Corporate policies and outcomes during the COVID-19 crisis: Does managerial ability matter?

Jebran, Khalil; Chen, Shihua

doi:10.1016/j.pacfin.2022.101743

Cited by 24 publications

(20 citation statements)

References 71 publications

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“…Despite the importance of managerial ability, there is limited research on the impact of managerial skills on corporate liquidity and the cost of debt for an emerging market especially, during a crisis. Andreou et al (2017), Jebran and Chen (2022) report that managerial ability plays a significant role during periods of uncertainty. The study period is 2015-2019, a critical period for Oman due to the decline of oil prices below $100 a barrel, the average five-year revenue as a percent of GDP was only at 23% in comparison to 36% in 2014 (World Bank, 2022).…”

Section: Managerialmentioning

confidence: 99%

“…A study by Matemilola et al (2018) indicates that experienced and capable managers leverage greater debt to protect the firm's profits from taxation, enhancing debt capital. The review of recent studies investigating managerial ability have focused majorly for developed (Kumar and Zbib, 2022;Khoo and Cheung, 2022;Magerakis, 2022;Haider et al, 2021;Curi and Lozano-Vivas, 2020) or Asian economies (Jebran and Chen, 2022;Phan, 2021;Naheed et al, 2021). Some studies have shown higher ability managers are associated with short-term debt (Khoo and Cheung, 2022;Shang, 2021).…”

Section: Empirical Literature and Hypotheses Developmentmentioning

confidence: 99%

“…Andreou et al . (2017), Jebran and Chen (2022) report that managerial ability plays a significant role during periods of uncertainty. The study period is 2015–2019, a critical period for Oman due to the decline of oil prices below $100 a barrel, the average five-year revenue as a percent of GDP was only at 23% in comparison to 36% in 2014 (World Bank, 2022).…”

Section: Introductionmentioning

confidence: 99%

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Does managerial ability and auditor report readability affect corporate liquidity and cost of debt?

Dalwai

Habib

Mohammadi

et al. 2023

ARA

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PurposeThis study investigates the impact of managerial ability and auditor report readability on the cost of debt and corporate liquidity in Omani-listed industrial companies.Design/methodology/approachThe study uses data from the S&P Capital IQ database and audited annual reports published on Muscat Securities Market. The sample consists of 35 firms (175 firm-year observations) from 2015 to 2019. Managerial ability is measured using the data envelopment analysis proposed by Demerjian et al. (2012a, b). Auditor report readability is measured as a log of the auditor report digital file size proposed by Loughran and McDonald (2014).FindingsThis study finds that a company's managerial ability reduces the cost of debt lending support to upper echelons and agency theory. Highly able managers of industrial companies are associated with increased corporate liquidity consistent with the precautionary motive of holding cash. In addition, less-readable auditor reports contribute to higher debt costs and reduce corporate liquidity.Originality/valueTo the best of the authors’ knowledge, few studies have explored the influence of managerial ability and auditor reporting readability on firms' financial policy. For industrial-sector firms, this study demonstrates the managerial ability and readability of auditor readability as significant determinants of the cost of debt and corporate liquidity, especially during periods of uncertainty. Thus, the findings can be generalized to other non-financial sector firms in the country and the Middle East.

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Section: Managerialmentioning

confidence: 99%

Section: Empirical Literature and Hypotheses Developmentmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

Does managerial ability and auditor report readability affect corporate liquidity and cost of debt?

Dalwai

Habib

Mohammadi

et al. 2023

ARA

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“…Recent literature has highlighted the effects of the COVID-19 pandemic on several aspects such as corporate performance (Shen et al, 2020;Achim et al, 2021), firm policy related to investment, financing, cash holdings and dividend payouts (Jebran and Chen, 2022), stock markets (He et al, 2020;Haroon and Rizvi, 2020), financial reporting and audit activity (Crucean and Hat egan, 2021;Elmarzouky et al, 2021a;Elmarzouky et al, 2021b) and earnings management (Lassoued and Khanchel, 2021;Liu and Sun, 2022).…”

Section: Corporate Tax Avoidancementioning

confidence: 99%

The impact of the COVID-19 pandemic on corporate tax avoidance: evidence from S&P 500 firms

Kobbi-Fakhfakh

Bougacha

2023

JFRA

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Purpose This study aims to examine the impact of the COVID-19 pandemic on corporate tax avoidance (TA). Design/methodology/approach The authors tested their predictions using a panel data set of US publicly traded firms listed in the Standard & Poor 500 index. Based on available information in the DATASTREAM database covering the 2019–2021 period, the authors used three proxies for TA, that is, the current effective tax rate (CUETR), the cash effective tax rate and book-tax differences (BTD). The authors estimated multiple regression models including industry and year fixed effects. The authors carried out additional analyses using BTD components, that is, temporary and permanent BTD, and testing for the impact of the COVID-19 pandemic across industries. Findings The results show that the outbreak of the novel coronavirus (COVID-19) affected positively the CUETRs and negatively BTD, indicating a reduction in TA, in the postpandemic period. Further analyses provide evidence that this effect is the same, regardless of the degree of industry failure probability, but it is more driven by the reduction of deferred tax expenses (temporary BTD component). These findings suggest that the US publicly listed firms have experienced a serious drop in their income in the postpandemic period, following the markets closure and the quarantine periods that hampered business. Therefore, with lower profits, they are not willing to evade taxes. Social implications This paper enriches taxation research during economic crises. The research findings have important policy implications. On the one hand, the fiscal policy should stimulate growth to allow firms to tackle the challenges they confronted post-COVID-19. On the other hand, the global economic crisis caused by the pandemic has led to a major deterioration in public finances and has raised inequalities across households. Therefore, it would be necessary to review public fiscal policies to achieve a balance of equity, growth and sustainability. In this context, tax reform focusing on tax progressivity could counter in part the negative economic effects of the COVID-19 pandemic and led to economy recovery. Originality/value This study contributes to the growing body of literature on the COVID-19 effects with a special focus on corporate practices. This study provides first evidence on the effect of the COVID-19 pandemic on manager’s behavior from taxation perspective. This study also enriches taxation research during economic crises.

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“…En épocas emergentes, los impactos siempre son devastadores, por ello, las políticas corporativas y la capacidad empresarial son elementos sustanciales para la resolución de problemas en conjunto con la correcta administración y determinación de deuda, un ejemplo evidente es que, cuando existen gerentes capaces en épocas emergentes reducen sus inversiones, tenencias de efectivo y financiamiento, pero, por lo contrario, aumentan significativamente los pagos de dividendos, debido a que es muy importante mantener los valores de capital aunque implique un costo un poco más alto, pero la capacidad, conocimiento y habilidades que pueden generar mediante el diálogo puede destacar la capacidad empresarial como un factor crítico determinante en el desempeño empresarial en tiempos de incertidumbre(Jebran & Chen, 2022;Sarango, 2021).En épocas emergentes, la recesión de los países en conjunto con la volatilidad de los mercados bursátiles, el aumento del riesgo financiero, el cierre de actividades comerciales, la variabilidad de los precios de materia prima y el aumento de la incertidumbre mundial en su punto máximo, afecta gravemente a todas las empresas del mundo, más aún cuando pertenecen a industrias que no son prioritarias, o aquellas donde la movilidad, el diálogo y trabajo entre gran cantidad de personas, las respuestas generales ante estas circunstancias conllevan a la disminución de la estructura de capital correspondiente a los pasivos y mantener la proporción de capital, donde la clave principal es saber invertir, mantener efectivo, pago de dividendos y óptimas formas de financiación, pese a que existe igual un impacto profundo en el desempeño organizacional las decisiones de inversión y financiamiento son críticas en las operaciones de supervivencia, especialmente en la relación con los poseyentes de participación de capital como un aumento de la retención(Baldwin y Di Mauro, 2020;Gharib et al, 2021;Zaremba et al, 2020) Tenjo et al (2006). en su estudio, concluye que existe un efecto negativo de la rentabilidad sobre el nivel de endeudamiento, los altos niveles de endeudamiento provocan estrés financiero porque imponen una limitación superior a la estructura de capital empresarial; con respecto al tamaño de la firma existe un efecto positivo frente al endeudamiento, en el caso de los coeficientes de los activos tangibles no existe un discernimiento, argumenta que dependiendo del sector existe una partición diferente del coeficiente de apalancamiento, por último, concluyen que las firmas más apalancadas adjudican un mayor nivel de sensibilidad en sus decisiones de financiamiento basado en la disponibilidad de recursos internos, debido a que su estudio abarca un periodo…”

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Endeudamiento en las Pymes: ¿Qué paso durante la pandemia Covid-19?

Sarango¹,

Quinga²,

Angamarca

et al. 2023

LATAM

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La pandemia del COVID-19 ha tenido un gran impacto en las empresas de todo el mundo, y muchas han tenido que recurrir a la deuda para sobrevivir. El cierre de empresas y la disminución de las ventas han reducido los ingresos, mientras que los costos fijos, como el alquiler, los salarios y los suministros, han seguido siendo los mismos. Con dicha premisa, el estudio plantea como objetivo: determinar si la pandemia Covid-19 incidió en el nivel de endeudamiento en las empresas manufactureras de la zona 3 del Ecuador. El estudio recurre al análisis de varianza para comparar múltiples medias (ANOVA) y Prueba de Tukey. Como resultados se percibe que no existe un impacto de la pandemia en el endeudamiento en este grupo de empresas, pero esto no significa que en otros casos no exista dicho impacto. No es totalmente correcto afirmar que el COVID-19 no ha aumentado la deuda en las empresas. De hecho, la pandemia ha afectado significativamente a la economía mundial y ha obligado a muchas empresas a recurrir al endeudamiento para mantener sus operaciones en marcha, pero, es prioritario considerar la diversidad de los sujetos de estudio y sus escenarios.

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Corporate policies and outcomes during the COVID-19 crisis: Does managerial ability matter?

Cited by 24 publications

References 71 publications

Does managerial ability and auditor report readability affect corporate liquidity and cost of debt?

Does managerial ability and auditor report readability affect corporate liquidity and cost of debt?

The impact of the COVID-19 pandemic on corporate tax avoidance: evidence from S&P 500 firms

Endeudamiento en las Pymes: ¿Qué paso durante la pandemia Covid-19?

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