ABSTRACT Artificial intelligence investment holds significant importance for enterprises achieving high-quality development. Existing research predominantly focuses on AI's impact on corporate innovation and production. This paper examines how AI investment influences corporate capital structure from a financing perspective. Employing text analysis, we examined annual reports of Chinese manufacturing listed companies from 2008 to 2023 to construct an AI investment indicator. The results of the study show that AI investment significantly improves the gearing ratio of enterprises. This conclusion still holds after a series of endogeneity and robustness tests. Regarding the underlying mechanism, AI investment enhances corporate indebtedness by optimizing credit resource allocation and reducing debt financing costs. Moderation effects indicate that regional business environment quality positively moderates the impact of AI investment on capital structure, while equity concentration negatively moderates this effect. Heterogeneity analysis indicates that this effect is more pronounced for enterprises located in central and eastern regions, operating in competitive industries, or classified as non-heavily polluting enterprises. This study deepens the understanding of the role AI investment plays in debt financing at the micro-firm level and provides guidance for corporate managers selecting financing methods when investing in emerging technologies.

Purpose This paper aims to examine whether financial globalization forces and financial sector development impact country risk premiums in leading emerging and developing economies (EDEs). Design/methodology/approach The study collected panel data for 35 EDEs from 2000 to 2021. Based on the pre-estimation test conducted on the panel data, the seemingly unrelated regression technique, which can handle cross-sectional dependence, was used to estimate the baseline models. For robustness checks, the two-step system generalized method of moments (2S-GMM), which addresses endogeneity, autocorrelation and the dynamism of econometric variables, was also employed in the study. Findings The empirical analysis reveals that financial sector development can significantly reduce country risk premiums and can alter the effect of external debt on country risk premiums. Financial globalization forces have varying influences: foreign direct investment has a negative but insignificant effect on country risk premiums, whereas external debt significantly exacerbates them. Among the control variables, it is shown that inflation strongly contributes to country risk premiums in EDEs. Conversely, economic growth, current account balance, favourable credit ratings, foreign reserves and political stability ameliorate country risk premiums. Originality/value First, the study provides empirical evidence to corroborate the financial market liberalization and debt overhang theories. Second, this study reveals that financial sector development can alter the influence of financial globalization forces on the country risk premium in the EDEs. This implies that a well-developed financial sector can reduce reliance on external debt. This empirical issue was not addressed in previous studies.

This study addresses the influence of IAS 19 on the financial sustainability of companies, focusing on how its correct implementation impacts the management of labor liabilities and financial transparency. The main objective is to examine how companies that adopt this standard achieve greater operating efficiency and financial stability. To this end, quantitative methods were employed by analyzing companies of different sizes that implemented IAS 19. The results revealed that large companies, with more resources, achieved a successful integration of the standard, improving their financial indicators, such as debt reduction and increased profitability. In contrast, medium-sized companies faced difficulties in adopting the standard, although those that managed to implement it also saw improvements in their financial results. Large companies showed an 11.38% improvement in operating cash flow, while medium-sized companies achieved a remarkable 95.80% increase. In addition, financial transparency increased in both categories, reaching 40% in large companies and 50% in medium-sized ones. The discussion highlights that, although the benefits of IAS 19 are evident, it is crucial to provide support and training to medium-sized companies to maximize its impact. The conclusions point out that IAS 19 is fundamental for financial sustainability, improving financial transparency and investor confidence

The purpose of this study is to analyze and compare the financial strength of PT Mayora Indah Tbk and PT Indofood CBP Sukses Makmur Tbk during the 2021–2024 period by using financial ratios, namely Return on Equity (ROE), Current Ratio (CR), and Debt to Equity Ratio (DER). The research applies a descriptive comparative method with a quantitative approach, and the financial data were obtained from the (IDX). The results reveal that PT Mayora Indah Tbk has higher profitability and capital efficiency, as reflected by the increase in ROE and the DER value below 100%, which indicates a healthy capital structure and lower financial risk. Conversely, PT Indofood CBP Sukses Makmur Tbk demonstrates stronger liquidity, as shown by the continuous rise in CR each year, although the company still relies considerably on debt financing. Overall, PT Mayora Indah Tbk is considered more efficient in generating profits with controlled financial risk, while PT Indofood CBP Sukses Makmur Tbk excels in maintaining liquidity stability and meeting short-term obligations. The findings of this study are expected to provide added value for investors, management, and future researchers in assessing the financial health of companies within Indonesia’s (FMCG) sector.

ABSTRACT This study uses unbalanced panel data from Chinese listed companies between 2007 and 2023 and employs a dual fixed-effects model to examine the impact of climate change risk (CCR) on corporate trade credit financing (TCF). The analysis indicates that CCR significantly promotes corporate TCF through primary mechanisms including elevated debt financing costs, enhanced precautionary motives, and incremental information effects. A heterogeneity analysis reveals that this promotional effect is more pronounced in low-competition industries, regions with higher green-finance development levels, and firms characterized by high environmental, social and governance (ESG) ratings, low pollution attributes, strong market power, and non-state ownership. Further analysis indicates that physical risks (PR) inhibit TCF by weakening corporate profitability and cash flow stability, whereas transition risks (TR) exhibit a more pronounced promotional effect by incentivizing increased R&D investment and digital transformation. The economic consequence analysis indicates that TCF expansion driven by CCR enhancing their market value. This study systematically uncovers the buffering function of TCF in firms’ CCR responses and reveals the ‘dual effect’ of CCR, deepened our theoretical understanding of CCR and corporate TCF.

ABSTRACT Amid growing calls for sustainability in the healthcare sector, this study examines how and under what conditions environmental, social, and governance (ESG) performance influences research and development (R&D) output. Although existing studies suggest that ESG performance enhances R&D output, the financial mechanisms that enable or constrain this relationship remain underexplored. We address this gap by theorizing and testing the dual role of debt financing as both a mediator and a moderator in the ESG performance and R&D output relationship within the healthcare sector, where innovation is highly capital‐intensive and socially consequential. Integrating stakeholder theory and agency theory, we argue that ESG performance promotes R&D output through improved access to reputational and financial resources, whereas high debt levels weaken this effect due to agency conflicts. Using panel data from 2016 to 2022 on healthcare firms in Europe and the United States, we estimate our main models using OLS and applying instrumental variable and system GMM techniques as robustness checks to address endogeneity. Our findings show that debt financing partially mediates the ESG–R&D link and negatively moderates it, revealing its ambivalent role. Compared to existing studies, our findings indicate that the effects of ESG performance on R&D output are conditional and context specific, with stronger impacts observed in Europe than in the United States, reflecting institutional conditions such as stricter European Union sustainability reporting frameworks, notably the Corporate Sustainability Reporting Directive (CSRD), along with robust policy incentives and longer term investment horizons. We also find pronounced effects in the biotechnology and pharmaceutical subsectors. This study contributes to theory by bridging competing views on ESG performance and offering a more nuanced understanding of how debt financing shapes the ESG–R&D output relationship.

A Statistical Analysis of Liquidity’s Moderating Role in the Relationship Between Tax Aggressiveness, Debt Financing, and Egyptian Non-Financial Firm Performance

This study examined the effects of capital structure on the performance of selected quoted manufacturing firms in Nigeria from 2015 to 2024. Four models were specified to capture the influence of capital structure on the selected firms’ performance. Capital structure was proxied by equity (EQF) and total debt of firms (TDF) while firms’ performance, by returns on assets (ROA), earnings per share (EPS) and dividend per share (DPS). Data were sourced from the annual financial reports and balance sheets of the selected firms in various years. The Augmented Dickey Fuller (ADF) and Phillips Perron (PP) unit root tests were conducted to test for the stationarity of the series, while the Panel Ordinary Least Squares (POLS) estimation technique was adopted to test for the long run relationship of the series. The fixed and random effects estimation was also conducted while the Hausman test allowed us to select which model was more efficient for the analysis. The findings revealed that both equity and debt were positive but only debt was significant in explaining changes in returns on assets. Equity was negative while debt was positive but both were significant in explaining changes in earnings per share of the selected firms. Equity was negative while debt was positive but both were not statistically significant in explaining changes in dividend per share. The study recommended that an optimal mix of equity and debt financing will be appropriate for optimal utilization of assets and debt to leverage returns. Firms should embark on more holistic and strategic policies geared towards increased profitability and decreased number of outstanding shares at the same time. Equity and debt can be leverage to create value for shareholders through increased financial leveraging, tax benefits, cost of debts and equity financing.

With capital markets’ growing attention to sustainable development, environmental, social, and governance (ESG) factors have become increasingly important in shaping corporate financing decisions. However, whether changes in ESG ratings (upgrades or downgrades) effectively signal shifts in a firm’s operational risk and transparency is unclear. Moreover, little research has explored whether these signals influence firm financing costs, particularly across ownership structures and regulatory environments. This study uses data from Shanghai and Shenzhen-listed firms from 2014 to 2023 to examine how dynamic ESG rating changes affect their debt financing costs and analyze the associated market responses. Across the full sample, ESG rating upgrades are associated with modest reductions in the debt financing costs, whereas downgrades raise debt financing costs, revealing an asymmetric pricing pattern in which creditors respond more strongly to negative ESG signals than to positive ones. Ownership structure moderates these effects, for non–state-owned enterprises, upgrades lower and downgrades increase debt financing costs more visibly than for state-owned enterprises. Following implementation of the new Securities Law, the impact of ESG rating changes on debt financing costs has become more pronounced. Robustness checks using alternative ESG providers and instrumental-variables estimation yield consistent results. These findings provide empirical insights for firms, investors, and policymakers to optimize financing strategies and improve ESG-related regulations.

Riskier climate, closer ties? How climate risk drives firms towards bank debt financing

Moroccan producers of households’ detergents suffered from cash flow bullwhip. This distortion of financial flow originated from the bullwhip effect produced during the COVID 19 pandemic. A recent study confirms that some performance attributes are correlated with the degree of exposure to the CFB. The relative significance of these performance criteria, however, is not immediately apparent. The objective of this research is to develop a multi-criteria mathematical model which will serve as a basis to assess the performance of the companies under study and to define the determinants of Cash Flow Bullwhip control using the MACBETH method. This research is conducted on a sample of Moroccan producers of household detergents. The findings indicate that the importance of financial variables is higher than that of supply-chain elements, and internal control factors. Good supply chain asset management, financial efficiency, financial liquidity, control activities, financial debt, and supply chain credibility are the main levers to control the CFB.

ABSTRACT Employing a sample of A-share listed manufacturing firms from 2010 to 2023, we examine the effect of patent pledging on firms’ labor share. The empirical results indicate that patent pledging leads to a significant increase in the labor share. This finding remains robust across various alternative specifications and robustness checks. Further analysis suggests that this positive effect operates through two primary channels: improving firms’ human capital and reducing debt financing costs. The heterogeneity analysis reveals that the effect is more pronounced for high-tech firms, non-state-owned enterprises (NSOEs), and firms in regions with strong intellectual property rights (IPR) protection. Furthermore, additional evidence indicates that patent pledging primarily increases the share of income allocated to employees rather than executives. These findings offer empirical insights into how the financialization of intangible assets through patent pledging can generate tangible labor gains, thereby carrying important implications for promoting inclusive and sustainable firm development.

Purpose- The core purpose of this study explores the nexus of financial competitiveness, the liquidity position of a firm, and leverage financing. Methodology- This analysis is based on 7 years of data from 398 listed companies in Pakistan, while panel least square (PLS) techniques have been applied to estimate the parameters. Findings- The financial position of a firm is also affected by macroeconomic indicators. The intangible assets and cost of debt are also important determinants. It was noted that the return on equity in small and medium enterprises is higher than in large-scale industrial units despite very low return on assets in small and medium enterprises. Conclusions- The study concludes that the size of a firm, debt financing, and liquidity position are important, significant, and robust determinants of financial competitiveness. The real source of this differentiation is the magnitudes of leverage financing and liquidity position of enterprises.

Based on a dynamic perspective, this paper analyzes the impact of listed companies' Environmental, Social, Governance (ESG) performance on corporate financing costs, focusing on solving the problem of how companies can improve ESG to more significantly reduce financing costs. The dynamic perspective in this paper refers to two types of dynamic attributes that characterize ESG from a time dimension: one is the annual improvement rate, and the other is the intra-year volatility (based on the variance of quarterly ratings). This paper found that for every 1 unit increase in the ESG improvement speed (ΔESG), the debt financing cost was significantly reduced by 0.2% (p<0.01), while for every 1 unit increase in the ESG volatility (σESG) over a year, the financing cost increased by 0.3% (p<0.01). Concurrently, the negative impact of ESG ratings on financing costs has a threshold of 4.044 in the Huazheng nine-level system. The research significance of this paper lies in revealing the mechanism by which ESG affects financing costs: the faster the ESG improvement, the more significant the reduction in financing costs; high ESG volatility within the year will generate a financing premium; at the same time, there is a threshold for the impact of ESG ratings on financing costs. Accordingly, this paper recommends that firms prioritize sustained, low volatility ESG upgrades and strive to cross—and remain above—the 4.044 threshold.

Green credit policies serve as the driving force behind the green allocation of credit resources and constitute a key strategy for promoting capital structure optimization among highly polluting enterprises. Utilizing data from Chinese A-share listed companies between 2007 and 2023, this study employs the implementation of the 2012 Green Credit Guidelines (hereinafter referred to as the Guidelines) as a quasi-natural experiment. It empirically examines the impact of green credit policy implementation on the capital structures of China’s heavily polluting enterprises and its underlying mechanisms. Findings indicate: (1) Following the Guidelines’ promulgation, the financial leverage ratios of heavily polluting enterprises declined significantly, restraining capital structure expansion. The policy thus played a positive role in optimizing their capital structures. (2) Mechanism tests reveal that corporate ESG performance exerts a positive moderating effect within the relationship between green credit policies and corporate capital structure. The Guidelines heightened attention to ESG performance, which in turn constrained debt financing channels and strengthened equity financing, thereby reducing corporate financial leverage. (3) Heterogeneity analysis reveals asymmetric impacts of the green credit policy, with state-owned heavily polluting enterprises and those in eastern and central regions experiencing more pronounced reductions in financial leverage following policy changes. This study elucidates the mechanism through which the Guidelines’ implementation moderate’s capital structure, providing crucial empirical evidence for refining green credit policies and upgrading the capital structures of heavily polluting enterprises.

As environmental, social, and governance (ESG) practices develop in emerging markets, analysing their connection with financial performance has become increasingly important for informing policy tailored to their unique institutional structures and investment frameworks. The study demonstrates a strong link between ESG performance and corporate debt costs within China’s hybrid institutional environment, considering the ‘dual carbon goal’ and ESG assessment. By analysing 4,811 A-share firm observations (2013–2023) using fixed-effects models and instrumental variables, some findings can be summarized: (1) Causal Effect: A one-unit increase in ESG lowers debt costs by 1.3% (β = -0.013, p < 0.001) after addressing endogeneity, which is 13 times greater than the original estimates. (2) Mechanism: Reputation and risk serve as mediators, confirming that ESG enhances recovery value through stakeholder goodwill. Despite contrasting global evidence, these findings add to the empirical evidence for China by revealing how ESG drives debt reduction. As a result, the study recommends ESG policies that address institutional gaps and bolster reputation to maximise financing benefits.

Objectives This article aims to assess the relationship between financing providers for micro and small companies (MSCs) and the use of the reduced financial reporting regime, which obscures the assessment of their financial situation. The main research question is: What are the determinants of the decision to abbreviate the financial statements of micro and small companies? Material and methods Based on the Orbis database and financial statements extracted directly from the National Register of Companies (KRS) in Poland, logistic regression was employed to determine the relationship between different sources of funding and stakeholders and the use of abbreviated financial statements. Results According to the findings, less than half of eligible companies use abbreviated financial statements in Poland, which is much less than expected and compared to other countries. Abbreviated financial statements do not seem as attractive as they might seem on the basis of the preamble to the Accounting Directive, that repeats the goals of many EU policies. Furthermore, abbreviated financial statements are correlated with legal form (small and micro enterprises) and financial debt (micro enterprises only). The more complex legal form and use of financial debt reduces the likelihood of using abbreviated financial statements. Thus, the use of abbreviated financial statements can be challenging for micro-entities seeking external debt financing. Conclusions Two specific directions of the EU's long-term economic policies are in conflict with each other, which creates a need for specific measures to counteract this conflict. We shall recognise the negative consequences and limitations of simplifying the financial reporting of these entities, especially since the practical benefits associated with it are not in fact significant.

In the global economic landscape, cultural and creative enterprises generally face financing constraints, mainly because they highly rely on intangible assets, which are often difficult to accurately evaluate and effectively mortgage under traditional financing models. In this context, this article focuses on the representative case of South Korean entertainment company HYBE acquiring American media company Ithaca Holdings for in-depth research. The study adopts a method that closely combines case analysis with financial data to systematically and deeply analyze HYBE's innovative financing model. The results indicate that HYBE ingeniously packaged and integrated the investment shares, fixed deposits, and other assets of its subsidiaries as collateral, successfully realizing the financialization of intangible assets and constructing a debt financing scheme with asset guarantees. Moreover, during the period of large-scale mergers and acquisitions, the company still maintained good liquidity and interest coverage. This case fully proves that light asset enterprises can effectively break through financing bottlenecks through asset financialization.

ABSTRACT In response to slowing growth and financial uncertainty, central banks have increasingly adopted unconventional monetary policies (UMPs). Using panel fixed‐effects models with financial data from listed firms in China, the United States, and Japan during 2011–2021, this paper examines the impact of UMPs on corporate financing and cross‐country heterogeneity. Robustness is confirmed through endogeneity checks, variable substitution, and external shocks. The results show that the use of UMPs in China and the United States can increase debt financing ratio of companies, but the similar policies in Japan have the opposite effect. Policy effects differ by firm size and age, with smaller and younger firms more sensitive. Financial and political efficiency could moderate transmission. Furthermore, through the variable slope model, among the three countries, the impact of UMP on corporate debt was the strongest in China, while it was weaker in the United States and Japan. Overall, the study highlights substantial cross‐country and institutional heterogeneity in UMP transmission, offering empirical evidence for differentiated policy design and insights into optimizing monetary policy tools.

Start-up and growing businesses require adequate financial resources to survive and achieve sustainable growth. Empirical evidence indicates that a significant proportion of business failures result from inadequate financing alongside operational and managerial challenges. This study investigates the effectiveness of capital structure on the growth and start-up of businesses, focusing specifically on the roles of equity capital, debt capital, and retained earnings. A desk review methodology was adopted, synthesizing relevant theoretical and empirical literature. The study draws on the Pecking Order Theory, which emphasizes the superior impact of internal financing on financial performance, favoring equity and retained earnings over debt. The Modigliani–Miller Capital Structure Theory provides a conceptual benchmark, though its relevance is limited to perfect market conditions. Agency Theory highlights the influence of corporate governance and managerial decision-making on capital structure choices, while Trade-off Theory underscores the cost-effectiveness of equity and retained earnings relative to debt. Empirical evidence indicates that equity financing significantly enhances financial performance, and retained earnings support firm growth when effectively reinvested. In contrast, debt financing generally has an insignificant or negative impact on start-up and growing businesses. The study concludes that low-cost, internally generated financing is most effective in promoting sustainable growth and recommends that start-up businesses prioritize equity mobilization through personal savings and family contributions while strategically limiting external borrowing and reinvesting retained earnings. Keywords: Capital Structure, Business Start-up and Growth, Pecking Order Theory, Modigliani–Miller Capital Structure Theory, Agency Theory, Trade-off Theory, Empirical Review.