Cash Resources Research Articles

Managerial sentiment and employment

Recent research shows that managers, much like investors, are prone to sentiment. In this paper, we study the effect of managerial sentiment on firms’ operations both theoretically and empirically. Consistent with our model’s predictions, we find that high managerial sentiment increases employment growth, especially among firms with limited investment opportunities and regardless of their cash resources. We also show that high managerial sentiment offsets the negative effect of low investor sentiment and bad governance on employment, but ultimately leads to lower labor productivity. Overall, the findings unveil a new channel through which optimistic managers affect firms’ operations.

The Relation between CEO-Friendly Boards and the Value of Cash Holdings

Our study investigates how CEO-friendly boards influence the value and utilization of cash resources. In this paper, we analyze two conflicting views on CEO-friendly boards and their impact on corporate cash holdings: one view posits that such boards might be too lenient, fostering managerial moral hazard problem, while the other contends that they encourage CEOs to share information, despite CEOs knowing that better-informed boards could enforce stricter oversight. By measuring board friendliness through CEO-board social ties, we find that firms with a friendly board tend to maintain lower cash reserves but their excess cash is valued higher by the market compared to firms without such a board. Moreover, these boards deploy excess cash in ways that significantly enhance firm value. The results remain robust even after controlling for various governance variables and CEO characteristics. Our findings offer crucial insights for corporate practitioners and policymakers, highlighting the importance of appointing and retaining CEO-friendly directors to foster effective information exchange, especially in firms with substantial CEO-board information asymmetry in capital budgeting.

An Evaluation of the Implementation of the Treasury Single Account System in Zambia: A Case Study of Selected Government Ministries

The study sought to empirically evaluate the implementation of the Treasury Single Account System in Zambia. The study employed an exploratory research design and utilised the purposive sampling method. The findings revealed that the TSA has resulted in better management of government cash resources. However, despite being effective in the implementation of the TSA the findings show that it has its challenges. The findings have shown that the TSA has been consistent with international best practices. It can be concluded that the TSA has to overcome the shortcomings cited to become more effective in its operation in Zambia. The study recommended that the Government should continue to operate with the principles of TSA because of the positive influence it has on the effectiveness of public finance management in areas of fraud control, accurate accounting, budgetary control, effective cash management and the coverage of the TSA be extended, with the necessary modifications, to cover the local government for effective and efficient management of public finance especially in the areas of fraud control, accurate accounting, budgetary control and cash management.

DIRECTIONS FOR THE FORMATION OF AN ADAPTIVE CASH FLOW MANAGEMENT MECHANISM AT SMALL AND MEDIUM-SIZED BUSINESS ENTERPRISES UNDER CONDITIONS OF NATIONAL ECONOMY RECOVERY

The methodological and practical recommendations for forming an adaptive cash flow management mechanism at small and medium-sized business enterprises under conditions of the post-war recovery of the Ukrainian economy are substantiated. The author's interpretation of the category «cash flow» is proposed as a dynamic indicator that characterizes the constant movement of cash resources as a result of the operational, investment, and financial activities of the enterprise associated with the receipt (incoming cash flows) or spending (outgoing cash flows) of the enterprise's cash resources, which can have a cash and non-cash form, expressed in national or foreign currency and related to a certain point in time. This made it possible to determine the ontological content of the scientific category «mechanism of managing cash flows of the enterprise» and specify its components (management goals and tasks, management criteria, management methods, management levers, management factors, management principles, specifics and features of management, management tools, managerial functions, management resources, regulatory and legal support, and information support). The author's version of the stages of formation of an adaptive cash flow management mechanism at small and medium-sized business enterprises based on the criterion of their optimization is recommended. By the functional specialization of top managers and employees of the financial subsystem, the procedure for making a managerial decision regarding forming an adaptive cash flow management mechanism at small and medium-sized business enterprises is proposed. This clarified the functional responsibilities of employees of the financial subsystem in the cash flow management process. The expediency of using a payment calendar is substantiated, which will help to synchronize cash receipts and payments. A set of measures to increase (decrease) cash flow at small and medium-sized business enterprises has been formed.

МОДЕЛИРОВАНИЕ ВЗАИМОДЕЙСТВИЯ ЖЕЛЕЗНОДОРОЖНОГО И МОРСКОГО ТРАНСПОРТА НА ЦИФРОВЫХ ТРАНСПОРТНЫХ КОРИДОРАХ АРКТИЧЕСКИХ РЕГИОНОВ РОССИИ

The opportunity of formation Western transport corridor ensuring connection of the Arctic regions of Russia with powerful areas of the central part of Russia and Republic Belarus is considered. The modeling of process sending cargoes from the senders up to seaport of Murmansk is information-technological base logistic maintenance polymodal transportations with participation of railway and sea types of transport. Reasoned proves to be true, that the digital reconstruction of a functioning transport corridor has highly productive a resource of the current and perspective analysis of a condition of objects infrastructure and rolling-stock on all a direction of following cargo. It is marked, that the high throughput of means overload of cargoes in seaports is go-ahead reference point of smooth work of a sea transport way. Visually prototyped the three-dimensional image of a transport corridor is an operative model platform of search both realization of the effective design and administrative decisions ensuring most complete and rational use of all cash resources of railway and sea transport on a direction of transportations.

Tax planning and financial default: role of corporate life cycle

PurposeDrawing on the resource-based view (RBV), this study investigates how tax planning affects the likelihood of financial default in different stages of the corporate life cycle.Design/methodology/approachCollecting a large sample of US firms between 1989 and 2016, hypotheses are tested using a hazard model. Several robustness and endogeneity checks corroborate the main findings.FindingsThe results show that tax-planning firms are less likely to default in the introduction and decline stages, while they are more likely to default in the growth and maturity stages. The findings suggest that introductory and declining firms use cash resources obtained from tax planning efficiently to meet their needs and acquire other useful resources. In growing and mature firms, tax aggressiveness generates unnecessary slack resources, weakens managerial discipline and increases reputational risks.Practical implicationsThe results shed light on the benefits and costs associated with tax planning throughout firms' life cycle, holding great significance for managers, investors, lenders and other stakeholders.Originality/valueThis study contributes to the literature that examines resource management at different life cycle stages by showing that cash resources from tax planning are managed in distinctive ways in each life cycle stage, having a varied impact on the likelihood of default. The authors shed light on underexplored cash resources. Furthermore, this study shows the potential linkages between the agency theory and RBV.

Information asymmetries and debt financing: New evidence from the 2007-2008 financial crisis

Purpose: Focusing on the 2007-2009 financial crisis, this study investigates how firms' and debtholders' information sensitivity jointly shape corporate debt financing. According to the pecking order theory, opaque firms prefer bank loans over more information-sensitive sources like bonds and equity. When external conditions worsen, firms face difficulties accessing bank loans and look for alter-natives. Yet, as bondholders are more information-sensitive than banks, the substi-tution effect may not occur especially for firms with lower financial reporting qual-ity (FRQ). Design/methodology/approach: A matching difference-in-differences ap-proach is used to compare the debt financing of firms with and without access to corporate bond markets before and after the onset of the financial crisis. A sample of quarterly data of US-listed firms is analyzed for the 2006Q3-2009Q2 period. Findings: The reduction in debt financing due to the crisis was greater for firms with access to bond markets. The effect is more pronounced for firms with lower FRQ. These firms also looked more for alternatives such as equity and cash re-sources.

Management of Own Investment Activity by Small Business Entities

The article highlights the problem of investment activity manifestation by small businesses whose activities are related to agriculture. The reserves remaining at the disposal of entrepreneurs after paying personal income tax and VAT are determined by analyzing tax liabilities and obligations. Monitoring of the official websites of the Entrepreneurship Promotion Funds showed the possibility of attracting investments in the form of grants for business support and development. The purpose of the study is to identify and justify ways to implement investment activities through a competent tax policy in relation to small businesses engaged in agricultural production. To achieve this, the task was set to analyze tax deductions from the perspective of increasing the subject’s own monetary and cash resources and the latter’s ability to invest them in production. In the course of the work, the following methods were used: monographic, abstract-logical, economic-statistical, systems approach, comparative analysis. The methodological and theoretical basis was the works of representatives of domestic science, regulatory and legislative acts of the Russian Federation regulating the functioning of the tax system; official publications, as well as materials of scientific and practical conferences. The study results proposed: to consider the financial capabilities and opportunities of small businesses in the agricultural production sector as an incentive for their own investment activity; when declaring the right to apply tax deductions [Tax on personal income (standard, social, property, investment, professional) and “input Value Added Tax”], to release their own funds from taxation and apply them, as well as to use the possibilities of attracting government (public) and private grants as investments in the production process.

Directions for improving control procedures over the movement of financial resources in companies with a branch network on the example of OOO «Gazprom transgaz Samara»

The article deals with the problems of controlling the flow of financial resources in large companies with a wide branch network both inside and outside the country. The authors use the example of one of the largest fuel and energy Russian companies to consider the processes of financial resources movement between local branches, regional representatives and the parent organization. One of the representatives of holding structures that include companies with a branch network in the extractive industry is the Gazprom Group, which includes the parent organization represented by PJSC Gazprom and many subsidiaries engaged in oil and gas production, processing and transportation. The authors note that the implementation of financial control within such companies is a rather complex process, which contributes significantly to the financial stability of the holding company as a whole. The relevance of the work lies in the fact that the lack of an effective system of control over the movement of financial resources in companies with a branch network can affect not only the activities of the entire holding, but also the economy of the whole country. The authors present the movement of financial flows within the company, identify weaknesses and develop recommendations to improve control procedures. It is concluded that the development of the Unified system of control over the movement of cash resources in companies with a branch network can solve a number of previously identified problems of the existing control system. Despite the existing deficiencies in the control system, the proposed solutions seem simple enough to implement and will contribute to their elimination.

Projected Cash Flow Model by Activities for Decision Making in Private Companies in Peru

The objective of the research was to develop a projected cash flow model by activity, a situation that is not shown in traditional cash flows. The article uses a deterministic cash flow model based on the liquidity position at the date on which the financial statement is formulated, according to which the total cash flow, that is, the net change in cash, will be realized according to the balance of the Statement of Cash Flows, Operating Flows and the Investment Flows that may be present, although they are infrequent and at the same time are normal activities of a company. It also shows a contribution to the theories and practices is the expansion of knowledge in financial theory on cash resources, which were confirmed by the research and conclusions regarding the analysis of open capital companies in the emerging market. It was concluded that the analyzed model can form the basis for improving decision making and finance management in companies.

Heterogeneous adaptability: Learning, cash resources, and the fine‐grained adjustment of misaligned governance

AbstractResearch SummaryWhen can a firm make fine‐grained adjustments to misaligned subsidiary governance? We examine whether and under what conditions a firm will adapt the equity stake it owns in a subsidiary, enabling improved alignment of the stake with the uncertainty in the local environment. We predict that the rate of adaptation of misaligned equity stakes depends on the experiential and vicarious learning from which the firm can draw, and that these learning effects are contingent on possessing fungible slack resources, specifically cash. Using a sample of 726 Japanese‐foreign subsidiaries established in 38 host countries over a 21‐year period, we find support in line with our predictions. Overall, this study explicates heterogeneous adaptability in subsidiary governance and similar strategic tasks.Managerial SummaryWhether due to suboptimal choices or changing conditions, firms must sometimes change how they relate with and control their subsidiaries. Whereas much research has addressed adaptation in the form of discrete changes in ownership mode, we examine under what conditions a firm can make fine‐grained adjustments to misaligned subsidiary governance. We argue that a firm can learn to make such adjustments, not only from its own experience but also vicariously by observing other firms in the same foreign environment. Furthermore, we consider whether cash is a valuable resource for this purpose. Overall, this study shows how firms can pursue strategic adaptation in subsidiary governance and related tasks.

Predicting Exporters with Machine Learning

AbstractIn this contribution, we exploit machine learning techniques to evaluate whether and how close firms are to become successful exporters. First, we train various algorithms using financial information on both exporters and non-exporters in France in 2010–2018. Thus, we show that it is possible to predict the distance non-exporters are from export status. In particular, we find that a Bayesian Additive Regression Tree with Missingness In Attributes (BART-MIA) performs better than other techniques with an accuracy of up to 0.90. Predictions are robust to changes in definitions of exporters and in the presence of discontinuous exporting activity. Eventually, we discuss how our exporting scores can be helpful for trade promotion, trade credit, and assessing aggregate trade potential. For example, back-of-the-envelope estimates show that a representative firm with just below-average exporting scores needs up to 44% more cash resources and up to 2.5 times more capital to get to foreign markets.

Analysis of the main trends of international labor migration in the world

The article analyzes migration flows around the world and at the regional level from a theoretical and practical point of view. Recently, there have been major migrations and displacements, which have led, among other things, to the death of people. First of all, this is the displacement of millions of people due to military conflicts or serious economic and political instability. The study emphasizes that, despite the limitations of international mobility, migration is an eternal phenomenon, it is accelerating as part of the broader transformations of globalization of trade and economic processes. A summary and analysis of the main statistics of international migration by region, by gender and other indicators is provided. The study showed that the main flows of labor migrants are directed to countries with above-average and high-income incomes. Monetary transfers by labor migrants by regions of the world are analyzed. The importance of these transfers for financing current expenditures and the shortage of cash resources of the population is emphasized, especially for countries in which the inflow of remittances accounts for the bulk of GDP.

Treasury Single Account: An Assessment of its Compliance in Ghanaian Covered Entities.

Treasury Single Account (TSA) is an indispensable tool for consolidating and managing government as well as covered entities cash resources, thereby reducing borrowing costs and improving efficiency in treasury management. In countries or covered entities where the banking system is fragmented, some funds may not be accounted for properly within a reporting period. The study population was covered entities which generate internal funds to support their operations and also receive subventions from the government. The population was stratified into five (5) groups and a quasi-random sampling technique was used to select the sample size. The study used chi-square to test the hypothesis and it was found that covered entities in Ghana do not comply with TSA concept in managing their cash resources.

Публічні кошти як об’єкт судово-економічної експертизи

Having chosen a democratic development path, Ukraine is actively working to improve the quality of public finance management. Generally, public funds are not objects of forensic economic expertise. However, funds of the different institutions and associations operating within limits implemented by legislative norms become such objects due to numerous economic crimes. The article aims to reveal the essence and content of the concept of public funds, which will serve as the basis of special knowledge when performing a forensic economic expertise following the goals formed during pre-trial or court proceedings. The heuristic potential of public funds was revealed by clarifying the types of public funds recorded in the legislative field. The types of public funds were analyzed according to their classification features and characteristics in the economic and legal sense, which contributes to the organization of the research of public funds based on this classification and the tasks of forensic economic expertise. It was substantiated that the concept of “public funds of resources” is broader in content than the “public funds of cash resources”. Therefore it is proposed to distinguish them given their corresponding content component during the forensic economic expertise of operations with such objects of expert research. Mandatory criteria for the publicity of funds have been identified, such as public interest, the common (public) purpose of operation, non-commerciality, public-legal regime of operation of the fund of funds established by law, defined as a special object of public financial control, legally defined sources of income, forms distribution and form of use of the monetary fund. Additional classification features of funds of public funds have been established, which allows for their classification in the legal field.

The impact of cash holding on stock returns in small and medium enterprises on the Egyptian Nile Stock Exchange

This paper explores the impact of cash holdings on stock returns in small and medium enterprises. The sample includes 24 SMEs listed on the Egyptian Nile Exchange, excluding service firms, with a total of 96 observations from 2016 to 2019. Data was collected from financial statements and reports obtained through an information dissemination company in Egypt. This study uses a panel data analysis with comparing all results via ordinary least squares and the generalized method of moments. The findings show a statistically significant negative effect of cash holding on stock returns in small and medium enterprises on the Egyptian Nile Exchange. Further, the evidence shows that firms with higher levels of cash holding have higher investment alternatives and then lower stock returns. This result supports the agency theory that an increase in cash holding leads to managers exploiting cash resources to achieve personal benefits, thus increasing agency costs, lowering investment efficiency, and therefore lowering stock returns. The results support the trade-off between risk and return by using cash holding to finance operational activities and investing in higher investment alternatives and then lower stock returns.

Treasury Single Account: Tool for Resource Control and Fraud Mitigation

This study is carried out to investigate the influence of Treasury Single Account (TSA), on public sector resources management in Nigeria: a study of south-south Nigeria. The study empirically explores the extent to which TSA has influenced appropriation control and cash management in the Nigerian public sector. To achieve these objectives, the survey research design was adopted using primary data with the help of a questionnaire distributed to purposely selected 300 staff of federal government MDAs in South-South Nigeria. Two hypotheses were formulated and tested at 0.05 level of significance. Regression analysis was used for data analysis and testing of hypothesis. The outcome of the study revealed that TSA has a very strong and positive relationship with level of appropriation in public sector in Nigeria. More so, TSA has a strong and positive relationship with level of cash management in public sector in Nigeria. Fraud control positively and significantly moderates the relationship between TSA and public sector resources management in Nigeria. This research concludes that the introduction of TSA has significantly enhanced consolidation of cash resources of the government. The study however, recommended among others that TSA adoption is essential for actualization of public sector resources management, thus government should create more awareness of the benefits of TSA to employees of MDAs and the general public. Government should ensure that internal control processes are adequate to monitor and deter employees’ corrupt activities. Adequate policies and regulations that would ensure TSA is extended to all agencies of government at all levels should be enacted.

ДЕФІНІЦІЯ ПОНЯТЬ «ФІНАНСОВІ РЕСУРСИ» ТА «ГРОШОВІ КОШТИ»

The obtained results of theoretical research become the basis of the practical activities of enterprises and are the basis for the development of programs, projects, corporate and functional strategies of the enterprise. Therefore, a theoretical study of clarifying the essence of the concepts "financial resources" and "cash" is relevant from the point of view of optimizing management processes in financial management and establishing effective internal and external communications with the correct use of these concepts. The purpose of this scientific article is to study the essence of the definitions "financial resources" and "cash" and clarify their common and distinctive characteristics. The article discusses the concept of "resources" and their characteristics. Different approaches of scientists to the interpretation of financial resources, their features and differences are studied. The obtained results are systematized in a table highlighting the key meaning, which became: cash funds, cash resources, highly liquid assets, own and loan funds, target direction and sources of income (internal and external). The role of money in the financial and economic activity of the enterprise is determined. Cash is constantly deposited in bank accounts or cash registers in the form of proceeds from sales or income and is withdrawn when payments are made. Domestic scientists define cash as the receipt and outflow of monetary units of the enterprise and their equivalents, generated as a result of its economic activity, the movement of which is related to the factor of time, risk and liquidity. It has been proven that equating financial resources with money significantly narrows the concept of "financial resources", because they include not only available, but also potential funds. We consider it expedient to interpret "financial resources" as a set of cash and their equivalents, formed in the process of economic activity and received from the outside intended for the fulfillment of financial obligations and financing processes of the reproduction of the enterprise. It is established that cash is not the same as financial resources, but is only a part of them and is the most liquid asset of the enterprise, including cash in hand, funds on bank accounts in banks, deposits and electronic money. The given definition of financial resources of the enterprise reveals the main internal content of financial resources, according to which it becomes possible to identify the mechanism of the influence of finance on the reproductive process, which is a prospect for further scientific research.

NET PRESENT VALUE (NPV) AS A REINFORCEMENT OF THE DECISION-MAKING PROCESS IN TERMS OF INVESTMENT SELECTION

Adequate competition, technical and technological development require enterprises to constantly change and make new investments. Investment is the ongoing expenditure of resources for future benefits. Investments usually involve the commitment of considerable cash resources and manifest themselves in the growth or replacement of tangible fixed assets. Each investment has an individual investment life cycle. The distribution of inflows and outflows associated with the preparation, implementation and operation of an investment. NPV is the net present value, or present value of future cash flows. This indicator predicts what income can be expected from a given investment in terms of the present value of money. Objective decision-making instruments can be constructed using the NPV method. NPV, as the difference between the present values of cash inflows and cash outflows analyzed over a period of time. NPV makes it possible to compare the money that needs to be paid to complete a planned investment with all the cash flows that the company will generate in the future. The NPV method is considered to be the most theoretically correct method for evaluating the profitability of investment projects. There is also a steady increase in interest in it in business practice. The advantages of the NPV method is that it takes into account the entire life cycle of the investment, all cash flows and changes in the value of money over time. A positive NPV value means that the investment contributes to an increase in the value of the company

Use of A Deterministic Cash Flow Model To Support Manager Decisions

The aim of the article is to analyze the influence of certain types of cash flows (from operating, investing, and financing activities) on the change in cash balances, i.e. total cash flows in economic entities. The article uses a deterministic cash flow model based on the formula of the cash flow statement according to which the total cash flow, i.e. net change in cash, is the sum of the operating cash flows, investment income minus investment expenditure, increased by financial income and reduced by financial expenditure. The results of the research indicate that Polish listed companies that are subject to the research are characterized by positive operating cash flow, low capital expenditures and low financial inflows in the years 2009-2019. A contribution to the theories and practice is the broadening of knowledge in finance theory on cash resources, which were confirmed by research and conclusions concerning the analysis of Polish joint-stock companies in the emerging market. The study indicates substantial cash accumulation, low use of external financing, i.e., high financial flexibility. The deterministic model of cash flows presented and used in the article is to support managerial decisions. The analyzed model may constitute the basis for building an IT system that could be used to manage the finances of enterprises. The system will use cash data, which is an important and better source of information than accrual data.