Level Of Leverage Research Articles

Effects of firm-level geopolitical risk on leverage

ABSTRACT This study investigates the effects of firm-level geopolitical risk on the leverage of multinational companies listed in Taiwan from 2015 to 2021. The findings reveal a negative correlation between firm-level geopolitical risk and leverage level, indicating that firms reduce leverage to mitigate the risks associated with geopolitical risks. This negative correlation is stronger in firms with lower profitability, larger size, smaller irreversible investments and lower cash holdings. These results remain robust under two-stage least squares regression controlling for endogeneity and are consistent across alternative geopolitical risk measures and instrumental variables.

Heterogeneity Analysis of Economic Policy Uncertainty on Corporate Investment Based on Panel Threshold Regression

As the global landscape evolves rapidly, economic policies must constantly adapt to the volatile economic situation, leading to economic policy uncertainty (EPU). Firms, as microeconomic entities, need to continuously adjust their strategies in response to these changes. Given that corporate investment is one of the most crucial factors in business operations, it is of paramount importance to investigate how the characteristics of corporate investment are influenced by EPU. Using the panel threshold regression method, we delve into the nonlinear impact of EPU on corporate investment. By collecting data from 2000 to 2023 for A-share listed companies in Shanghai and Shenzhen, as well as macroeconomic data, we empirically find that EPU exerts significant and differentiated effects on corporate investment across four dimensions: leverage level, company size, profitability, and growth potential.

Media pressure, corporate social responsibility, and the risk of share price crash

The investigation employs a compilation of data from 5085 listed entities over the period from 2013 to 2022 to explore the dynamics between media coverage, corporate social responsibility initiatives (CSR), and the risk of stock market crashes. The results suggest that greater media focus can elevate the chances of stock value plummeting, whereas robust CSR dedication tends to mitigate such risks. The extent of overall debt funding plays a significant role as an intermediary in the connection between CSR efforts and the threat of equity market meltdowns. Moreover, the influence of the audit services provided by the Big Four firms greatly alters the correlation between CSR endeavors and the probability of market downturns. Additionally, the influence of CSR on the risk of crashes varies based on the profitability of the company. The study proposes that enhancing CSR execution, maintaining moderate levels of financial leverage, and optimizing approaches to media relations can all contribute to reducing the likelihood of stock market crashes.

CREDIT MANAGEMENT STRATEGY TO ENSURE THE FINANCIAL STABILITY OF PACKAGING INDUSTRY ENTERPRISES

The article examines the possibilities of increasing the efficiency of credit resource management to ensure the financial stability of enterprises in the packaging industry. It was found that in modern conditions, the study of the assessment of the financial stability of the enterprise was not of a comprehensive nature, but was based, mainly, on the use of the coefficient method, which took place on a static basis and did not take into account the specifics of the industry, did not make it possible to assess the ability of the enterprise to generate cash flows for the implementation of activities. It has been proven that the problem of ensuring financial stability and financial balance of packaging industry enterprises is now an important one, especially in the conditions of uncertainty and instability of the economic environment caused by the war. On the basis of the conducted research, the key factors on which an effective credit management strategy should be based have been determined. In this context, the special importance of a timely and objective assessment of the financial stability of enterprises in the packaging industry, regardless of the forms of their ownership, is emphasized, which should be aimed at finding ways and opportunities to increase profits by means of a timely analysis of the financial state of enterprises. Eleven factors are proposed that should be taken into account when choosing a financial credit institution. A systematic analysis of the financial condition of the enterprise, its solvency, liquidity and financial stability is also necessary because the profitability of any enterprise largely depends on its solvency. Based on the balance sheet plan of the necessary resources, we forecast the sources of their formation, taking into account the level of financial leverage and the funds saved as a result of this at the time of taxation. Choosing the most profitable parameters, the enterprise can immediately determine the directions of saving its own monetary and financial resources, as well as optimize the use of already received ones. It has been established that in modern conditions, the relevance of effective financial management as a system of timely methods and techniques capable of preventing a financial crisis and avoiding risks of loss of financial stability of the enterprise in the future is objectively increasing. The lack of a clear definition of financial stability as an economic category and a system of indicators for its assessment, which requires further theoretical development of the problem.

The Relationship Effect of Board Characteristics and Company Characteristics on Corporate Social Responsibility

This study aims to analyze the influence of board characteristics on CSR policies with the company characteristics as control variables. CSR policy in this study focuses on the amount of CSR costs incurred by the company to contribute to the social and community environment. The data used in this study are secondary data sourced from the annual reports of energy sub-sector companies listed on the Indonesian Stock Exchange (BEI) from 2016-2022. The research sample was selected using the purposive sampling method, resulting in 28 companies as the sample. The data analysis used for hypothesis testing is multiple regression analysis using the Eviews 9 program. The results of the study indicate that board characteristics, as indicated by the variables of board size and firm age, have a significant positive influence on CSR. The results also show that firm size has a significant positive influence on CSR performance, while leverage has a significant negative influence on CSR performance. These findings provide information that the increasing number of board members in important positions within a company will impact the high CSR performance, as well as the maturity of a company indicated by the years since going public will enhance the high concern for the environment. In addition, the level of company leverage will be one of the considerations for investors in investing capital as it will have a negative impact on the adopted CSR policies.

Manager political preferences and company investor bases

AbstractWe investigate how the personal political preferences of top managers shape the investor base of firms. Based on the risk‐aversion attitude of firm decisions that rely on conservative political ideologies, we find that Republican managers tend to maintain a lower leverage level; invest less in tangible assets and R&D to pursue near‐term profitability; and maintain a high quality of information disclosure to increase stock liquidity. We demonstrate that firms led by Republican managers can attract more transient institutions. This relationship becomes stronger during financially stressful periods and is robust after considering the moderating role of managerial discretion and potential endogeneity.

PENGARUH TAX AVOIDANCE, DIVIDEND POLICY, DAN FAKTOR LAINNYA TERHADAP NILAI PERUSAHAAN

The increasing level of business competition in Indonesia causes every company to try to develop its firm value. One of which is through capital which can be obtained by selling shares. Firm value is an important influencing factor for making investment decisions because investors will pay attention to how well the company's performance is. This research was conducted with the aim of obtaining empirical evidence regarding the influence of the independent variables dividend policy, investment decision, leverage, profitability, firm size, liquidity, institutional ownership, and tax avoidance. The object of this research uses a population of all consumers non-cyclicals and consumer cyclicals sector companies listed on the Indonesia Stock Exchange (BEI) from 2020 to 2022. Sample selection was carried out using a purposive sampling method. Data analysis uses multiple linear regression. The data that passed the sample selection criteria was 33 company data out of a total of 99 company data. The testing results indicate that profitability and leverage influence firm value. A high level of leverage makes the company able to maximize its operational activities to obtain high profits so that it becomes a positive signal for investors and increases firm value. A high profitability serves as a signal that the company has good growth prospects in the future so that investors will be more interested in investing and contributing to an increase in the firm value. However, dividend policy, investment decision, firm size, liquidity, institutional ownership, and tax avoidance show no significant influence on firm value

The LDI (Liability-driven Investment) Debacle, Derivatives and Systemic Risk: There You Go Again!

This article examines the role of derivatives in the context of the recent crisis in the UK pension system, specifically in liability-driven investment schemes. It unveils derivatives’ role as instruments that multiply and propagate losses among market participants once specific events (worst-case scenarios) materialise. This article questions the role of derivatives as risk-management and risk-diversification tools, given their employment, in this case as in others before, for speculative purposes. Critically, with speculation came higher than desirable levels of leverage that these financial products elicited, causing in the process a series of systemic concerns. While much criticism has been directed at post-2008 regulation, and particularly at clearing and margin requirements, this article proposes a broader view of the problems posed by derivatives in the different contexts of their applications. More specifically, attention is drawn to legal doctrines that could be redeployed for the purpose of mitigating the speculative nature of derivatives.

BOARD ATTRIBUTES AND TIMELINESS OF FINANCIAL REPORTS OF LISTED NON-FINANCIAL FIRMS IN NIGERIA

This study is on board attributes and timeliness of financial reports of listed non-financial firms in Nigeria. The study covers a period of ten (10) years from 2011 to 2020. The study embraced the correlational research design. The population of the study comprises of one hundred and fourteen (114) non-financial firms that are listed on the NXG as at 31st December 2020 out of which sixty (60) was selected using a two-point filter to eliminate the firms that has not fulfil the criteria for the sample selection for the study. The dependent variable of the study is timeliness of financial reports and is proxied by audit report lag. The independent variable which is board attributes is proxied by board size and board gender. While the control variable profitability and firm size. Board attribute was found to have a negative and significant impact on timeliness of financial report of listed non-financial firms in Nigeria. This implies that for every increase in the board size and an increase in the number of females on the board, there is a significant reduction in the audit report lag among listed non-financial firms in Nigeria. It can be concluded that board attribute reduces audit report delay among listed non-financial firms in Nigeria. It is therefore recommended that the board of directors of listed non-financial firms should reduce the level of leverage in their capital structure since it was found that delay in audit report increases with an increase in leverage.

Pengaruh Likuiditas, Leverage, Profitabilitas dan Kepemilikan Manajerial Terhadap Nilai Perusahaan: Studi Empiris pada Perusahaan Manufaktur yang Terdaftrar di BEI Tahun 2020-2022

A company will always strive to achieve its goals, for example long-term goals such as the ability to increase company value. Indrarini (2019: 3) defines company value as an investor's vision of the manager's success rate in managing the company's assets entrusted to him which is often associated with stock prices. The sampling technique in this study used purposive sampling method. The data collection method in the study is the annual financial report documentation method (annuar report). This study uses a type of quantitative research, the data used in the research is secondary data obtained by taking through the annual report of each manufacturing company which can be accessed through the company's official website. Liquidity has no effect on firm value, the high level of liquidity causes a decrease in firm value. Leverage affects firm value, companies with low leverage levels can increase firm value. Profitability has no effect on firm value, excessive inventory may have low profitability. Managerial ownership has no effect on firm value, the results of this study contradict agency theory.

FAKTOR-FAKTOR YANG MEMPENGARUHI KINERJA KEUANGAN PERUSAHAAN PADA PERUSAHAAN MANUFAKTUR DI BEI

This research aims to obtain empirical evidence regarding the effect of leverage, firm size, intellectual capital, and working capital turnover on financial performance in manufacturing companies listed in the Indonesia Stock Exchange during the period of 2018-2020. The sample was selected using purposive sampling method and the valid data used in this study found 69 manufacturing companies. The data processing techniques using multiple regression analysis assisted by SPSS software (Statistical Product and Service Solution) version 21. The results of this study showed that firm size and working capital turnover have no significant effect on financial performance. Meanwhile, leverage has negative and significant effect on financial performance and intellectual capital has a positive and significant effect on financial performance. The implication of this study is for the role of the company management to pay attention on the level of leverage used by the company and the role of intellectual capital in increasing the company’s financial performance.

The impact of the Bank of Japan’s exchange traded fund and corporate bond purchases on firms’ capital structure

AbstractThis study examines how the Bank of Japan’s (BOJ’s) exchange-traded fund (ETF) and corporate bond (CB) purchases affect the capital structure of Japanese listed firms. The results first suggest that the BOJ’s ETF purchases reduced the equity risk premium for firms included in the purchases, thereby lowering their cost of equity. These firms issued more stocks and became less dependent on bond debt and bank loans than control firms, resulting in a lower level of leverage. On the other hand, the BOJ’s CB purchases lowered the risk premium of bonds eligible for such purchases, which implies a decline in the cost of bond debt. Firms eligible for CB purchases issued more bonds, while reducing bank debt but to a smaller extent, thus having higher leverage than firms not eligible for CB purchases. Categorizing firms into four groups based on whether their stocks were included in ETF purchases and/or their bonds were eligible for CB purchases further shows that the policy impacts on firm financing have differed depending on which group a firm fell in. These results indicate that the BOJ’s ETF and CB purchases have had a considerable impact on the cost of capital, securities issuance activities, and corporate capital structure.

On Regional Bank Concentration and Firm Leverage: The Case of Colombia

ABSTRACT Disparities in regional bank concentration within Colombia, an emerging economy, are studied to evaluate their effects in the book leverage of local enterprises. Analyzing the 2016–2021 financial statements of 18,812 companies established in the country, we find evidence that the book leverage of individual firms is significantly correlated with the concentration of bank lending within their geographical region. Specifically, increases in bank concentration result in book leverage increases. Leverage for the country’s largest firms has a significant and complex relationship with their region’s bank concentration. The largest firms enjoy significantly higher levels of book leverage in the country’s less concentrated areas. This higher leverage disappears as concentration increases and, in the most concentrated regions, their leverage is lower than that of their counterparts. This manuscript joins the growing works in the literature claiming the existence of factors within a geographical location that counter the absence in bank competition, allowing some firms to effectively access institutional finance and mitigate some of the negative effect of banking concentration.

Corporate governance in relationship to value relevance and accounting conservatism: SBF 120 firms

This study examines the relationship between disclosure quality as measured by value relevance and accounting conservatism and the corporate governance mechanisms such as the characteristics of the financial market, board of directors and ownership structure of French companies listed on the SBF 120. The result shows that the companies can have a high value relevance of accounting information or practice the accounting conservatism when they are featuring by the existence of a high number of financial analysts who follow the company, listed on a US stock exchange or have a dispersed structure capital. The findings show also that the significant institutional shareholders, foreign ownership, board with small size, separation of functions as well as the creation of a supervisory board, as well as high performance and a low level of leverage contribute to improving the quality of accounting value.

Pengaruh Leverage, Profitabilitas Dan Umur Perusahaan Terhadap Pertumbuhan Laba Pada Perusahaan Food And Beverage Yang Terdaftar Di Bursa Efek Indonesia Periode 2019-2021

At the end of December 2019, there was an outbreak of a virus called Coronavirus19 (COVID-19). Where this virus causes economic instability, one of which is in Indonesia. Economic instability due to the pandemic has impacted the performance of several companies, one of which is a food and beverage company. One of the parameters to see the performance of a company is profit. Profit growth can be influenced by several factors, one of which is the level of leverage, company age, sales level. This study aims to examine the effect of leverage, profitability and company age on profit growth in food and beverage companies listed on the Indonesian stock exchange for the 2019-2021 period. The population in this study were 72 companies. Determination of the sample used in this study is purposive sampling technique, namely the technique of determining the sample using certain criteria or considerations. The number of samples used in this study was based on a purposive sampling technique of 63 observations. The report data used in the research is the 2019-2021 annual financial reports. The data analysis technique used is multiple linear regression analysis. The results of the study state that leverage has no significant effect on profit growth in food and beverages companies, profitability has a significant negative effect on profit growth in food and beverages companies, company age has no significant effect on profit growth in food and beverages companies

PENGARUH STRUKTUR MODAL TERHADAP PROFITABILITAS BANK PADA DUAL BANKING SYSTEM DI INDONESIA

The dual banking system in Indonesia still faces the problem of inadequate capitalization with a high level of leverage. This study aims to analyze the effect of capital structure on bank’s profitability in Dual Banking System in Indonesia. The data analysis method used is panel data regression and difference test on 8 conventional banks and 8 Islamic banks. Panel data regression is intended to identify the influence of capital structure proxied through DER and CAR ratios on profitability (ROA) with control variables of bank size and asset’s growth. The secondary data used is annual report data for the period 2013-2022 sourced from OJK. The estimation results on conventional banking show that the DER and growth variable has a significant positive impact on profitability, while CAR and bank size have no significant influence on profitability. Then, in Islamic banking, DER has a significant negative influence on profitability performance, while CAR and growth have no significant influence on Islamic bank’s profitability performance. Meanwhile, bank size is proven to affect the Islamic bank’s profitability performance. Through a t-test, there is a significant difference in profitability performance and capital structure between the two banking systems in Indonesia.

Targeting behavior and capital structure theories: An empirical analysis of gulf cooperation council countries

This study examined the dynamic nature of capital structure decisions and the effectiveness of trade-off, pecking order, and market timing theories in explaining the changes in leverage ratios. A partial adjustment model was used to examine the practice of setting a target (optimal) leverage, estimate firms’ speeds of adjustment in reaching their target leverages, and identify the capital structure theories that best explain the changes in leverage levels of firms in the Gulf Cooperation Council countries. Firms in these countries reach their target leverages at estimated average speeds of adjustment of 59.8 %–72 % annually. These speeds of adjustment are sensitive to country- and firm-specific characteristics. The targeting behavior factor of the trade-off theory better explains the changes in capital structure compared with the pecking order or market timing theories.

Menganalisis Rasio terhadap Laporan Keuangan pada PT. Unilever Indonesia Tbk

This research aims to analyze the financial performance of PT. Unilever Indonesia Tbk during the period of 2022-2023 using financial ratios. The method used is the analysis of liquidity, solvency, and profitability ratios towards the company's financial statements. The results show that in terms of liquidity, the company's ability to meet short-term obligations is still poor and tends to deteriorate. Meanwhile, the company's leverage level is quite high, exceeding industry standards. However, in terms of profitability, the performance of PT Unilever Indonesia is quite encouraging with profit margin, return on investment, and return on equity ratios above industry standards. Overall, despite its high profitability, the company needs to improve its liquidity and capital structure to maintain long-term business continuity.

DETERMINANTS OF CASH HOLDINGS OF CONSUMER NON-CYCLICALS FIRM LISTED IN INDONESIA STOCK EXCHANGE

Cash is one of the most important asset owned by a firm. Cash functions to finance all firm’s operating activities. Without cash firm’s operational activities can’t run smoothly. Firms hold a certain amount of cash, this is called cash holdings. The level of cash holdings owned by a firm surely need to be managed well. This research aimed to empirically prove the effect of financial leverage, profitability, capital expenditure, firm size, and growth opportunity on cash holdings. The populations used in this research was 105 consumer non-cyclicals firms that was listed on Indonesia Stock Exchange (IDX) during the 2020-2022 period. The sampling method used was the purposive sampling method. The sample used in this research was 50 consumer non-cyclicals firms that was listed in IDX during the 2020-2022 period. The data used for this research was secondary data. The hyphothesis testing method used was multiple linear regression method. The statistical tool used for data processing in this research was Eviews version 12.0. The model that was most suited for this research was the Random Effect Model (REM). The results of this research showed that financial leverage, capital expenditure, and growth opportunity had a negative effect on cash holdings, profitability had a positive effect on cash holdings, while firm size didn’t have any effect on cash holdings. The results of this research implied that managers and investors should consider the level of financial leverage, profitability, and capital expenditure in assesing cash holdings to make a decision.

Influence of Moderation Leverage on The Relationship Between Profitability and Firm Value

Capital market investors anticipate their investments will appreciate and progress in line with their investment objectives, specifically to enhance investor well-being. The investment value appreciates when the issuer's share price or firm value rises. Several variables can impact the value of a company, with profitability and leverage being two significant influences. Prior studies have presented empirical proof that a firm's profitability and leverage can impact its value. This study examines the moderating impact of leverage on the association between profitability and company value. The study employed data from companies listed on the Indonesia Stock Exchange between 2019 and 2021. Currently, there are no studies that have investigated the impact of leverage as a moderating factor on the relationship between profitability and firm value. The data analysis revealed a strong positive correlation between profitability and firm valuation. Significant leverage levels have a considerable negative effect on a corporation's value. The interaction variable of profitability and leverage has a minimal effect on the relationship between profitability and firm value. The test results suggest that leverage modifies, diminishing the link between profitability and company value. However, it is essential to note that leverage is not demonstrated to be a substantial moderating variable in this relationship.