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Using the exclusion of business development companies (BDCs) from stock indexes, this paper studies the effectiveness of market discipline in the direct lending space. Amid share sell-offs by institutional investors, a drop in BDCs' valuations limits their ability to raise new equity capital. Following this funding shock, BDCs do not adjust their capital structure. At the same time, they are reducing the risk exposure of their portfolios. We document a greater reduction in risk for BDCs subject to stronger market discipline from their debtholders. BDCs pass through the capital shock to their portfolio firms by reducing their investment intensity. [ABSTRACT FROM AUTHOR]

Using a standardized methodology, we empirically evaluate 55 proposed determinants of capital structure in terms of statistical significance, economic significance, and identification. We find that robust and economically important determinants of debt ratios are relatively few in number. Nevertheless, because each determinant relates to one of five market imperfections—taxes, distress costs, information asymmetry, agency costs, or supply frictions—we draw conclusions from the evidence as a whole regarding the explanatory power of different capital structure theories. We find greater support for pecking order theory and supply-related theories, with less support for traditional tradeoff theory and agency theory. [ABSTRACT FROM AUTHOR]

We investigate the link between a firm's life cycle and its operational efficiency and find that operational efficiency first increases and then decreases with the life cycle thus exhibiting an inverted – U shaped relationship. Our empirical examination reveals the relationship holds for subsamples of dividend- and non-dividend-paying firms, with dividend-paying firms displaying higher efficiency scores than their non-dividend-paying counterparts in each life cycle stage. In the literature on benchmarking the moderating role of a firm's life cycle stage has not been considered. Thus, our findings have empirical significance for efficiency comparison in benchmarking studies. Including the life cycle stage of comparable firms permits a more homogeneous cohort for efficiency comparisons. Consequently, firm policy revolving around capital structure and dividend pay-outs need to take into cognizance that operational inefficiencies could also be a life stage phenomenon rather than agency issues led misallocation of resources. Additionally, we find that when operating efficiency is the variable being studied in a multivariate setting, controlling for the dividend status of a firm reduces omitted variable bias as dividend pay-outs and firm lifecycle are known to be intertwined. [ABSTRACT FROM AUTHOR]

Purpose: This study measures the relationship between human capital and innovative literacy from the perspective of intellectual capital. For this purpose, the relationship between human capital and innovative literacy was first investigated to measure intellectual capital. Subsequently, the moderating effect of entrepreneurial orientation on the influence of innovative literacy on human capital was also analysed. Design/methodology/approach: This study analyses the relationship between innovative literacy, human capital and entrepreneurial orientation through structural equation modelling – the study sample comprised 457 participants in Türkiye. Findings: The results suggest a positive relationship between human capital, a sub-component of intellectual capital and innovative literacy. Innovative literacy can influence intellectual capital and increase value. Our finding further confirms that entrepreneurial orientation has no moderating effect on the same relationship. Research limitations/implications: Despite the observed correlation between IL and HC growth, this study had some limitations. First, the generalisability of the findings is limited because the sample was selected from individuals with a high level of education in Türkiye. Despite these limitations, this study has important theoretical and practical implications for developing countries. Türkiye is a developing country, and the selected sample is the most critical database in the country for an Innovative Literacy Scale. However, future research could focus on whether there is a potential source of bias and collect and compare data from heterogeneous workers. In addition, research on existing research frameworks in other countries may consider varying levels of education and business sectors. This research aims to be a pioneering initiative towards the advancement of IL. The question of whether IL should be considered equivalent to or a subset of HC, which has been previously proposed as a dimension of IC, can be clarified through a thorough examination of what IL means. Practical implications: In a theoretical framework, transforming human capital into value through innovations derived from innovative literacy activities will significantly increase the company's intellectual capital. Organizations in which innovative literacy play an important role achieve organizational goals, strengthen commitment and contribute to sustainability through the emergence of new potential innovative individuals. This research also contributes significantly to the existing literature. Initially regarding theoretical implications, this study examines the concept of innovative literacy in the existing literature on intellectual capital, human capital and entrepreneurial orientation. Additionally, this study offers a new perspective on intellectual capital. Social implications: The findings of this research also provide managerial outcomes. Initially, the assessment of concepts, research and development capabilities and efficient knowledge management are indicators of innovative literacy proficiency at the individual level. Human capital is a subcomponent of intellectual capital and refers to knowledge, skills and experience. Innovative and literate team members should be developed in order to strengthen the intellectual capital structure of an organization. Originality/value: This study contributes to understanding innovative literacy from an intellectual capital perspective using the Innovative Literacy Scale to reveal important dimensions that influence innovative literacy. Using a measurement tool with new sub-dimensions not included in the extant literature on intellectual capital is unique. This study suggests that scholars should include innovative literacy – a distinct subset of intellectual capital – in their body of knowledge on human capital. Our findings have the potential to help meet the needs of human resource departments, researchers, educational institutions, public institutions and enterprises. [ABSTRACT FROM AUTHOR]

Innovation is crucial for competitive companies. To effectively implement innovation, it is necessary to have substantial financial resources. Traditionally, financing sources such as venture capital and angel investors are considered more suitable. In contrast, debt is considered less suitable due to the risky nature of innovation, which creates a negative association between innovation and debt. At the same time, the resource-based view emphasizes the importance of resources for successfully executing strategies. Therefore, we aim to identify the effect of the interaction of innovation strategy and strategic resources on companies’ debt (capital structure). This finding is relevant since, despite the literature indicating that debt is inappropriate for innovation, it remains one of the most common sources of financing an innovative project. We show that a firm with an innovation strategy and strategic resources has greater financial leverage. The sample included American companies, covering 3,628 companies from 2008 to 2018. [ABSTRACT FROM AUTHOR]

I show that the corporate group structure generates tax benefits that create incentives for higher leverage. The tax benefits arise when losses on distressed subsidiaries are tax deductible for a parent firm. Higher tax rates then imply that more of these losses are borne by the government instead of the parent firm, reducing the expected costs of bankruptcy and thereby incentivizing the subsidiaries to take on higher leverage. Using data from a large sample of European multinationals, I show that this tax benefit exists on top of the trade-off theory and debt-shifting effects, and is stronger when deductions of subsidiary losses are more generous. [ABSTRACT FROM AUTHOR]

In last few years, air pollution has caused many issues in China. With the flourishing of education, the relationship between advanced human capital structure (AHCS) and air pollution deserves thoughtful consideration. Therefore, this article uses a dynamic panel model to analyze the effect of AHCS on air pollution with data from 31 Chinese provinces from 2014 to 2020. Considering the potential endogenous problem of AHCS affecting air pollution, the system generalized method of moments method is employed to overcome endogenous bias. Empirical results reveal that, in China, AHCS significantly worsens air pollution. By comparing the dynamic panel model with the traditional static panel model, traditional mean regression was found to overestimate the impact of AHCS on air pollution. Then we explored the mechanism by which AHCS affects air pollution and found that industry structure, urbanization, per capita disposable income, and industry cluster mediate the effect of AHCS on air pollution. Finally, some policy implications are proposed to improve AHCS and air pollution control. [ABSTRACT FROM AUTHOR]

Purpose: The literature has dealt with the relationship between board characteristics (BC) and firm performance (FP) on a large scale. However, it yielded inconsistent results. Thus, this paper aims to examine the indirect relationship between BC and FP through the mediating role of the capital structure (CS). Design/methodology/approach: This study used a sample of 528 non-financial companies listed on Bursa Malaysia from 2015 to 2019. Also, a two-step system generalised method of moments estimation technique was applied. Findings: The results show that board diversity and the frequency of board meetings positively affect financial performance, and it is negatively influenced by board turnover, size and independence. Also, the results indicate a positive relationship between the independence of the board and all CS variables. Importantly, the findings support the policy-setting role of the board of directors where CS (measured by total debt and short-term debt) suppresses some governance mechanisms' detrimental effect on FP. Hence, the board of directors, apart from the monitoring function, introduce various policies (financial and non-financial) that enhance the overall performance of companies. Originality/value: These results are consistent with the agency's perspective that management practices in selecting the optimal capital reduce agency costs and improve performance. The findings contribute to developing a broader theoretical framework that accounts for the policy-setting role of the board of directors. The current study model of corporate governance offers insight for policymakers into the role of corporate governance other than monitoring functions in organisations and how CS should be taken into consideration with corporate governance and FP association. [ABSTRACT FROM AUTHOR]

Purpose: This study examines the implications of real asset liquidity for accounting conservatism. We investigate whether the liquidity of a firm's physical assets mitigates lenders' demand for conservatism by increasing the amount lenders can recover if the firm is liquidated, a theoretical prediction in Göx and Wagenhofer (2009). Design/methodology/approach: We use an asset redeployability index as a proxy for firm-level real (physical) asset liquidity and adopt ordinary least squares (OLS) regressions in the test. We also investigate the differential impact of real asset liquidity on conservatism in two unique settings where lenders' demand for accounting conservatism varies (loan initiation and bank deregulation). Findings: We find that accounting conservatism decreases as real asset liquidity increases. The negative effect of real asset liquidity on conservatism increases as the quantity of the firm's real assets increases, and the negative association is strengthened when firms face high financing constraints and have access to public debt markets. The moderating effect of real asset liquidity on lenders' demand for conservatism increases (decreases) when real asset liquidity is more (less) important to lenders. Originality/value: This study provides direct empirical evidence for the theoretical prediction in Göx and Wagenhofer (2009). Prior research shows that real asset liquidity impacts a firm's capital structure and investment decisions (Campello and Giambona, 2013; Kim and Kung, 2017; Ortiz-Molina and Phillips, 2014; Williamson, 1988). We complement this literature by providing evidence that real asset liquidity also plays a role in financial reporting by reducing accounting conservatism. [ABSTRACT FROM AUTHOR]

We are examining the impact of benefit corporation certification on the profitability of UK companies, taking into account their capital structure. We contribute to the literature that scrutinizes the financial ramifications of Benefit Corporation Certification. Analyzing UK Certified Benefit Corporations (CBCs) and their noncertified counterparts using a difference‐in‐differences analysis, we find that the performance of CBCs with a capital structure heavily weighted towards debt declines in comparison to non‐CBCs, using Return on Assets as a measure of financial performance. Conversely, the performance of CBCs with a capital structure primarily composed of equity is comparable to that of non‐CBCs. [ABSTRACT FROM AUTHOR]

We examine the Netherlands around the Second World War, where the occupying Nazi regime overhauled the country's corporate tax regime and introduced a profit tax of 55 per cent. We estimate that the new tax regime cost investors at least 300 million guilders, an amount equivalent to 5 per cent of Dutch GDP in 1940. We demonstrate that the tax introduction changed the financing of Dutch businesses. In particular, we find strong evidence that debt financing increased because it provides a tax shelter. The changes in taxation also led to an after‐tax reduction in the cost of debt, which had large real effects on firm investment. After the end of the war, firms with more leverage had higher capital expenditures. [ABSTRACT FROM AUTHOR]

We estimate the costs of financial distress prior to default (predefault costs) separately from the loss incurred at default (the loss given default) using a dynamic tradeoff model of capital structure. We show that predefault costs account for a large fraction of total distress costs, approximately 64.1%. At the same time, they vary across industries ranging from 32.1% to 75%. We demonstrate that the expected predefault costs of financial distress vary significantly across industries with a range between 3.2% and 8.3% and are higher for small firms relative to larger ones. This paper was accepted by Lukas Schmid, finance. Supplemental Material: The data files are available at https://doi.org/10.1287/mnsc.2023.4974. [ABSTRACT FROM AUTHOR]

Improving the supply efficiency of ecological products (EPSE) is of great significance to protect the ecological environment, promote the development of green industry and the sustainable growth of the economy. This paper focuses on constructing an evaluation index system for EPSE and exploring the relationship between the development level of the digital economy (DE) and EPSE in China. To measure the EPSE, the study employs the Undesirable Slacks-Based Measurement (SBM) Model across 30 provinces, cities and districts in China from 2011 to 2022. Furthermore, the research utilizes spatial econometric models, panel threshold effect models, and other methodologies to investigate the impact mechanism and nonlinear relationship between DE and EPSE. The research shows that: (1) The overall level of EPSE in the study area is relatively low, with significant development differences observed; (2) The DE has a nota-ble spatial spillover effect on EPSE, with a significantly negative impact in neighboring areas; (3) The development of the DE promotes EPSE through the upgrading of human capital structure, industrial structure, and increases in local government fiscal revenue and corporate operating profits; (4) Heterogeneity analysis shows that the impact of DE on EPSE varies significantly across eastern, central, and western China, with positive effects pronounced in the eastern and western regions; (5) Regression results of the threshold effect indicate a significant single threshold effect on the impact of DE development level on EPSE. Specifically, when the threshold value is less than 0.1232, DE significantly contributes to the improvement of EPSE. This paper contributes new literature evidence and factual references to the understanding of the causal relationship between DE and EPSE. The findings highlight the importance of considering spatial spillover effects, impact mechanisms, and regional heterogeneity in analyzing the relationship between DE and EPSE. The research also suggests that promoting the development of the digital economy could be a viable strategy to enhance EPSE, especially in regions where the threshold value is below 0.1232 [ABSTRACT FROM AUTHOR]

Intelligent manufacturing enterprises play a crucial role in the modern industrial system and are key to high-quality economic development. However, most current research on intelligent manufacturing technology innovation focuses on single variables, lacking a comprehensive analysis from a linkage grouping perspective. This paper constructs an analytical framework for the technology innovation path of intelligent manufacturing enterprises from three dimensions: technology level, organization level, and environment level. Six antecedent variables are selected: R&D investment, digital transformation, human capital structure, profitability, government support, and competitive position. Using the fuzzy sets of qualitative comparative analysis (fsQCA) methodology, the paper examines the technological innovation paths of intelligent manufacturing enterprises in China. The research indicates that no single antecedent variable is necessary for high technological innovation; instead, the innovation path results from the synergistic effect of multiple conditions. The study identifies three paths leading to high technological innovation in intelligent manufacturing:"Government and Human Resource driven types," "Environmental-Organizational linkage types,"and"Organizational Resilience dominant types." This analysis provides reference suggestions for enterprises to adopt suitable development strategies based on their competitive positions. [ABSTRACT FROM AUTHOR]

The aim of this article is to examine which selected internal factors influence the profitability (ROA) of companies in the energy sector in Poland and how they do so, over the period 2018–2021, taking into account two groups: all types of activities (984 companies) and electricity production (508 companies). This study uses Pearson correlation analysis, Wilcoxon pairwise rank test, descriptive statistics and multiple linear regression to build eight ROA econometric models, four for each group. The research shows that in the energy sector, in particular, variables relating to the capital structure (total equity/total assets, long-term liabilities/total assets, short-term liabilities/total assets and long-term liabilities/short-term liabilities ratios) have a statistically significant impact (positive or negative) on the profitability (ROA). The aforementioned ratios appear in various combinations in all eight ROA models. The use of equity to finance the activities of companies in this sector seems to be particularly beneficial, as the total equity/total assets ratio occurs in as many as seven out of eight models and, moreover, it always has a positive impact on the ROA. The remaining analyzed variables relating to the structure of assets (fixed assets/total assets ratio), financial liquidity (current ratio) and the age of the company appear in the models as statistically significant quite rarely, having a different impact on the ROA (positively or negatively). However, variables such as the fixed assets/current assets and total liabilities/total equity ratios do not have a statistically significant impact on the ROA at all in any of the studied groups of enterprises. The research results suggest that managers, in order to shape profitability (measured by ROA), should pay special attention to the capital structure, i.e., the proportions of the use of equity, long-term liabilities and short-term liabilities to finance the operations of energy companies as these independent variables appear most often in ROA models. Other analyzed factors, such as the assets structure (the share of fixed assets in total assets) or financial liquidity, also have an impact on the return on assets; therefore, their use in energy companies should also be considered. Moreover, the research shows a large diversity of factors shaping ROA in econometric models, the way they affect the dependent variable (positive or negative) and the degree of model fit (R2), both in individual years and in the two groups of companies studied. This proves that it is not possible to clearly and finally determine which factors and how (positive or negative) they affect the profitability. This influence can change over time depending on the circumstances, which indicates the need for the continuous involvement of decision makers in the management process and making decisions based on reliable and appropriate-to-the-situation analyses. [ABSTRACT FROM AUTHOR]

The study empirically examines the factors affecting the financing decisions of non-financial listed companies in Gulf Cooperation Council (GCC) countries. Using static and dynamic two-step generalized method of moments techniques, it analyzes unbalanced panel data from 364 non-financial companies across six GCC countries from 2011 to 2021. The findings partially support optimal capital structure theories, highlighting significant internal factors such as profitability, market-to-book ratio, firm size, earnings volatility, and growth opportunities that influence financing decisions. While no single theory fully explains the financing choices, the association of internal factors with book and market leverage is consistent. The study provides robust and generalizable results, aiding financial institutions and policymakers in formulating pro-development policies and regulations. This research facilitates better coordination between corporate managers and financial institutions, supporting the region's economic transition. It is the first study to use extensive data from GCC non-financial firms to investigate financing decisions, offering valuable insights for investors and a basis for further analysis of capital structure choices in the region and beyond. [ABSTRACT FROM AUTHOR]

This study looks at how capital structure, sales growth, and operating flow have an impact on stock prices. The purpose of this study is to see how capital structure, sales growth, and operating flow have an impact on stock prices simultaneously and partially. This study uses a quantitative descriptive scheme. Non-cyclical consumer companies listed on the IDX during the period 2018– 2022 are the subjects of this study. Using the purposive sampling technique, this study was quantitative descriptive and collected 18 samples of companies over five years, which resulted in 90 observational data with secondary data. Data analysis includes descriptive statistics and panel data regression tests. The results show that, overall, capital structure, sales growth, and operating cash flow affect stock prices; Only the capital structure affects the price partially, and the growth of sales and operating cash flow does not affect the price significantly. [ABSTRACT FROM AUTHOR]

This study aims to examine and test the influence of profitability and capital structure on firm value, with company size as a moderating variable in technology companies listed on the Indonesia Stock Exchange (IDX) for the period 2019-2022. This quantitative research employs convenience sampling with a sample size of 32 companies. The data used in this study is secondary data, comprising 94 financial statements. The analysis was conducted using moderated regression analysis with the assistance of eViews version 13. The results indicate that profitability does not affect firm value, whereas capital structure does influence firm value. Additionally, company size weakens the effect of profitability and capital structure on firm value. [ABSTRACT FROM AUTHOR]

The determination of the capital structure is a critical component of a company's financial decision-making process. The question of how to optimize a firm's capital structure to increase its value has been a significant topic of interest within the financial community. The employee stock ownership plan (ESOP) has developed rapidly in China's capital market over the past decade, providing a suitable context for studying the impact of employee equity incentives on capital structure decisions. This paper employs cross-sectional ordinary least squares regression models and unbalanced panel fixed effect models to investigate the impact of employee stock ownership plans (ESOPs) on firms' capital structure decisions. The analysis is conducted on a sample of Chinese A-share listed companies on the Shanghai and Shenzhen Stock Exchanges. The research considers both static capital structure choice and dynamic capital structure adjustment. We find that the implementation of an ESOP reduces the level of corporate debt and accelerates the dynamic adjustment of capital structure, suggesting that employee equity incentives play a role in optimizing firms' capital structure decisions. We also find that the impact of ESOPs on the dynamic adjustment of capital structure is asymmetric. Specifically, the implementation of ESOPs markedly accelerates the downward adjustment of capital structure, yet has no impact on the upward adjustment of capital structure. Further analysis demonstrates that the impact of ESOPs on capital structure decisions is contingent upon the macroeconomic environment, industry characteristics, corporate governance, and ESOP contract designs. First, the optimization of ESOPs on capital structure decisions is more pronounced in an economic boom environment, in a poor market climate, or in competitive industries. Second, the reduction effect of ESOPs on corporate debt is more pronounced in non-state-owned companies, high-tech companies and those with lower ownership concentration. In contrast, the acceleration effect of ESOPs on capital structure adjustment is more pronounced in state-owned companies, non-high-tech companies and those with higher ownership concentration. Ultimately, ESOPs financed by loans from a firm's major shareholders—or with a longer lock-up period, smaller shareholding size or executive subscription ratio—demonstrate a more pronounced optimization effect on capital structure decisions. This paper not only contributes to the existing literature on the relationship between equity incentives and capital structure decisions, but also provides guidance for listed companies on the reasonable design of their ESOPs and the optimization of their capital structure decisions. [ABSTRACT FROM AUTHOR]

Trapping refers to the event when a household falls into the area of poverty. Households that live or fall into the area of poverty are said to be in a poverty trap, where a poverty trap is a state of poverty from which it is difficult to escape without external help. Similarly, extreme poverty is considered as the most severe type of poverty, in which households experience severe deprivation of basic human needs. In this article, we consider an Omega risk process with deterministic growth and a multiplicative jump (collapse) structure to model the capital of a household. It is assumed that, when a household's capital level is above a certain capital barrier level that determines a household's eligibility for a capital cash transfer programme, its capital grows exponentially. As soon as its capital falls below the capital barrier level, the capital dynamics incorporate external support in the form of direct transfers (capital cash transfers) provided by donors or governments. Otherwise, once trapped, the capital grows only due to the capital cash transfers. Under this model, we first derive closed-form expressions for the trapping probability and then do the same for the probability of extreme poverty, which only depends on the current value of the capital given by some extreme poverty rate function. Numerical examples illustrate the role of capital cash transfers on poverty and extreme poverty dynamics. [ABSTRACT FROM AUTHOR]

With the financial burden of government increasing, the Public-Private-Partnership (PPP) model has become an alternative method to develop public infrastructure. To efficiently promote the private sector to participate in PPP, making a proper incentive policy is critical for the government. This paper examined the effects of two governmental support policies, i.e., tax reduction and risk-sharing, on the investment decision of the private sector, and further compared the relative efficacy of these two policies. The results manifest that: first, both tax reduction and risk-sharing policies motivate private sector to invest earlier; second, although the capital structure decision of the private sector is free from the influence of the risk-sharing policy, the optimal debt level under tax reduction policy shows a U-shape relationship with the incentive ratio; third, when completion risk is large, there exists efficiency loss for total benefits of the project under the risk-sharing incentive policy. Besides, the efficacy of two incentive policies varies depending on the scenario. Firstly, given the same incentive ratio, the risk-sharing policy proves to be more effective than the tax reduction policy. Secondly, when considering the same level of incentive loss for government, tax reduction policy outperforms than risk-sharing policy in terms of efficacy. Thirdly, the efficacy of these policies also depends on the completion risk level: under small completion risk, risk-sharing policy is more effective, whereas under large completion risk, the tax reduction policy takes precedence. Based on these findings, some managerial insights that could assist government in formulating more effective incentive policies are proposed. [ABSTRACT FROM AUTHOR]

The purpose of this study is to understand how company size, liquidity, and capital structure can affect stock prices in the food and beverage industry in Indonesia, and to provide practical guidance for stakeholders in making financial and investment decisions. This research method uses a sample of 18 manufacturing companies in the food and beverage subsector on the IDX in the 2019-2022 period. Sample selection is carried out by purposive sampling technique, which is a technique that considers and determines samples based on certain criteria. The purposive sampling technique was chosen to ensure that the samples taken were relevant to the research objectives. The results of this study show that the number means that the independent variable is only able to explain the bound variable of 0.299 or 29.9%. *The Stock Price variable can be explained by 29.9% by variables such as company size, debt-to-equity ratio, current ratio, and return on equity while the remaining 70.1% can be influenced by other factors that are not studied. [ABSTRACT FROM AUTHOR]

We study how environmental risks induced by the potential inundation associated with sea‐level rise affects firms' financial structure decisions. We find that firm leverage decreases with inundation risks associated with sea‐level rise. To establish causality, we consider firms' relocation of their headquarters, a propensity score matching estimator, and a difference‐in‐differences estimator around the release of the documentary "An Inconvenient Truth" and find that our results are robust. The negative relation between inundation risks due to sea‐level rise and financial leverage is more pronounced for firms with more geographically concentrated operations, firms with more close rivals, and firms that are non‐investment grade. SLR risk‐affected firms shift more towards equity and away from debt in their capital raising efforts and have a relatively higher weight of their leverage in short‐term debt. Our findings highlight firms' proactive adjustment and adaptation to long‐term environmental risks. [ABSTRACT FROM AUTHOR]

Financial flexibility occurs when companies borrow less than expected and is widely practiced. A commonly used model to establish the presence of financial flexibility is based on the determinants of the leverage model, which was developed some time ago and is composed of various factors that determine a company's leverage use. Governmental borrowing and financial sector development in the meantime were shown to be key drivers of corporate borrowing. We add these two factors to the original model to establish how the prevalence of financial flexibility is affected by these inclusions into the model. South Africa is used as a locality for the study because of its relatively recent financial sector development and increased governmental borrowing. The results of the study show that financial flexibility is more prevalent when these factors are considered in a South African context. Previous studies have paradoxically shown a lower financial flexibility prevalence in South Africa when compared to a developed market such as the UK, which is contradictory to developing market debt conservatism. In this study, we show that when accounting for financial sector development and governmental borrowing, financial flexibility is widely prevalent in a South African context, at similar levels to that of a developed economy. The primary implication of the study's findings is that financial flexibility may have been underreported in developed markets in prior studies. [ABSTRACT FROM AUTHOR]

Purpose: The article aims to present the indebtedness and factors affecting it in the group of non-financial companies listed on the Warsaw Stock Exchange in light of the health market crisis (HMC) induced by the COVID-19 pandemic. Design/methodology/approach: Differences, correlations, the impact of variables on debt, and the stability of regression models were examined. Findings: No differences were found in debt in relation to assets and equity, but differences were identified in other areas of financial management related to capital structure theories. Research limitations/implications: The vaccine's introduction altered market dynamics. Future research should explore post-vaccine debt level trends and their alignment with value maximization or liquidity-driven risk minimization strategies. During the pandemic, risk reduction likely provided a comparative advantage over profit maximization, reducing capital costs without significantly harming value despite declining cash flow. This warrants further investigation. Practical implications: The study suggests adjusting debt management strategies according to economic conditions. Post-pandemic research should examine debt evolution, value maximization, and risk minimization, emphasizing stable performance indicators. Social implications: Stable debt levels enhance economic confidence among employees and consumers. Risk-averse corporate behavior during the pandemic likely preserved jobs. Corporations’ access to more debt may increase inequality, impacting job opportunities. Originality/value: The paper presents the application of capital structure theory by businesses to the health crisis. . The added value of the article is the inclusion of changes in the EPS level, which are related to value creation, and Altman's Z-Score, which shows the financial condition and solvency of the company in the light of changes in the market related to Covid-19. [ABSTRACT FROM AUTHOR]

Purpose: This paper aims to test the empirical validity of the dynamic trade-off theory in its symmetric and asymmetric versions in explaining the capital structure of a panel of publicly listed US industrial firms over the period from 2013 to 2019. It analyzes the existence of an adjustment of leverage toward its target level and whether the speed of this adjustment is influenced by the debt measure, the model specification or/and the fact that the actual debt ratio is higher or lower than its long-term target level. Design/methodology/approach: This paper uses a quantitative research methodology using panel data analysis under the partial adjustment model and the error correction model using the generalized moment method in first differences and in systems to explore the dynamic nature of firms' capital structure behavior. Findings: The results show that the effects of the conventional determinants of leverage are globally consistent with the trade-off theory predictions. The dynamic versions confirm that firms exhibit leverage-targeting behavior. Although this speed of adjustment (SOA) depends on the debt and model specifications, it is around 60% on average. The estimated SOA is higher for the market leverage measure compared to the book leverage. The asymmetric adjustment model reveals that firms are more sensitive to reducing leverage than increasing it when they are away from their target; overleveraged firms exhibit approximately 5% faster adjustment than underleveraged firms when book leverage is used. Originality/value: The originality of this research paper lies in its development and test of an asymmetric model to allow the leverage adjustment speed to vary depending on whether the firm's debt ratio is above or below its target level and the methodological approach as well as the different model specifications used and the insights generated through the application of rigorous econometric techniques. [ABSTRACT FROM AUTHOR]

Purpose: This study aims to explore the impact of capital structure (CS), including total debts, short-term debt, long-term debt and total shareholder equity, on environmental, social and governance (ESG) performance in the context of Jordan. Design/methodology/approach: To achieve the study's objectives, the authors used the content analysis approach and the longitudinal data generated from the annual reports of 51 industrial companies listed on the Amman Stock Exchange for the period 2012–2020. Findings: The findings show that debt financing enhances ESG performance in all dimensions, while financing by equity did not affect ESG. Consequently, Jordanian companies' managers are trying to reduce agency costs by investing in ESG activities. In addition, companies are focusing on debt financing instead of equity to achieve their financial as well as nonfinancial goals. This is because the opportunism of new shareholders will likely lead to a focus on maximizing their value at the expense of the broader group of stakeholders, and this will adversely affect companies' ESG performance. Therefore, debt financing limits shareholder control. Originality/value: To the best of the authors' knowledge, this is the first examination of the impact of CS financing choices on ESG performance. Thus, this study has important implications for the decisions of executives, policymakers, shareholders and lenders, as it enables them to better understand the linkage between CS and ESG. [ABSTRACT FROM AUTHOR]

This paper studies the interactions of capital structure and product market competition under two supply chain structures: a distribution structure where two competing retailers source from a common supplier and a parallel structure where each retailer sources from a dedicated supplier. The analyses demonstrate that if the retailers have access to external credits, they will borrow more (less), buy more (less), and incur a higher (lower) default probability under a parallel structure than under a distribution structure if the retailers sell substitutes (complements). The retailers' leverage improves the profit of their upstream suppliers and of the channel but improves their own profits only if they sell complements. If they sell substitutes, borrowing makes them worse off, leading to the prisoner's dilemma phenomenon. If only one retailer has access to external credit, then it will enjoy a leadership premium (loss) if the retailers sell substitutes (complements), and this effect trickles up to the upstream supplier of the leveraged retailer under the parallel structure. Thus, the dedicated suppliers will abet the leveraged retailers to compete more aggressively than unleveraged ones. However, the common supplier is independent of their downstream customer's capital structure. These results reveal that the impacts of external credit on the supply chain profitability depend on the stages the supply chain members are in, the degree of product differentiation, the supply chain structure, the uncertainty of demand, and whether the competitor also has access to external credits. [ABSTRACT FROM AUTHOR]

Start-ups are essential contributors to economic development, but they often face several barriers to growth, including access to finance. We study their capital structure in their early years of operation through the lens of Pecking Order Theory, exploring how the pursuit of innovation influences firms' reliance on different types of finance. Panel analyses of 8273 German start-ups show that innovation activities are relevant predict start-ups' revealed preferences for finance. Effects on the type and order of financing sources depend on the degree of information asymmetries specific to research and development activities, human capital endowments, and the market introduction of new products and processes. New firms focused on research and development activities and with better human capital are less likely to receive informationally complex finance such as debt and will rely relatively more on owner and equity finance. Mixed evidence is found, instead, on the role of new products or processes. Our results suggest that the traditional pecking order theory does not hold for new firms, implying that owner and external equity play a much more prominent role for such firms. Then, managers and entrepreneurs should consider specific sources of finance and financial instruments in light of their innovative activities. [ABSTRACT FROM AUTHOR]

The goal of this research is to investigate whether taxation affects the leverage decisions of banks and if the response of leverage to tax increases depends on profit-shifting opportunities available to individual banks. This topic remains controversial since it is often believed that banking regulation is such an essential driver of leverage choices that little room is left for other considerations studied in the corporate finance literature. Using a difference-in-differences setup encompassing the period from 2006 to 2017, we exploit two exogenous income tax rate increases applicable to 225 Brazilian banks, employing novel identification strategies based on the intricacies of local taxation rules and on the distinctions between individual banks and financial conglomerates. We find stark differences in the behavior of banks around the two events, with a substantial increase in leverage following the first tax hike but no leverage response following the second. In addition, we find no evidence of heterogeneous effects based on the amount of profit-shifting opportunities available to individual banks. Regulatory concerns possibly became more relevant for leverage decisions during the period around the second tax hike because it coincided with the implementation of stricter capital requirements associated with the Basel III framework. Taken together, our results suggest that financial institutions balance considerations regarding the tax-shield benefits of debt against regulatory concerns specific to the banking industry when making capital structure choices. [ABSTRACT FROM AUTHOR]

The purpose of this research is to determine the relationships between macro variables, financial constraints, capital structure and stock returns based on expert opinion polls and a fuzzy interpretive structural modeling approach. The statistical population of this research includes experts and experts of the Tehran Stock Exchange Organization, 10 experts and 384 experts were randomly selected as the research sample. In order to analyze the opinions of experts, firstly, the fuzzy Delphi method and structural equations to evaluate the selected macroeconomic variables, financial constraints and their effect on the return and capital structure and the active companies of the companies accepted in the Tehran Stock Exchange, and the fuzzy Dimetal method for Prioritizing indicators and monitoring factors were used, and structural explanatory equations were used to examine the relationships between variables. The findings of this research included several parts, in the first part, macroeconomic variables were identified and introduced using the Delphi technique, then the relationships between the main variables of the research were investigated using the fuzzy interpretive structural equation method, and finally the investment indicators and in Continued liquidity and financial constraints were identified as influential indicators. In the third part of the data analysis of this research, the impact of macroeconomic variables and financial constraints on capital structure and stock returns was investigated, which showed that financial constraints have an effect on the intensity of the economic production gap on capital structure, stock returns, and company size on stock returns. [ABSTRACT FROM AUTHOR]

In this study, we provide the first attempt to relate economic policy uncertainty (EPU) to firms' access to finance. Using data from 26 countries and the news‐based index from Baker et al. (2016), we provide evidence that EPU significantly increases financial constraints and decreases firms' access to finance. Our main inference is robust to alternative measures of financial constraints, alternative samples, alternative model specifications, and several approaches that control for potential endogeneity. We further show that the EPU‐financial constraint relationship is driven by both the demand and supply sides of financing. Additional analyses suggest that the impact of EPU on firms' financial constraints is moderated by board characteristics (i.e., gender diversity, independence, and duality). They also highlight the moderating roles of government effectiveness, the rule of law and control of corruption. Collectively, our findings provide novel theoretical and practical contributions in relation to EPU and the firms' setting. [ABSTRACT FROM AUTHOR]

We develop a dynamic incomplete-markets model of entrepreneurial firms and demonstrate the implications of preferences for liquidity to entrepreneur's interdependent consumption, portfolio allocation, hedging and financing decisions. The numerical results provide several important implications. Preferences for liquidity reduce hedging demand using risky assets. Besides, the existence of preferences for liquidity decreases the implied equity value and encourages the entrepreneur to issue more debt. Especially, the preferences for liquidity can overturn the risk-shifting incentives of a risk-averse entrepreneur. [ABSTRACT FROM AUTHOR]

Since the seminal work of MM irrelevance theory, there has been a long history of controversy among academicians both in developed and developing nations regarding the determinants of capital structure. To this end, the main aim of this study was to investigate firm-specific and country-level determinants of the capital structure of Ethiopian commercial banks. The study adopted an explanatory research design with a quantitative research approach. A panel dataset was obtained from 14 commercial banks, which range from 2010 to 2022. A random effect panel regression result revealed that tangibility, non-debt tax shields, growth, and interest rate had a positive and significant effect, while the gross domestic product had a negative and significant effect on leverage which is used as a measure of capital structure. Among the independent variables tested, ROA, liquidity, effective tax rate, risk, and inflation have an insignificant effect on the capital structure of the selected commercial banks. The study will have implications for managers of commercial banks, legislators, regulators, and other interested parties that can use the study's conclusions to help them make well-informed capital decisions and implement the necessary measures to enhance the financial performance of Ethiopian banks with an optimal ratio of debt to equity. [ABSTRACT FROM AUTHOR]

This paper argues that understanding the power of TikTok's visual discourse is a crucial part of conceptualising the character, inspiration, and ambition of Iran's Gen-Z-led uprising, both at home and across the diaspora. TikTok is a social media platform that depends on visuality. As such, it creates its own specific forms of messaging. This paper seeks to apply an innovative methodology of 'Visual Discourse Tracing' to the Iranian protests. It uses this carefully devised, process-driven method, to highlight the core ways in which TikTok has amplified the message of the Iranian protests, connecting to the grassroots movement and to the longer history of Iranian women's struggle for freedom. Visuality and social media have been crucial in shaping the character of these contemporary protests, necessitating proper theorisation when understanding the wider Iranian protest movement. [ABSTRACT FROM AUTHOR]

Although prior studies have broadly examined the external economic consequences of corporate green innovation (GI) strategies, whether and how GI strategies influence firms' internal operations is underexplored. To fill this significant gap, we investigate the effect of GI initiatives on firm human capital structure, as represented by the ratio of salesmen (RSE) and accountants (RAE) to total employees. A higher RSE (RAE) plausibly indicates an enhanced position of salesmen (accountants) in human capital and greater importance that firms attach to their crucial role in improving marketing (reporting). Consistent with GI enhancing consumer purchase willingness, we find that GI lowers RSE. In line with GI reducing financing constraints and firms' emphasis on high-quality financial reporting, we record that GI decreases RAE. Moreover, such inhibitory effects become stronger when stakeholders' recognition of GI strategies grows, or when firms ex-ante rely more on marketing (reporting) functions of salesmen (accountants). [ABSTRACT FROM AUTHOR]

The study investigates the inverse relationship between financial performance and capital structure for the Romanian B2C e-commerce companies, based on a representative sample of 437 companies active in the period 2005–2020. Statistical analyzes show the evolution of financial performance and the impact of the COVID-19 pandemic on it, depending on the company category. All company categories had better financial performance in 2020 compared to 2019, based on sample results. The study reveals valid reference values for the financial ratios of Romanian electronic commerce, being a model to be applied in any industry. The analysis of the causality of the financial variables and their correlations, on the sub-periods 2005–2008 and 2009–2020, both at the company category level and at the sample level, are the basis of the GMM approach. The econometric models Difference GMM and System GMM explain the relationship between financial performance and capital structure leading to interesting conclusions. As e-commerce has a sustainable development, the findings and conclusions of the study provide guidance for economic policies at the sectoral level. Financial performance in relation to strategic debt management depends on the company category. Stimulating the development of those categories of companies that ensure the efficient performance framework can be the key to a sustainable development of the national economy. The study is useful for managers, investors, financial analysts, decision makers, in financial education as well as for the banking system. [ABSTRACT FROM AUTHOR]

This study aims to test and analyze the effect of investment opportunity set, capital structure, dividend policy, and profitability on firm value. Another objective to be achieved is the effect of capital structure and dividend policy on firm value mediated by profitability. Our research uses path analysis to determine and analyze the influence of exogenous variables on endogenous variables. The objects in this study are companies incorporated in LQ45 for the period 2012 - 2021. The results of the study found that the price earning ratio, capital structure with indicators of debt to asset ratio and debt to equity ratio, dividend payout ratio, and return on assets all have a positive and significant direction of influence on price to book value. Debt to equity ratio has a significant positive direction of influence on return on assets, while debt to asset ratio has the opposite direction, namely negative and significant to return on assets. What is different from the results of this test is that the dividend payout ratio, although the direction of influence is positive on return on assets, is not significant. Return on assets is not able to mediate the effect of debt asset ratio, debt to equity ratio, and dividend payout ratio in its effect on price to book value. [ABSTRACT FROM AUTHOR]

To facilitate natural heritage protection, ecological protection, and tourism development, farmers in natural heritage tourist destinations are often relocated and resettled, thus becoming land-lost farmers. Because of the COVID-19 pandemic, the livelihood vulnerability of land-lost farmers in natural heritage tourist destinations has become particularly prominent. In this paper, the Yinhuwan resettlement community in China's Mount Sanqingshan Scenic Area is taken as an example and changes in stock and livelihood capital structure of farmers after relocation are analyzed. Based on the "exposure-sensitivity-adaptability" framework, an evaluation index system of farmers' livelihood vulnerability is constructed to evaluate farmers' livelihood vulnerability. The multiple linear regression model is used to empirically analyze the influencing factors of livelihood vulnerability. The results show: (1) Relocation and resettlement induced considerable changes to the livelihood of farmers. After relocation, the livelihood capital of farmers has generally increased. The physical capital and financial capital of farmers increased significantly, while natural capital was replaced by tourism capital. This led to a decrease in human capital of farmers compared with tourism operations. (2) The COVID-19 pandemic has greatly impacted the livelihood of farmers in this resettlement community. (3) Under the influence of the COVID-19 pandemic, the livelihood vulnerability of the main Nongjiale operators has become relatively high, while that of part-time Nongjiale operators and non-Nongjiale operators is moderate. (4) Tourism capital, tourism market seasonality, and livelihood diversification are significant factors influencing the livelihood vulnerability of farmers in this resettlement community. In this paper, the original natural capital is replaced with tourism capital, and a new analysis framework of livelihood capital is constructed. This provides a reference for future research on the livelihood of farmers in tourist destinations. This reference helps to study the sustainability of the livelihoods of land-lost farmers, and to evaluate the feasibility of the resettlement policy of farmers in tourist destinations. Several suggestions are presented that provide a basis for the formulation of relevant policies for reducing farmers' livelihood vulnerability. [ABSTRACT FROM AUTHOR]

This article provides a comprehensive assessment of the impact of corporate environmental responsibility (CER) on financing patterns of working capital and fixed investment. Financing sources include internal funds, equity, different types of debt financing, and government grants. Specifically, this study examines differences in the impacts of CER on financing patterns for smaller and larger firms. Based on a sample of 15,082 firms covering 27 countries, our empirical findings indicate that environmentally responsible activities do not significantly affect financing patterns of working capital but affect the use of internal finance and almost all external sources for capital expenditures. Moreover, the impacts of environmentally responsible activities on capital expenditures vary across financial sources and depend on firm size. The revealed pecking order among financing sources and changes in the debt ratio offer valuable insights into the validity of capital structural theories for smaller and larger eco-friendly firms. [ABSTRACT FROM AUTHOR]

Purpose: This paper aims to empirically investigate the moderating role of corporate governance (CG) in the capital structure-performance relationship. Design/methodology/approach: The analysis is based on top Business Today-500 companies and covers a time span of 10 years. The fixed effect panel regression model is used to examine the impact of CG mechanisms on the relationship between capital structure and firm performance. Findings: The core findings of the study indicate significant positive moderating role of board independence, board size and family ownership on the relationship between leverage and performance. Practical implications: The results enable the managers of Indian firms to comprehend the significance of CG framework while taking financing decisions. The findings encourage managers to raise debt funds in those firms that adhere to good governance norms. Originality/value: Unlike extant studies that emphasize on the moderating impact of single CG variable in leverage-performance relationship, the current work comprehensively examines the role of many CG factors that moderate the relationship between capital structure and firm performance. To the best of the authors' knowledge, the present study is the first of its kind with respect to India. [ABSTRACT FROM AUTHOR]

Purpose: The purpose of this study is to examine the linear and non-linear relationship between capital structure (CS) and firm performance (FP) and the moderating and mediating roles of agency costs in the CS-FP nexus. Design/methodology/approach: This study used static and quadratic panel data regression models to examine the linear and non-linear relationships and structured equation models to analyze the mediating effect of agency costs in the CS-FP nexus of 38 listed non-financial Mauritian firms from 2009 to 2019. Findings: Leverage has a significant negative effect on FP supporting the pecking order theory. Agency costs are significantly and positively associated with FP. There is a strong non-linear relationship between leverage and FP supporting the trade-off and agency cost theories. Agency costs are an important moderator and mediator in the CS-FP nexus. Overall, the sensitivity analyses showed that the results were robust. Practical implications: Firms need to carefully consider the levels and types of debt and equity in their CS involving the use of dynamic strategies to adjust CS in response to changing economic conditions and FP. The moderating effect of agency costs may guide firms in optimizing CS and may contribute to corporate governance discussions, emphasizing the importance of aligning interests to foster sustainable business practices. Originality/value: This study adds to the extant literature by providing new evidence on the non-linear relationship between leverage and FP and the moderating and mediating roles of agency costs in the CS-FP nexus in emerging capital markets, where such studies are rare. [ABSTRACT FROM AUTHOR]

We develop a dynamic trade‐off model of managerial discretion to investigate how stock option compensation relates to managers' intertwined capital structure and dynamic investment decisions. Our model predicts that option grants provide managers with incentives to undertake both current and future investments, in sharp contrast to the effects of stock compensation. With an increase in option compensation, managers in low‐ (high‐) risk firms tend to increase (decrease) firm leverage, while the opposite is true when stock pay increases. This result offers an innovative prospective on the empirical tests of the relationship between option compensation and capital structure. [ABSTRACT FROM AUTHOR]

Using a novel sample covering 3783 US public firms from 2007 to 2020, we examine how negative media coverage of firm‐level environmental, social, and governance (ESG) practices affects a firm's debt choice. We find that firms with higher ESG reputation risk rely more on public bond than bank loan. The social and governance components, in particular, matter. Moreover, firms that receive more negative news coverage display a higher propensity to issue new bonds as opposed to securing new bank debt. Overall, our study presents empirical evidence on the relation between firm ESG reputation risk and debt financing. [ABSTRACT FROM AUTHOR]

This study empirically investigates the association between board attributes and capital structure decisions of non-financial listed firms in Bangladesh. This study also investigates how this association is shaped and moderated by the level of insider ownership. The current study takes 3096 firm-year observations of firms that are listed on the Dhaka Stock Exchange from 2004 to 2023. Multiple regression analysis on panel data was used, and pooled OLS was selected by resolving stationary issues. Moreover, this study used lagged variables and a GMM estimator to address endogeneity. The results show that both board size and board independence are more positively correlated with a firm's leverage under conditions of a high level of inside ownership. On the other hand, without the moderating effect of inside ownership, gender diversity on the board does not have any significant impact on a firm's leverage, and it turns into a positive association due to the moderating effect of inside ownership. This result is consistent with the existing theory and previous findings. After the introduction of corporate governance guidelines, the inside owners' effect on board size and board independence became substantial, indicating that corporate governance guidelines with the moderating role of inside ownership play a significant role in capital structure decisions in Bangladeshi listed firms. [ABSTRACT FROM AUTHOR]