Corporate disclosures and financial distress in banks in India: the moderating role of competition

Rastogi, Shailesh; Kanoujiya, Jagjeevan

doi:10.1108/ara-03-2022-0064

Cited by 9 publications

(11 citation statements)

References 86 publications

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“…Ownership concentration significantly impacts how equity financing is used to boost sustainability performance [35]. The congruence between ownership's strategic aims and sustainability goals may be more evident in businesses with concentrated ownership, such as state-owned firms or businesses run by a single family [39]. When equity funding is used, this connection can lead to a higher focus on sustainable activities.…”

Section: Ownership Concentration Equity Funding and Sustainabilitymentioning

confidence: 99%

The Moderating Role of Ownership Concentration on Financing Decisions and Firm’s Sustainability: Evidence from China

Wen,

Agyemang,

Alessa

et al. 2023

Sustainability

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We examined the impact of financing decisions on a firm’s sustainability in China as it aspires to achieve carbon neutrality. To proxy firms’ sustainability performance, we proposed an index for environmental, social, and governance (ESG) performance. The financing decision was proxied by debt funding and equity funding. Using secondary data from China Stock Market Accounting Data from 2016 to 2022, we utilize the fixed effect and fully modified ordinary least squares estimators for the empirical analysis. The analysis indicated a favorable link between debt funding and ESG performance. We uncovered an inconsistent association between equity funding and ESG performance. Moreover, ownership concentration revealed a significant role in moderating the impact of debt financing and ESG performance in China. The findings affirm that firms should rely on debt funding rather than equity funding to enhance their ESG performance. Hence, policymakers should enact laws allowing easy access to debt funding for companies to ensure higher ESG performance. This, in the long term, will contribute to the Chinese dream of carbon neutrality.

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Section: Ownership Concentration Equity Funding and Sustainabilitymentioning

confidence: 99%

The Moderating Role of Ownership Concentration on Financing Decisions and Firm’s Sustainability: Evidence from China

Wen,

Agyemang,

Alessa

et al. 2023

Sustainability

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“…Lang et al (2012) present that high transparency and disclosures (TD) create more stock liquidity, reducing capital costs. Rastogi and Kanoujiya (2022) also highlight that TD improves financial health. This situation eventually leads to a high valuation of the firms.…”

Section: Td and Esg's Association With Valuationmentioning

confidence: 89%

Firm's value and ESG: the moderating role of ownership concentration and corporate disclosures

Rastogi

Singh

Kanoujiya

2023

ARA

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PurposeThe study intends to determine the environment, social and governance (ESG)'s impact on the firm's value. In addition, how ownership concentration (OC) and transparency and disclosures (TD) influence the impact of firm's ESG on its valuation (firm value).Design/methodology/approachThe relevant panel data with a sample of 78 Indian firms for five years (2016–2020) are gathered. Both linear and nonlinear connections of firm's ESG with its value are tested. In addition, TD and two components of OC (stakes of promoters and institutional investors) are empirically tested as moderators on the connectivity of the firm's ESG with its value.FindingsThe linear association of firm's ESG with its value is found insignificant. ESG is found to have a positive and nonlinear (U-shaped) impact on the value of the firms. TD does not moderate the connectivity of firm's ESG with its valuation (firm value). The higher stakes of promoters positively affect the association of firm's ESG with the valuation. However, the high stakes of institutional investors retard the ESG's influence on the firm value.Research limitations/implicationsThe study is on Indian firms for five years. A sample of more than one nation and a longer duration (10 years) could have helped better determine the associations among the variables. In turn, these limitations can be the present study's future scope. In addition, the authors find a lack of standardisation of the ESG scales, which is a problem in measuring it. Using standardisation scales of ESG for the analysis can also be future scope on the topic.Practical implicationsThe investors would be wary of the level of ESG to influence the firms' value positively. Managers also need to be careful to have sincere efforts for ESG to reap its rich dividends. Policymakers may take cognisance that despite having board seats (in a few cases), institutional investors negatively (instead of positively as expected) influences the ESG's association with the firm's value. They may bring some guidelines or legislative changes to fix responsibility on the part of the institutional investors.Originality/valueNo study reports the linear and nonlinear association of ESG on the firm's value to observe clearer connectivity between the two. Similarly, no study is observed to have promoters and institutional investors as moderators on the association of firm's ESG with the valuation (firm value). Hence, the present study considerably augments the extant literature on the topic and its contribution.

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“…Therefore, the study rules out the multicollinearity problem [14]. Moreover, the VIF (varianceinflation-factor) values for explanatory variables are also low (< 10), which also ensures no multicollinearity [46].…”

Section: Descriptive Analysis and Correlationmentioning

confidence: 97%

“…This study primarily includes three categories of variables: 1) dependent variables, 2) explanatory factors (dependent variables), and 3) control variables. The Altman Z-score is commonly employed by many researchers in their respective studies as a measure of financial distress [48,46,56]. Thus, the exogenous variable in this context is the "Altman Z-score, " taken as a proxy of financial distress.…”

Section: Variablesmentioning

confidence: 99%

Impact of financial distress on the dividend policy of banks in India: evidence using panel data

Rawal,

Gopalkrishnan

2024

Futur Bus J

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The study primarily aims to examine the impact of financial distress on the dividend distribution policy of banks operating in India. Panel data analysis was performed using a static model to investigate the impact of distress on the bank’s dividend policy. The Z-score developed by Altman measures a bank’s financial distress (a high Z-score indicates the absence of financial distress). Data from 31 out of 34 banks operating in India between 2016 and 2020 has been used. The debt/equity ratio is used as the moderator. The sales log is used as the control variable. A linear connection exists between financial distress and dividends. Furthermore, debt/equity ratio significantly moderates the association of financial distress with dividend policy. The findings contribute to formulating a long-term dividend policy by drawing attention to the distressing situation in the banking sector, focusing on ensuring the banks’ financial viability. Thereby, the findings are novel and hold significant worth in improving the current understanding of the subject.

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Corporate disclosures and financial distress in banks in India: the moderating role of competition

Cited by 9 publications

References 86 publications

The Moderating Role of Ownership Concentration on Financing Decisions and Firm’s Sustainability: Evidence from China

The Moderating Role of Ownership Concentration on Financing Decisions and Firm’s Sustainability: Evidence from China

Firm's value and ESG: the moderating role of ownership concentration and corporate disclosures

Impact of financial distress on the dividend policy of banks in India: evidence using panel data

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