Short-term Debt Research Articles

Determinant Factors of Profitability in Fintech Lending Companies in Indonesia from 2019 to 2022 Using Principal Component Analysis (PCA)

This reserach examines factors influencing the profitability of Fintech lending companies in Indonesia. A purposive sampling method was employed to select 45 companies annually. The data for this research are cross-sectional, comprising the years 2019, 2020, 2021, and 2022. The methods in this research are Principal Component Analysis (PCA) and multiple linear regression. Findings reveal that current ratio, cash ratio, working capital turnover, debt to assets ratio, short-term debt ratio, equity multiplier, total assets turnover, fixed assets turnover, tangible assets ratio, and effective tax rate significant determinants of profitability for Fintech lending companies in Indonesia. This reserach can help Fintech lending companies improve their profitability.

Carry Trades and FX Risk Buffers: Foreign Currency Debt of Emerging Market Firms

Abstract The surge in foreign currency (FC) corporate debt in emerging economies has sparked concerns about macroeconomic stability, heightened by speculation about non-financial firms engaging in carry trades. Using firm-level data on the currency denomination of both assets and liabilities, we find evidence of firms' carry trades: firms save in local currency liquid assets and earn higher interest income after issuing short-term FC debt. They also set aside FC liquid assets as FX risk buffers. A large degree of heterogeneity in incentives is observed. Notably, listed firms participate more in carry trades and allocate less FX risk buffers than non-listed firms.

Impact of Debt Composition and Accounting Conservatism on Financial Distress in Emerging Markets

Aims: This study investigates the impact of debt composition, specifically short-term and long-term debt, on corporate financial distress, focusing on the moderating role of accounting conservatism. It aims to understand how firms in emerging markets, particularly Kenya, can achieve financial stability through prudent debt structuring and conservative accounting practices. Study Design: The research adopted an explanatory research design. Place and Duration of Study: The study utilized financial data from firms listed on the Kenyan Securities Exchange between 2008 and 2021. Methodology: The study analyzed a sample of 45 firms trading at the Nairobi Stock Exchange over 14 years from 2008 to 2021. The study used panel logistic regression, a statistical method for analyzing data with multiple observations over time, to test its hypotheses. Results: The results show that both short-term and long-term debt increase the likelihood of financial distress, with accounting conservatism further intensifying the risk for firms heavily reliant on short-term debt while mitigating it for those with long-term debt. This suggests that conservative accounting practices, which promote early recognition of losses, may exacerbate financial distress for firms heavily reliant on short-term debt. In contrast, for long-term debt, accounting conservatism has a mitigating effect helping firms manage their debt obligations more effectively over time. This highlights a nuanced role of accounting conservatism, where it increases the pressure on firms with short-term debt while providing stability for those with long-term obligations. Conclusion: The findings suggest that corporate managers in emerging markets should carefully balance short- and long-term debt to minimize financial distress risks. Additionally, adopting conservative accounting practices can serve as a safeguard, providing early warning signals for financial trouble and enhancing corporate stability. Managers should therefore carefully balance short-term and long-term debt to reduce financial distress while adopting conservative accounting practices to enhance financial transparency and risk management. Policymakers can support firms by promoting responsible debt management and offering incentives for conservative financial reporting to strengthen overall financial stability.

Can military-experienced CEOs improve corporate outcomes?

Purpose This paper aims to assess the role of CEOs with military experience in shaping corporate outcomes in Vietnam and provide new insights into how these unique backgrounds influence corporate financial decisions and firm performance within the specific context of an emerging market. Design/methodology/approach This study uses a comprehensive data set of 323 non-financial firms listed in Vietnam over 2013–2021 to examine the association between military-experienced CEOs and corporate outcomes. The authors apply propensity-score matching analysis to address potential endogeneity issues and use 2SLS estimation to show the mechanisms through which military CEOs affect firm performance. Findings The authors find that firms led by CEOs with military backgrounds outperform their counterparts lacking this experience. Furthermore, the findings indicate that firms helmed by military-experienced CEOs tend to make more investments and maintain lower (higher) short-term (long-term) debt levels. Practical implications This study provides additional evidence on the influence of military CEOs on corporate outcomes, particularly in the context of an emerging market. It underscores the positive effects of skills acquired during military service on veterans’ civilian careers, particularly in business leadership roles. The findings are valuable for managers contemplating the recruitment of veterans, highlighting the potential advantages these individuals can bring to a company. Additionally, the results may inspire younger individuals to consider military training as a means to develop valuable characteristics that can enhance their personal and professional development. Originality/value The authors have observed the notable success in firms led by CEOs with military backgrounds since Vietnam’s renovation period in the 1980s. Yet, to the best of the authors’ knowledge, research on the influence of military-experienced CEOs in Vietnam remains scarce. This study is the first pioneering in shedding light on the diverse contributions of soldiers to the development of the Vietnamese economy.

Determinants of Capital Structure in the Hospitality Industry: Empirical Evidence

This paper studies the determinants of hotel SMEs' capital structure using the theoretical framework, and the leading indicators suggested by the Trade-off and Peeking Order theories. We collected financial information from the Bureau Van Dijk database, observing a ten-year time horizon (2010 to 2019 included). The companies were selected based on the indication in paragraph 3, and all fell into the category of SMEs according to the European Commission criteria. Based on the accounting information, we calculated the dependent variables (Total Debt, Long-Term Debt, and Short-Term Debt) and the independent variables (Profitability, Tangibility of Assets, Growth, Size, and Age). For our analysis, we first used a panel data methodology, developing the least squares regressions (POLS) and the fixed effects models (FEM) and then, based on the results, we chose the fixed effects model (FEM) as it was more significant. Subsequently, we tested the hypotheses of the two theories (Trade-Off and Pecking Order) with our analysis model. The results highlighted that profitability, asset tangibility and size are the most significant variables in explaining the behaviour of hotel SMEs.

Unpacking Capital Structure Decisions: Analyzing Short-Term Debt to Equity Dynamics in Shariah Compliant Financially Distressed Firms

Unpacking Capital Structure Decisions: Analyzing Short-Term Debt to Equity Dynamics in Shariah Compliant Financially Distressed Firms

How Does China’s Carbon Emissions Trading Policy Affect the Financing of High-Carbon Enterprises?

Evaluating the impact of carbon emissions trading (CET) policy on the operations and development of high-carbon enterprises is of great practical importance in a context where policy-makers aim to balance steady growth and reduce carbon emissions. Based on the panel data of A-share listed enterprises, this paper comprehensively employs the difference-in-differences (DID) and the difference-in-differences based propensity score matching (PSM-DID) methods to investigate the impact of China’s CET policy on the financing constraints and financing ability of high-carbon enterprises. The results indicate that: first, the level of financing constraints of high-carbon enterprises in China has significantly increased with the implementation of the CET policy from 2012 to 2019. Second, the impact shows significant heterogeneity in various industries, carbon markets, and the characteristics of enterprises. Third, the CET policy reduces the long-term debt financing ability of high-carbon enterprises by 22.26 percent during the sample period, but it has no significant impact on short-term debt financing ability. JEL Classification: C33, D92, G32, Q43, Q58

Impact of Disaggregated External Debt on Economic Growth: Evidence from Asian Developing Economies

Abstract This study investigate the impact of total and disaggregated external debt on economic growth, across 32 Asian developing economies (ADE) from 1995 to 2020. The study applied the generalized method of moments (GMM) and dynamic common correlated estimator (DCCE) with interaction terms of institutional quality and macroeconomic policy to address the non-linearity, across-country heterogeneity, cross-sectional dependence and endogneity. The empirical results indicate that total external debt and its types initially harm economic growth, except for commercial creditors’ debt, which has positive effects. Short-term, private, and multilateral debt show weaker negative associations compared to long-term, public, and bilateral debt. Incorporating interaction terms in non-linear models reveal a shift from negative to positive impacts, highlighting the importance of robust institutional quality and stable macroeconomic policy in mitigating adverse debt effects. Our findings underline the necessity of tailored policies accounting for specific impacts of different debt types on economic growth. Moreover, highlight the significance of institutional quality and macroeconomic policy standards to manage risks, optimize debt management practices, adjust fiscal policies, and foster sustainable economic growth. Future research should further investigate the broad impact of domestic debt in conjunction with external debt across different countries, time periods, and methodological approaches.

Cracking the Code: Hidden Choices and Visible Impacts Pattern Recognition in Corporate Finance

AbstractResearch in corporate finance suffers from bounded rationality due to static modeling. Adopting factor analysis, an unsupervised machine learning approach, and balance sheet information (accounts) over time, we find underlying dynamic latent corporate finance decisions. Our study identifies three latent corporate finance decisions adopted by executives in Pakistan, (1) long-term capital investment, (2) short-term debt credit, and (3) financial flexibility. The order of the decisions and the empirical tests highlight agency problems rooted in familial ownership concentration. We find that long-term capital investment and short-term debt credit decisions significantly reduce the firms’ present and future performance. Conversely, managers do not embrace financial flexibility, despite its ability to improve performance. The study highlights a contradiction, firms bounded by ownership concentration prefer control over performance and do not make decisions to optimize and protect minority shareholders’ wealth, depicting a moral hazard problem.

Evaluation of External Financing and Technology Investment Quality of Listed Manufacturing Companies in Nigeria

Purpose: This study examined the effects of external financing on technology investment quality of listed manufacturing firms in Nigeria. Design/Methodology/Approach: The study employed ex-post facto research design. 44 listed manufacturing firms on NGX as at 31st December, 2023 form the study population while 43 firms were selected as the sample using census sampling technique. Data were collected from annual audited financial reports and subjected to multiple regression analysis. Findings: The findings from the analysis revealed that long term debt has positive significant effect on research and development but insignificant negative effect on return on investment and operational efficiency. Also, it was found that short term debt has positive significant effect on return on investment but negative insignificant effect on operational efficiency and research and development. Practical Implication: The study concluded that finance from short term debt is crucial for manufacturing firms to earn optimum returns from their innovative investment. It is therefore recommended that management of manufacturing firms strategically align their external finances with investment in capital technology. Originality/Value: The originality of this study is such that, it may emerge as one of the pioneer studies to investigate the effect of external financing on the quality of technological investment within the Nigerian manufacturing sector.

Debt maturity and the marginal value of cash holdings

This study investigates the impact of debt maturity on the marginal value of cash holdings. It posits that short-term debt acts as a crucial governance mechanism by reducing agency conflicts and aligning managerial actions with shareholder interests. Using a sample of U.S. public firms, the results indicate that firms with higher proportions of short-term debt have a greater marginal value of cash, reflecting more efficient resource allocation and reduced managerial opportunism. The necessity for frequent capital market interactions associated with short-term debt mitigates agency conflicts. Additionally, the study explores three potential mechanisms: financial constraints, managerial moral hazard, and information asymmetry.

Does firm culture influence corporate financing decisions? Evidence from debt maturity choice

This study establishes a relation between corporate culture and debt maturity choice. Specifically, superior corporate culture is associated with the choice of shorter-term debt, supporting the notion that superior culture reduces managerial agency problems resulting in managers being more receptive to external monitoring through the choice of shorter-term debt. The culture subcomponents of integrity, teamwork, and innovation are found to have a meaningful influence on the debt maturity structure choice. The relation between culture and debt maturity is more pronounced in firms with higher managerial stock ownership and those that are financially constrained, but is weakened in firms with a greater CEO sensitivity to stock prices. Additionally, firms with superior culture are shown to have higher long-term credit ratings. These findings contribute at the confluence of corporate culture and debt financing literatures. A battery of robustness tests, including addressing endogeneity concerns, validate the findings.

ANALISIS KINERJA KEUANGAN BERDASARKAN RASIO LIKUIDITAS DAN PROFITABILITAS PADA PT. ASTRA INTERNASIONAL TBK

This reseach was conducted at PT. Astra Internasional Tbk. The aim of this reseach is to analyze and explain finansial performance as measured by the Current Ratio (CR) and Net Profit Margin (NPM) at PT. Astra Internasional Tbk, through financial report analysis of the company’s ability to fulfill its obligations and the results achieved from its operational activities, the type of research carried out is descriptive reseach. The results of descriptive and statistical analysis showed that PT. Astra Internasional Tbk’s Current ratio is in poor condition, this indicates that the company has not been able to pay short-term obligations or debts that are due. The Net Profit Margin is in poor condition, this indicates that the company has not been able to maximize net profit from the company’s operational activities.

ANALISIS RASIO PROFITABILITAS DAN RASIO LIKUIDITAS UNTUK MENGUKUR KINERJA KEUANGAN PT HANJAYA MANDALA SAMPOERNA TBK

The aim of this researcher is to analyze and explain financial performance in terms of Net Profit Margin (NPM), Return On Equity (ROE) , Current Ratio (CR) and Quick Ratio (QR) at PT. Hanjaya Mandala Sampoerna, Tbk, through financial report analysis will determine the company's ability to generate profits and determine the company's ability to fulfill its obligations and the results the company has achieved from its operational activities. The type of research carried out is descriptive research. The results of descriptive and statistical analysis showed that PT. Hanjaya Mandala Sampoerna, Tbk's Net Profit Margin (NPM) is in the bad category, this indicates that the company is less able to maximize the value of its profits. Return on Equity (ROE) is in the bad category. This indicates that the company has not been able to manage capital well and generate company profits. The Current Ratio (CR) is in the good category. This indicates that the company is able to pay short-term obligations or debts that are due. The Quick Ratio (QR) is in the good category. This indicates that the company is able to fulfill or pay current debt by taking into account the value of inventory

Does exploratory trademark strategy affect the cost of debt financing? Evidence from China

In this study, we investigate how exploratory trademark strategy affects the cost of debt financing. Using data from Chinese listed firms between 2005-2021, we find that firms adopting exploratory trademark strategies experience lower cost of debt, highlighting the positive strategic value of trademarks. This effect is especially significant for firms facing higher competitive pressure, greater information asymmetry, and less easily access to external finance. In addition, supplementary analyses reveal that exploratory trademark strategy enhances attention and alleviates financing constraints. These results suggest that information risk and default risk are influential in determining the relationship between exploratory trademark strategy and debt pricing. Moreover, we identify a significant link between this strategy and debt maturity, indicating that firms adopting exploratory trademark strategies tend to have greater long-term debt capacity and less reliance on short-term debt. Our findings underscore the crucial role of trademark management in corporate financing, particularly in reducing firm’ debt financing costs.

CAPITAL STRUCTURE AND FINANCIAL PERFORMANCE OF LISTED INFORMATION AND COMMUNICATIONS TECHNOLOGY FIRMS IN NIGERIA

This study seeks to examine the effect of capital structure on financial performance of the listed information and communications technology firms in Nigeria. This study adopted correlation and ex-post facto research design. The population of this study consists of all listed information and communications technology firms in Nigeria. Census sampling technique was employed. Multiple regression model based on pooled ordinary lease square, robust test was adopted in analyzing the panel data obtained from audited financial statement of the listed sampled information and communications technology firms for the periods of 10 years between (2013- 2022). The study reveals that both long term debt financing ratio short term debt financing, and debt to equity financing ratio have positive and significant influence on return on assets of the listed information and communications technology firms in Nigeria. On the other hand, equity financing ratio has a positive but insignificant effect on performance of listed information and communications technology companies in Nigeria. Therefore, it is recommended that the management of the listed information and communications technology firms in Nigeria should initiate coherent and integrated financial policies towards encouraging long-and short-term debt financing and debt to equity financing to ultimately improve the financial performance of the list information and communications technology firms in Nigeria.

Financing Risks and Preventive Measures for E-Commerce Corporates

The e-commerce industry has achieved tremendous development in the past decade. However, in this rapid development process, there are some problems that have caused huge hidden dangers, and financing is the most important one among them. Therefore, the topic of this article is the dangers and prevention methods of e-commerce corporations under different financing methods. The method of this paper is as follows: first, segment the financing models of e-commerce corporates, then combine the financing situation of several well-known e-commerce corporates in China, analyze relevant data, and discuss the possible problems under these financing models separately. The research shows that the short-term debt payment risk, financial leverage risk and investment decision risk are the major risks that have influences on the firms’ financing, and the first two have a greater impact. To resolve these dangers, e-commerce firms can adjust debt structure, diversify financing channels and establish a sound risk prevention mechanism.

ANALISIS RASIO LIKUIDITAS DALAM MEMENUHI KEWAJIBAN PADA PERUSAHAAN DAGANG YANG TERDAFTAR DI BURSA EFEK INDONESIA

The objective of this research is to analyze the liquidity ratio in measuring the company's ability to meet obligations in trading companies listed on the Indonesia Stock Exchange. The usefulness of the research results is expected to contribute to the understanding of solving issues related to the analysis of factors affecting customer loyalty and can be used as a consideration for the companies studied in taking corrective steps for the future. It can also be used as an evaluation material in determining future company strategies. Financial ratio analysis is a part of business or risk prospect analysis for decision-making purposes by evaluating the business environment, strategy, and the company's financial position and performance. The financial statement analyses commonly used by companies include liquidity analysis, solvency analysis, and profitability analysis. Liquidity analysis provides insights into a company's ability to match short-term liabilities maturing with current assets. The liquidity ratio owned by the company can be used as an evaluation material and for the effectiveness of company management. Based on these issues, the author conducted research on "Liquidity Ratio Analysis in Meeting Obligations in Trading Companies Listed on the Indonesia Stock Exchange" using annual financial reports for the period 2020-2022. The data analysis technique in this study uses descriptive analysis by collecting data, classifying data, explaining, and analyzing to provide clear information and insights into the issues being researched. The results of the study show the liquidity ratio in measuring the ability of short-term debt of trading companies listed on the Indonesia Stock Exchange (IDX) for the period 2020-2022, including PT. Bintang Oto Global Tbk, PT. Midi Utama Indonesia Tbk, PT. Wicaksana Overseas International Tbk, PT. Modern International Tbk, and PT. Perdana Bangun Pusaka Tbk. Viewed from the current ratio of 42.22% < 75%, it is categorized as unhealthy, meaning the hypothesis taken is that the company is unable to meet short-term debt obligations with the liquidity ratio. The quick ratio of 286.69% and the cash ratio of 181.31% > 150% are categorized as very healthy, thus the hypothesis taken is that the company is able to meet short-term debt obligations with the liquidity ratio.

Debt maturity, governance and investment efficiency: new evidence from emerging market

PurposeThis study investigates the combined influence of corporate governance (CG) and debt maturity (DM) on the investment inefficiency among non-financial 506 NSE-listed firms in India between 2009 and 2022. Additionally, this study also investigates the moderating effect of short-term debt (STD) maturity concerning the relationship between CG and investment inefficiency.Design/methodology/approachUtilizing the residuals extracted from the Biddle et al. (2009) investment model, three different forms of investment inefficiency (investment inefficiency, overinvestment and underinvestment) were measured. To measure the internal governance of firms, a new corporate governance index (CGI) was developed using 65 new governance stipulations, whereas STD was measured as short-term debt divided by total debt. Interaction effects between CG and DM were also estimated. Employing CGI and STD along with firm-specific control variables, many pooled regression models were estimated. Endogeneity issues were addressed through two-stage least squares. Robustness checks were also conducted using the two-step system GMM, alternative measures of dependent and independent variables.FindingsThe findings demonstrate that higher CG and shortened DM increase investment efficiency. This evidence implies that firm-level governance and short-term debt reduce information asymmetry and increase management oversight. Additionally, the evidence suggested that shortened DM and CG complement one another to increase investment efficiency, suggesting companies that utilize STD to a greater (lesser) extent demonstrate a greater (lesser) impact of CG in reducing investment inefficiency.Practical implicationsThis work first advocates the establishment and implementation of robust corporate governance mechanisms to control agency conflicts, moral hazard, adverse selection and limit opportunistic behavior of managers for improving investment efficiency. Second, since interaction effects suggest a complementarity between CG and DM, it is advocated that STDs can be used to achieve optimal investment choices to control moral hazards and adverse selection and discourage suboptimal investment levels.Originality/valueThis work provides new evidence concerning the effects of CG and DM on various forms of corporate investment efficiency (investment inefficiency, overinvestment and underinvestment, using alternate measures) in an emerging economy like India having a unique institutional framework and macroeconomic environment using a newly developed firm-specific CG index for a large sample of companies using recent data.

Investigation and Analysis of McDonald's Market Development

As a large restaurant chain, McDonald's is affected by different external and internal factors, which makes investors begin to question its sustainable operation ability. This study takes McDonald's as an example to explore the development issues of the catering industry through its business situation. This article studies the sustainability of McDonald's stock price in the future and evaluates its continued investment potential. Therefore, based on the financial data of McDonald's and its competitors during the period from 2020 to 2023, the expected value is estimated by combining quantitative research methods and relative value evaluation methods. The results of the study show that McDonald's financial performance in the past few years has been good, including good capital structure, short-term debt repayment ability and profitability. Investors can make a long-term investment in McDonald's stock based on a sound financial position and good market expectations. This study has important practical significance for the healthy development of catering.