Impact Of Financial Constraints Research Articles

The Impact of Financial Constraints and Earnings Management on Working Capital Adjustment Speed: Evidence from Egypt

The Impact of Financial Constraints and Earnings Management on Working Capital Adjustment Speed: Evidence from Egypt

Adapting for Well-Being: Examining Acculturation Strategies and Mental Health among Latina Immigrants

This study investigates how assimilation and integration, two commonly studied acculturation forms, help immigrant Latinas cope with acculturative stress and related psychological distress. It employs the Ecological Framework for Understanding Immigration (EFUI), merging Bronfenbrenner’s Ecological Systems Theory and the Socioecological Model as a comprehensive approach. Through multigroup analysis, various factors significantly affect the psychological distress of immigrant Latinas, including financial constraints, contentment with migration decisions, age, and adherence to familial values. Acculturative stress relates to English proficiency, racial discrimination experiences, U.S. residency duration, and contentment with the migration choice. The moderating effects of assimilation and integration vary, influencing psychological distress and acculturative stress differently in each group. In conclusion, this study uncovers complex coping mechanisms used by immigrant Latina individuals facing acculturative stress and highlights the protective role of assimilation, the importance of familismo, the impact of financial constraints, and the significance of racial discrimination. This finding underscores the need for mental health interventions to respect and incorporate Latinx individuals’ cultural values and beliefs, promoting positive mental health outcomes.

The nonlinear relationship between financial constraints and R&D investment: the mediating role of executive stock options

PurposeThe current study aims to investigate the mediating role of executive stock options in the nonlinear relationship between financial constraints and research and development (R&D) investment through two measures of financial constraints.Design/methodology/approachThis study is based on a sample of 90 French firms for the period extending from 2008 to 2020. The authors employ a panel threshold method to analyze whether the impact of financial constraints on R&D investment depends on the level of financial constraints or not.FindingsUsing SA index (Hadlock and Pierce, 2010) and FCP index (Schauer et al., 2019) as measures of financial constraints, the authors demonstrate that the relationship between financial constraints and R&D investment is nonlinear. Moreover, the authors find that executive stock options mediate partially the relationship between financial constraints and R&D investment. More specifically, the authors show that stock options could play two roles depending on the level of the financial constraints; inconsistent mediation for firms with low/medium level of financial constraints and partial mediation for highly constrained firms.Originality/valueThis paper is the first to the best of the authors' knowledge to investigate the nonlinear relationship between financial constraints and R&D investment as well as the mediating role of executive stock option using dynamic panel threshold models.

The impact of financing constraints on total factors productivity : evidence from property law reform in China

ABSTRACT This paper examines the effect of financing constraints on total factor productivity (TFP) using China’s Property Law reform as a natural experiment, employing a difference-in-difference (DID) model. The study reveals that easing financing constraints significantly enhances TFP. These results hold through parallel trend tests, placebo time checks, treatment group randomization, and regression using an alternate TFP measurement. Quantitatively, alleviating the financing constraint by one standard deviation can boost TFP by 26.5% of its standard deviation. It is noted that state-owned enterprises are more responsive to property rights protection than private and foreign enterprises.

Do financial constraints affect the CEO stock options remuneration? Evidence from a panel threshold model

PurposeThe purpose of this study is to examine the nonlinear relationship between financial constraints and the chief executive officer (CEO) stock options compensation and to analyze whether the impact of financial constraints on the CEO stock options compensation changes at certain level of financial constraints or not.Design/methodology/approachThis study is based on a sample of 90 French firms for the period extending from 2008 to 2019. To deal with the non-linearity, the authors use a panel threshold method.FindingsUsing different measures of financial constraints [KZ index (Baker et al., 2003), SA index (Hadlock and Pierce, 2010) and FCP index (Schauer et al., 2019)], the results reveal that the impact of the financial constraints (SA index and FCP index) is positive below the threshold value and it becomes negative above.Research limitations/implicationsThe non-linearity between financial constraints and CEO stock options shows that the level of financial constraints can be a major determinant of the CEO compensation structure. More specifically, this study sheds light on the key role played by the level of financial constraints and how this latter influence management decisions.Originality/valueThis paper is the first to the best of the authors' knowledge to examine the nonlinear relationship between financial constraints and the CEO stock options compensation using a panel threshold model.

Too Much of a Good Thing? The Impact of Serial M&A on Innovation Performance

Based on the sample of serial M&A of Chinese listed companies from 2010–2019, this paper intends to investigate the impact of serial M&A on innovation performance and the impact of financing constraints and digital inclusive finance (DIF). The empirical results show that an inverted U-shaped relationship exists between serial M&A and innovation performance that first goes up and then goes down. The results of mechanism analysis show that financing constraints play a mediating role in the inverted U-shaped relationship between serial M&A and innovation performance, while DIF plays a moderating role in the mediating effect of serial M&A on innovation performance through the financing constraint. The heterogeneity analysis finds that the inverted U-shaped relationship between serial M&A and innovation performance is more significant in firms with non-state ownership property, a higher business environment index, and medium and large-scale firm size. The research results not only help to promote the in-depth analysis of the impact of serial M&A on innovation performance, but also help to provide targeted theoretical reference and practical guidance for corporate management decision making.

국내 물류기업의 재무제약과 사회적 책임활동으로써 기부금 지출에 관한 연구

오늘날 기업경영에 있어 사회적 책임활동(CSR, Corporate Social Responsibility)은 그 중요성이 날로 증가하고 있으며, 많은 연구들에서 기부활동 포함 기업의 CSR활동이 기업가치를 높일 수 있는 수단임을 실증해 주고 있다. 하지만, 이러한 CSR활동은 기업이 처한 재무상황과 소유구조 등 다양한 요인에 의해 달라짐을 언급하고 있다. 이에 본 연구는 국내 306개 물류기업을 대상으로 2000년 이후 시행한 기부활동이 재무제약수준에 따라 달라질 수 있는지, 어떠한 특성요인이 관계 되어 있는지를, 5,529개 패널데이터를 바탕으로 실증하였다. 선행연구들을 바탕으로 구축한 연구모형은 데이터특성을 감안하여 패널토빗모형과 패널프로빗모형을 통해 검정을 시도하였다.BR 연구결과에 따르면, 국내 물류기업들은 기업이 처한 재무곤경수준에 따라 기부활동이 달라지는 것으로 분석되었다. 즉, 재무곤경수준이 양호할수록 더 많은 기부활동을 수행하며, 유동성과 영업활동 현금흐름이 좋을수록 기부금지출을 늘리는 것으로 나타났다. 또한, 이미지개선 활동과 연계된 광고비지출이 많을수록, 대외적 평판이 중요한 큰 규모의 자산을 보유할수록 기부금지출에 보다 적극적임을 확인 할 수 있었다. 하지만, 부채규모와 기부활동 간에는 부(-)의 관계가 확인되어, 부채규모가 클수록 기부금지출에 보다 소극적인 것으로 나타났다. 물류기업의 업력은 기부활동과 부(-)의 관련성이 확인되었으나, 이는 연구대상기간 동안 물류관련 경기지수의 점진적 하락 추세가 반영된 것으로 판단된다. 본 연구는 국내 물류기업을 대상으로 재무제약과 기업특성에 따라 CSR활동차원의 기부금 지출특성을 파악하고, 결과를 제시하였다는데 그 의의가 있을 것이다. 하지만, 물류기업의 CSR활동과 재무제약 요인을 보다 다양한 관점에서 접근한 연구가 시행될 경우 본 연구의 의의는 한층 더 강화될 것으로 판단된다.

Impact of Financial Constraints on Firm's Economic Value: Evidence from Pakistan stock exchange

Impact of Financial Constraints on Firm's Economic Value: Evidence from Pakistan stock exchange

Influencing factors of employee brand equity from the perspective of FinTech.

Recent years have seen a heated discussion on what influences employees' recognition of enterprise brand equity among the psychological community. Some empirical evidence suggests that the brand equity of consumers and brand equity of sales are two categories that should be studied. However, more recent discussions have focused more on the former. In contrast, this study discusses the factors influencing brand equity based on the employee level. Moreover, this paper examines whether FinTech can help companies get out of financing difficulties and thus improve employees' brand equity recognition. This research illustrates how FinTech has become an essential driver of brand equity value. Based on micro panel data on enterprises from 2011 to 2019, we analyze the transmission mechanism between the two factors and the mediating role of financing constraints. FinTech's development promotes employees' recognition of corporate brand equity, and financing constraints are an essential transmission path between the two factors. Furthermore, the impact of financing constraints on employee brand equity identity is characterized by cross-regional economic heterogeneity. In contrast, the development of FinTech characterizes the cross-enterprise heterogeneity in employees' recognition of brand equity value. Altogether, this study demonstrates the promising application of FinTech in influencing the mechanisms of employee brand equity.

Do parties still shape policies in times of crisis? The impact of financial constraints on partisan policymaking in Italy (1996–2018)

This paper investigates the effect of macro-economic conditions on partisan policymaking through an analysis of novel data on the fulfilment of 2412 Italian pledges. Are parties able to produce ideologically driven policies even during economic downturns? And how does the economic context affect parties’ capacity to fulfil their pledges? In this paper, I contend that the interaction between macroeconomic conditions and the policymaking process is more complex than it is usually depicted and cannot be restricted to the constraints, financial above all, engendered by a recession period. Results from binary logistic regressions indeed suggest that parties do maintain a certain room for manoeuvre to influence the governing agenda in times of crisis. Even though in some cases pledge fulfilment is severely affected by deteriorations of economic conditions, parties are still able to carry out a large share of their programmatic priorities. Moreover, the economic situation mostly challenges left-leaning governments.

The impact of financial constraints on investment efficiency in South Africa

Shifts from firm-level investment efficiency occur due to market imperfections and informationasymmetry. This translates to an increased cost of capital, which leads to over or under-investments. This study demonstrates the absence of a direct association between investmentefficiency and financial constraints in African firms, complementing the efficient markethypothesis. We observed firms across different industries listed on the JSE from 2009 to 2019.Empirical results from panel data analysis reveal that financial constraints drive improvedinvestment levels and firms in this region depend on external funds – specifically credits – toinvest.

Corporate Liquidity Management in Emerging Economies under the Financial Constraints: Evidence from China

The main purpose of this article is to investigate the impact of the optimum level of cash holdings on corporate performance. Moreover, in this paper, the impact of financial constraints is tested as moderating factor between the relationship of cash holdings and corporate performance. The present study uses the system generalized method of moments (GMM) as the main estimation methodology. Using a sample of companies listed on stock exchanges of China, empirical pieces of evidence find that cash holdings-corporate performance relation is a nonlinear concave and depicts similar evidence for firms with financial constraints. The financially constrained firms maintain optimal cash holding at a higher level, which corresponds to debt rationing, difficulty to access financial markets, and the high cost of external finance. Moreover, propensity-score-matching depicts statistically significant differences in the level of cash holdings amid financially constrained and unconstrained firms. Finally, the difference-in-difference estimator shows that financial crisis affects less financially constrained firms due to low reliance on external financing.

Financing constraints and innovation performance: the moderating role of the network location of cross-border innovation cooperation among Internet enterprises

PurposeThis study aims to explore the relationship between financing constraints and the innovation performance of Internet enterprises in the cross-border innovation cooperation network. The study also analyzes the moderating effect of the location of the cross-border innovation cooperation network.Design/methodology/approachThe authors selected patent data, related transaction data and other data of A-share listed companies on Shanghai and Shenzhen stock exchanges from 2014 to 2019. The generalized moment estimation method of instrumental variables (IV-GMM) method was used to analyze the relationship between financing constraints and the innovation performance of Internet firms and the moderating effect of the cross-border innovation cooperation network location. The threshold value of the moderating effect of the network structure hole was calculated with the threshold model.FindingsThe empirical results show a significant inverted U-shaped relationship between financing constraints and the innovation performance in the cross-border innovation cooperation network of Internet enterprises. Network centrality positively moderates this relationship. There is a threshold for the adjustment effect of network-structural holes, and the adjustment intensity of structural holes changes before and after the threshold.Originality/valueThis study provides a new perspective for Internet firms in innovation cooperation networks to alleviate the negative impact of financing constraints on innovation performance. The inverted U-shaped relationship between financing constraints and the innovation performance of Internet enterprises is in two stages. The moderating range of network centrality and the structural hole besides the threshold of the moderating effect of a structural hole are detailed.

Corporate Financing Constraints and Stock Price Crash Risk based on Overinvestment Perspective

As an anomaly in the capital market, the frequent occurrence of domestic and foreign stock price crashes can bring great impact on the stability of the market and economic development. The causes have also become an important topic of research for scholars, and this paper uses data of A-share listed companies of China in 2018 to study the impact of financing constraints on the risk of stock price crashes. The results show that the degree of financing constraints is significantly and negatively related to the risk of stock price collapse, i.e., the higher the degree of financing constraints, the lower the risk of stock price collapse. The findings can not only enrich the literature on stock price crash risk, financing constraints and other related fields, but also have important reference value for reducing stock price crash risk and promoting the healthy and stable development of China's capital market.

Do financial constraints impact the technical efficiency of agricultural cooperatives? evidence from Brazil

Agricultural cooperatives have the main goals of meeting the economic, social and cultural needs of their members. Although they do not seek profits, they must be competitive since they compete with other cooperatives and companies in the market. In this sense, the search for technical efficiency to give cooperatives a better market position contrasts with the difficulty these organizations face in obtaining foreign capital to enable greater investments. There is little empirical evidence, however, of the relationship between financial constraints and technical efficiency in these organizations. According to theoretical assumptions, this relationship could be positive or negative. Thus, this paper analyzes the impact of financial constraints on the technical efficiency of Brazilian agricultural cooperatives. For this, we used two metrics to measure financial constraint and analyzed panel data on 68 Brazilian agricultural cooperatives for the 2005-2014 period. Despite the theoretical predictions, our main results suggest there is no evidence that financial constraints affect technical efficiency. This result can be explained by the characteristics attributed to Brazilian cooperatives, that is, the fact they deal with different commodities (multi-purpose) and do not have strong demand for investments (technology). This paper contributes to the literature both by providing new empirical evidence regarding the relationship between technical efficiency and financial constraints and by introducing a new metric for analyzing financial constraint in the context of cooperatives.

Source of fund, financial constraints, political instability, and firm innovation: empirical evidence from Arab Spring countries

ABSTRACT The purpose of this article is to examine the impact of financial constraints on innovation in countries experiencing the Arab Spring. It also looks at how the impact of financial constraints varies with the source of funding. The study uses 2013 BEEPS data. 2261 companies from 5 MENA countries were included in our sample. The recursive bivariate probit and extended probit models are used. Our findings show that financial constraints negatively affect the likelihood of enhancing a firm's innovative performance. Unlike the existing literature, the effect of financial barriers was not only directly examined, but also the region and fund structure of the company were examined together. Although bank loans directly negatively impact innovation performance, when this effect is considered together with financial barriers, it has been observed that the effects of financial barriers decrease. An even more significant decline is seen with the inclusion of the regional influence.

The Complexity of Technological Innovation Decision-Making in Emerging Industries

It is well known that innovation-driven emerging industries have gradually become the main driving force of global economic recovery and growth. Technological innovation decision-making is a complex and dynamic system, which is affected by various factors inside and outside an enterprise. In this dynamic system, how to make the optimal technological innovation investment decisions is a key concern for enterprises and governments. As an investment activity, technological innovation largely depends on the amount of external financing obtained by enterprises. However, financial constraints have increasingly become an obstacle to enterprises’ technological innovation. At the same time, technological innovation is also affected by the external political and economic environment, such as changes in economic policy, government subsidy policies, and institutional environmental policies. Can these external environments reduce the negative impact of financing constraints on technological innovation? In this study, based on the data of listed companies in China’s strategic emerging industries, we adopt a panel negative binomial regression model to investigate the complexity of technological innovation decision-making from the perspective of financing constraints. Our main findings include the following. First, financing constraints significantly inhibit the input and output of technological innovation in emerging industries. Second, the inhibition effect on the output of substantive innovations is more pronounced than that on the output of strategic innovations. Third, based on the analysis of enterprise heterogeneity in different dimensions, we show that this inhibition has a selective effect among different industries. Finally, we show that economic policy and marketization can help alleviate the inhibition effect of financing constraints on technological innovation.

The Impact of Financial Constraints on the Relationship between Excess Cash with Trading Continuity and Stock Liquidity

هدف: معمولا سرمایه‌گذاران ریسک‌گریزند و نقدشوندگی سهام روی تصمیم‌هایی که برای سرمایه‌گذاری می‌گیرند، تأثیر می‌گذارد، از این رو، نقدشوندگی سهام برای سرمایه‌گذاران اهمیت شایان توجهی دارد. با توجه به دو فرضیه سنگربندی مدیریت و فرصت‌های سرمایه‌گذاری، تعیین نوع اثر وجه نقد مازاد بر استمرار معاملات و نقدشوندگی سهام، به لحاظ نظری مبهم است. برای رفع این ابهام، لازم است که به‌صورت تجربی این روابط آزمون شود. در این راستا، هدف پژوهش حاضر، بررسی تأثیر وجه نقد مازاد بر نقدشوندگی و استمرار معاملات سهام و همچنین، بررسی تأثیر محدودیت مالی بر این رابطه، در بین شرکت‌های پذیرفته شده در بورس اوراق بهادار تهران در بازه زمانی 1389 تا 1398 است. روش: جامعه آماری این پژوهش، شرکت‌های پذیرفته‌شده در بورس اوراق بهادار تهران بود که با استفاده از روش حذف سامان‌مند، 147 شرکت برای آزمون انتخاب شد. برای آزمون فرضیه‌ها، از روش رگرسیون چندگانه و داده‌های ترکیبی استفاده شد. یافته‌ها: یافته‌های پژوهش، تأثیر منفی وجه نقد مازاد بر نقدشوندگی سهام و استمرار معاملات سهام را تأیید کرد. سایر یافته‌های پژوهش نشان داد که محدودیت مالی، رابطه بین وجه نقد مازاد با نقدشوندگی سهام و استمرار معامله را تضعیف می‌کند. نتیجه‌گیری: وجه نقد مازاد، به افزایش مسئله نمایندگی و کاهش نقدشوندگی و استمرار معاملات منجر می‌شود. این نتیجه در شرکت‌هایی که محدودیت مالی دارند، ضعیف‌تر است؛ زیرا این شرکت‌ها می‌توانند از طریق وجه نقد مازاد، از فرصت‌های سرمایه‌گذاران پیش رو بهره بیشتری ببرند و بدین ترتیب، نظر سرمایه‌گذاران را به خود جلب کنند. به بیان دیگر، وجود محدودیت‌های مالی، به غالب‌شدن فرضیه فرصت‌های سرمایه‌گذاری در مقابل فرضیه سنگربندی مدیریت منجر می‌شود.

Financing Constraints and Stock Price Volatility Empirical Evidence from Shanghai and Shenzhen A-share listed Companies

Based on the theoretical analysis of financing constraints and stock price volatility, the hypothesis of “corporate financing constraints inhibiting corporate stock price volatility” is proposed. After data cleaning, the cross-sectional data based on A-share was used to make an empirical analysis of the relationship between financing constraints and stock price volatility of listed companies in 2018 through regression model. The study found that when companies relax financing constraints, due to widespread overinvestment, the stock price of companies will fluctuate more. In addition, we have shown that by replacing the return of financing constraint indicators and the regression of subsamples based on enterprise size, market type and ownership, the conclusion of the study is more robust. The research reveals the mechanism of the impact of financing constraints on the volatility of corporate stock prices. The conclusions have practical significance for investors, corporations and relevant regulatory authorities.

Family Management and Corporate Bond Spreads: Do Foreign and Government Ownerships Matter?

ABSTRACT This research hand-collects data on family CEOs of family-controlled firms (named family management) to investigate the relation between family management and corporate bond spreads in Taiwan with a sample of 1,660 firms for the period 1996–2015. We show new evidence on the impact of financial constraints and CEOs’ characteristics on corporate bond spreads. Results find an impact of family management on increasing corporate bond spreads after considering firms’ and bonds’ characteristics. Moreover, the effect of family management on higher bond spreads is offset by firms under foreign or government ownership, as interacting family management with such ownership effect would give outside investors more assurance and protect minority shareholders from exploitation. Finally, firms’ financial constraints and CEOs’ weak characteristics lead to a detrimental impact of family management on bond spreads.