Financial Flexibility as an Investment Efficiency Factor  in Asian Companies

Cherkasova, Victoria; Kuzmin, Evgeny

doi:10.22146/gamaijb.26239

Cited by 22 publications

(25 citation statements)

References 40 publications

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“…Some studies suggest that high financial flexibility has a positive effect on enterprise performance (Rapp, Schmid, & Urban, 2014). Enterprises with high financial flexibility tend to perform better in a financial crisis (ArslanAyaydin, Florackis, & Ozkan, 2014) since high financial flexibility helps enterprises make valuable investments during the crisis, it is also conducive to the optimal allocation of financial resources and control of financial risks (Cherkasova, Kuzmin, & Gadjah, 2018). (DONG & MAO, 2016).…”

Section: Financial Flexibility and Enterprise Performancementioning

confidence: 99%

Financial flexibility, dynamic capabilities, and the performance of manufacturing enterprises

2020

jrems

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This study explores the mechanism of financial flexibility on enterprise performance from the perspective of dynamic capabilities by testing the relationship among them respectively. This study selects the data of A-share manufacturing companies in Shenzhen and Shanghai from 2011 to 2017 to structure three main variables mentioned above. The test results of the regression analysis indicate that financial flexibility has an interval effect on enterprise performance. Dynamic capabilities play a part in mediating financial flexibility and enterprise performance, which means financial flexibility can influence enterprise performance through dynamic capabilities. This study adds weight to the theory of financial flexibility and dynamic capability and helps enterprises adjust them more effectively in an increasingly complex economic situation.

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Section: Financial Flexibility and Enterprise Performancementioning

confidence: 99%

Financial flexibility, dynamic capabilities, and the performance of manufacturing enterprises

2020

jrems

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“…1) Financial flexibility (independent variable) Spare financial leverage (SFL) seems to be a critical driver of a firm's FF in the recent capital structure literature (Marchica & Mura, 2010;Ma & Jin, 2016). Cherkasova and Kuzmin (2018) define FF as spare debt capacity; it is a Spare financial leverage function. SFL calculated based on the current financial leverage ratio (CFL) deviation from the average (proxy expected, EFL) of the study period (Mirkhalili & Mahmoudabadi, 2018, p. 148):…”

Section: Operational Definition Of Study Variables and Measurementmentioning

confidence: 99%

The Relationship Between Financial Flexibility and Market Value Added: The Mediation Effect Role of the Corporate Size (A Practical Study on a Sample of Jordanian Industry Sector Firms)

Altameemi¹

2020

IJEF

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The current study aims at testing the effect of ‘Financial Flexibility’ (FF) on the market value-added by the firm size as a mediator variable. This study’s statistic sample consists of 26 companies listed on the Amman stock exchange from 2010 to 2019. The FF and market value-added are independent and dependent variables, respectively. The data analysis was done by the Baron - Kenny methodology (1986) and Sobel-Test to analyze the hypothesizes based on the corporate size’s mediation effect role. The results concluded from the study of the effect of the company size on the relationship between FF and market value-added stated that the FF has a positive statistically significant impact, and there a partial mediation of the firm size effect upon this relationship due to the mediation effect is statistically significant based on Sobel test.

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“…Conversely, the financial flexibility is the firm's capability to raise economic resources, respond expected investment and expansion opportunities as well as provide strength to face any future unexpected events, and contributes to maximizing firm's value (e.g. Bates, Kahle, & Stulz, 2009;Bolton, Wang, & Yang, 2019;Byoun, 2007;Cherkasova & Kuzmin, 2018;Denis & Mckeon, 2009;Ma and Jin, 2016).…”

Section: Introductionmentioning

confidence: 99%

Does earnings quality instigate financial flexibility? New evidence from emerging economy

Islam

Wang

Zulfiqar

et al. 2020

Economic Research-Ekonomska Istraživanja

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Purpose: This research aims to examine the empirical relationship between earnings quality and financial flexibility, i.e., how information related to earnings affects firms' cash levels in the emerging economies. Design/Methodology/Approach: To attain the research objectives, we used panel data for 18 years (2000)(2001)(2002)(2003)(2004)(2005)(2006)(2007)(2008)(2009)(2010)(2011)(2012)(2013)(2014)(2015)(2016)(2017) obtained from the CSMAR database. Statistical software STATA used for data analysis. Descriptive, multiple correlations, and unbalanced panel data analysis are used. Findings: Our empirical results negate the works conducted on the advanced economy showing that information related to earnings (Earnings Quality) is negatively associated with firms' Financial Flexibility irrespective of firms' characteristics, i.e., firms with profit or loss and firm's with R&D or without R&D expenditure. However, the firm's earnings quality, firm size, cash flows, financial constraints, dividends, and growth are the dominant predictor of financial flexibility. Moreover, the degree of dominance depends on the firm's specific characteristics. Research Limitations/Implications: This research has been conducted on the emerging Chinese market. For consistent and robust results, this research excluded the financial and other firms that possess different operational and regulatory attributes than the manufacturing firms. The study is useful for policymakers and managers to design their cash levels and avoid the hurdle of external finance or to accelerate their flexibility to raise money from an external source. Originality/Value: Previous research addressed the issue related to cost and benefit, information asymmetry, ownership concentration, and firm's propensity to cash holdings. A very little research conducted with earnings quality and cash holdings in the developed market (in Europe and the USA), and thus, for the first time, we address the issue of earnings quality and financial flexibility in the emerging economy.

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Financial Flexibility as an Investment Efficiency Factor in Asian Companies

Cited by 22 publications

References 40 publications

Financial flexibility, dynamic capabilities, and the performance of manufacturing enterprises

Financial flexibility, dynamic capabilities, and the performance of manufacturing enterprises

The Relationship Between Financial Flexibility and Market Value Added: The Mediation Effect Role of the Corporate Size (A Practical Study on a Sample of Jordanian Industry Sector Firms)

Does earnings quality instigate financial flexibility? New evidence from emerging economy

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