling of economic and financial crises (for example, the great depression of the 1930s, the global financial crisis of 2007–2008 and the crash following the Covid-19 pandemic of 2020).

Webs of Influence: Secondary Stakeholder Actions and Cross-National Corporate Social Performance

2020 ◽  
Author(s):  
Kate Odziemkowska ◽  
Witold J. Henisz
Keyword(s):  
Corporate Social Performance ◽  
Social Issues ◽  
Social Performance ◽  
Issue Salience ◽  
Firm Level ◽  
Data Set ◽  
Stakeholder Groups ◽  
Corporate Social ◽  
The Relationship ◽  
Cross National

We analyze the relationship between the actions and interactions of secondary stakeholders with an interest in corporate social performance (CSP) and variation in firm-level CSP across countries. Our work represents a significant theoretical shift in research exploring comparative CSP, which, to date, has focused on cross-national variation in institutions. We propose that stakeholders can also drive cross-country heterogeneity in CSP by influencing the salience of the issues for which they advocate. Stakeholders raise salience of CSP issues through their interactions with important sociopolitical actors within a country, signaling their collective ability to change expectations on CSP. CSP issue salience is also heightened where heterogeneous stakeholder groups advocate for CSP issues, signaling that issues have garnered widespread acceptance or legitimacy. Managers are also more attuned to the urgency of issues through the direct actions that stakeholders take against firms in the country. We also argue and find that these effects are moderated by interstakeholder interactions, which signal the degree of consensus among stakeholders on issues and their ability to mobilize repeatedly against firms. We draw on a novel data set of 250 million media-reported events to identify secondary stakeholders with interests in the environmental and social issues that constitute CSP, their direct actions against firms, and their interactions with important sociopolitical actors and each other. We show empirically that variation in secondary stakeholder actions and interactions between countries, and within countries over time, is associated with differences in firm-level CSP among a sample of 2,852 firms spanning 36 countries from 2004 to 2013.

Beyond Dutch Disease: Are there mediators of the mining–tourism nexus?

2020 ◽  
pp. 135481661989922
Author(s):  
Char-lee Moyle ◽  
Fabrizio Carmigani ◽  
Brent Moyle ◽  
Sajid Anwar
Keyword(s):  
Structural Equation ◽  
Negative Relationship ◽  
Equation Model ◽  
Dutch Disease ◽  
Data Set ◽  
International Tourist ◽  
Resource Intensity ◽  
Governance Quality ◽  
The Relationship ◽  
Unbalanced Panel Data

In recent years, significant work has emerged exploring the relationship between tourism and mining. Generally, the relationship is considered to be negative, the result of crowding out of tourism during mining booms. However, the relationship is likely to be more complicated with mining affecting tourism both directly and indirectly. The indirect effects arise from the mediation role played by foreign direct investment (FDI), governance quality, trade and the real exchange rate. To verify this hypothesis, this article uses an unbalanced panel data set that covers 190 countries over the 2002–2017 period. A structural equation model is used to account for the mediating relationships. The results show a direct negative relationship between natural resource intensity and international tourist arrivals, as well as indirect positive relationship mediated by FDI partially offset by an indirect negative relationship mediated by governance.

The relationship between managerial entrenchment and accounting conservatism

2021 ◽  
Vol 19 (5) ◽  
pp. 612-631
Author(s):  
Mahdi Salehi ◽  
Ebrahim Ghanbari ◽  
Saleh Orfizadeh
Keyword(s):  
Corporate Governance ◽  
Fixed Effects ◽  
Balance Sheet ◽  
Accounting Conservatism ◽  
Content Type ◽  
Managerial Entrenchment ◽  
Conservative Accounting ◽  
Income Statement ◽  
Study Results ◽  
The Relationship

Purpose This study aims to assess the relationship between managerial entrenchment and accounting conservatism in Iran. Design/methodology/approach To test hypotheses, all listed companies on the Tehran Stock Exchange during 2013–2018 (six years) that qualified were selected. Given the defined limitations of the study, a total of 120 firms with 720 year-observations was selected. After collecting data and figures, they were analyzed using EViews software. Having presented the inferential model tests, the panel data with fixed effects model is chosen. Findings The study results indicate a positive and significant relationship between managerial entrenchment and unconditional conservatism presented in the income statement. Moreover, the authors find a meaningful relationship between managerial entrenchment and unconditional conservatism about the balance sheet. Practical implications Managers will be more aware of the positive consequences of employment optimal corporate governance such as conservative accounting. Such corporate governance is likely to serve their interest in the long run by providing positive signals to the equity owners and board of directors. Originality/value By assessing conservatism’s literature in Iran, we observe many studies on this concept. Still, no investigation is carried out on the relationship between conservatism in accounting and managerial entrenchment. The present study is innovative because it evaluates the relationship between managerial entrenchment and two types of conservatism, namely, balance sheet and income statement conservatism, which have never been investigated by prior studies, notably in emerging markets.

scholarly journals A Cross-country Study of the Effects of Institutional Ownership on Credit Ratings

2017 ◽  
Vol 12 (8) ◽  
pp. 80 ◽  
Author(s):  
AlHares A. ◽  
Ntim C. G.
Keyword(s):  
Financial Crisis ◽  
Firm Size ◽  
Global Financial Crisis ◽  
Credit Ratings ◽  
Negative Relationship ◽  
Institutional Ownership ◽  
Control Variables ◽  
Firm Level ◽  
Anglo American ◽  
The Relationship

A considerable number of studies have examined the relationship between corporate governance (CG) structures and corporate performance (e.g., Yermack, 1996; Gompers et al., 2003; Beiner et al., 2006; Renders et al., 2010; Ntim et al., 2012; Kumar & Zattoni 2013; Griffin, et al., 2014). In contrast, despite its importance as demonstrated by the recent financial crisis, studies examining why and how a corporation’s CG mechanisms might influence its credit ratings are rare (e.g., Switzer and Wang, 2013;Matthies, 2013; Tran, 2014). This research, therefore, seeks to contribute to the extant literature by exploring the effects of (CG) mechanisms on corporate credit ratings. Specifically, using a sample of 200 firms from 10 OECD countries over ten years covering the pre- and post-2007/08 global financial crisis period from Anglo American (i.e., Australia, Canada, Ireland, UK, and US) and Continental European (i.e., France, Germany, Italy, Japan and Spain) traditions and employing a total of 200 listed companies, this paper hopes to achieve a number of objectives. First, the paper attempted to assess the levels of compliance with, and disclosure of, CG principles contained in the 2004 OECD CG Code in firms from two different traditions: Anglo America and Continental Europe. Second, the paper sought to investigate the relationship between CG mechanisms and credit ratings. These relationships will be explored by employing firm-level CG mechanisms (ownership structures measured by Institutional Ownership) by accounting for firm-level control variables (e.g., firm size, growth, profitability, and leverage) based on a multi-theoretical framework that incorporates insights from agency and legitimacy theories. The findings revealed that there was a strong negative relationship between institutional ownership and credit ratings. From the descriptive analysis, it was shown that institutional owners did not have a very high credit rating. When the control variables were assessed, it was shown that they had a negative influence on the credit ratings with sales growth and leverage and positive significant relationship with firm size, corruption index, power distance and Anglo American countries.

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