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

Yi, Jiangnan

doi:10.30585/jrems.v2i2.465

Cited by 16 publications

(23 citation statements)

References 23 publications

(28 reference statements)

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“…Studies on the FF-EP relationship have found it to be either positive (Al-Slehat, 2019;Arslan-Ayaydin et al, 2014;Ma and Jin, 2016), negative (Agha and Faff, 2014) or an inverted U-shape (Gu and Yuan, 2020;Yi, 2020). However, this research found the FF-EP relationship to be U-shaped in the hospitality industry amid the COVID-19 shock.…”

Section: Theoretical Implicationscontrasting

confidence: 55%

“…2. Literature review and hypotheses development FF refers to an enterprise's ability to access and restructure its financing at low costs (Gamba and Triantis, 2008), seize investment opportunities, acquire and invoke resources and maximize its value and resiliency during unexpected events (Graham and Harvey, 2001;Ma and Jin, 2016;Yi, 2020). FF is essential to an enterprise's financial decision-making, as it assists with selecting profitable investments and maintaining debt and future financing capacity (Marchica and Mura, 2010).…”

Section: Ijchm 342mentioning

confidence: 99%

“…Another viewpoint focuses on the nonlinear FF-EP relationship, where several studies report it to be concave. Yi (2020) investigated the effect of FF on EP for manufacturing firms listed on the SSSE, from 2011 to 2017, from a dynamic capabilities (DC) perspective and discovered an inverted U-shaped FF-EP relationship (Yi, 2020). Gu and Yuan (2020) analyzed the associations between FF, internal control and EP, in SSSE listed information technology companies, from 2015 to 2018 and also evidenced an inverted U-shaped FF-EP relationship (Gu and Yuan, 2020).…”

Section: Ijchm 342mentioning

confidence: 99%

“…While one argument suggests a positive FF-EP nexus (Al-Slehat, 2019;Arslan-Ayaydin et al, 2014;Bilyay-Erdogan, 2020;Ma and Jin, 2016), other states that increased FF can cause over investment and low FF can lead to insufficient investment (Agha and Faff, 2014). A third viewpoint focuses on the nonlinear FF-EP relationship, with several articles reporting it as concave (inverted Ushaped) (Gu and Yuan, 2020;Yi, 2020). Recent studies show that financially flexible firms experienced relatively better stock price performance at the start of the COVID-19 pandemic (Fahlenbrach et al, 2020;Ramelli and Wagner, 2020).…”

Section: Introductionmentioning

confidence: 99%

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Convex-concave effect of financial flexibility on hospitality performance: quantile regression approach

Chang

2021

IJCHM

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Purpose The purpose of this paper is to study the influence of financial flexibility (FF) on enterprise performance (EP) within Taiwan’s hospitality industry during the COVID-19 shock and explore whether EP varies with hospitality industry characteristics. Design/methodology/approach Secondary data of 39 Taiwan Stock Exchange-listed hospitality firms were collected from the Taiwan Economic Journal databases. Quantile regression analysis was applied to examine the FF-EP relationship Findings The results evidence that there is a U-shaped (convex) FF-EP relationship for hospitality firms in the 10th, 25th and 50th Tobin’s Q quantiles and in asset-heavy firms. For asset-light firms, FF has an inverted U-shaped (concave) effect on EP in the 90th Tobin’s Q quantile Practical implications The empirical results highlight the need for Taiwan’s hospitality industry as a whole to take rolling adjustment and optimization of FF and concentrate on liquidity risk management after the COVID-19 pandemic and for long-term sustainability. Originality/value To the best of the authors’ knowledge, this study is one of the first to examine the nonlinear FF-EP relationship in the hospitality industry of Taiwan, particularly amid the COVID-19 shock. Moreover, this study extends current literature by revealing the hospitality industry’s FF-EP relationship and highlights the importance of the pandemic crisis context.

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Section: Theoretical Implicationscontrasting

confidence: 55%

Section: Ijchm 342mentioning

confidence: 99%

Section: Ijchm 342mentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Convex-concave effect of financial flexibility on hospitality performance: quantile regression approach

Chang

2021

IJCHM

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“…Definition and measure of financial flexibility FF can be defined as "an enterprise's ability to access funds to finance positive net present value projects and to withstand financial risk" (Bonaimé et al, 2014;Ferrando et al, 2017). To be more specific, FF is the "ability of a firm to effect resilience when faced with unexpected events or crises, timely acquire or invoke resources, seize opportunities to invest" (Bates et al, 2009;Cherkasova & Kuzmin, 2018;DeAngelo et al, 2011;Denis & Mckeon, 2012;Graham & Harvey, 2001;He et al, 2020;Ma & Jin, 2016;Opler et al, 1999;Yi, 2020;Zhang et al, 2020). FF plays a vital role in the financial decision-making of enterprises.…”

Section: Theory Of Capital Structurementioning

confidence: 99%

The nonlinear relationship between financial flexibility and enterprise risk-taking during the COVID-19 pandemic in Taiwan?s semiconductor industry

Chang

2021

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Research background: Risk-taking is the basis for sustainable development of enterprise. It was clear that the influence COVID-19 epidemic on the global market economy has increased operational risks for businesses. The semiconductor industry has high operating risks and financial risks. Moderate financial flexibility (FF) can improve the ability of semiconductor enterprises to acquire financial resources in real time, calmly cope with the impact of uncertainties in operation, improve investment opportunities, and enhance sustainable operation. It is therefore interesting to study the influence of FF on enterprise risk-taking (ERT). Purpose of the article: The aim of the contribution is to explore the effect of FF on ERT within Taiwan?s semiconductor industry amid the COVID-19 pandemic period, and investigate whether ERT varies with semiconductor industry characteristic. Methods: Data from first three quarters of 2020, from multinational semiconductor firms listed on the Taiwan Stock Exchange (TSE), were collected and analyzed. Fixed effects regression with heteroscedasticity adjustment used to evaluate the influence of FF on the ERT of Taiwan?s semiconductor industry. Furthermore, in order to corroborate and support the reliability of the results, this research also used the different measures of ERT and Quantile regression (median regression) in the research model to check the robustness. Findings & value added: Empirical results indicate that FF has a U-shaped effect on ERT for multinational semiconductor firms listed on the TSE, particularly within the integrated circuits (IC) manufacturing industry. Additionally, FF also has a U-shaped effect on ERT for the asset-light semiconductor and IC manufacturing industries. This article also suggests that for the asset-light semiconductor and IC manufacturing industries, the optimal inflection points are 1.1397 and 0.9729, respectively. Based on the consequences of this study, it is suggested that Taiwan?s semiconductor industry should reasonably maintain FF and focus on the liquidity risk management for the long term value added, even after the COVID-19 pandemic period.

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Revisiting the nexus between corporate social responsibility and corporate value: Evidence from China

Wu,

Liew

2023

Corp Soc Responsibility Env

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PurposeUnder the concept of sustainable development guided by ‘carbon peak’ and ‘carbon neutral’, corporate social responsibility (CSR) performance has become the focus of attention in all sectors of society. With the gradual deepening of China's ‘new economic normal’ development, firms face increasing environmental uncertainty in the market. This study aims to embed CSR, financial flexibility (FF), institutional investors (INST), and corporate value into the same theoretical framework and conduct heterogeneity analysis on the nature of property rights, heavily polluting industries, and marketisation level.Design/Methodology/ApproachBased upon the observation data of listed firms in Shanghai and Shenzhen A‐shares in China from 2011 to 2021, this study uses Stata software for data processing, analysis, and two‐stage least‐squares (2SLS) models to solve endogenous problems.FindingsThe research results show that improving CSR performance increases corporate value, while INST and FF moderate the relationship between them. Further heterogeneity analysis found that the nature of property rights, heavily polluting industries, and marketisation level have different impacts on these moderating effects. This result provides ideas for clarifying the economic impact of enhancing the firms' CSR performance in the current era.Originality/ValueFirst, from the standpoint of CSR performance, it enhances the literature on the key corporate values in China. Second, from the perspective of corporate value, it has enriched the CSR literature and provided a new perspective for further clarifying the significance of improving the CSR performance of firms at this stage. Third, from the perspective of INST and FF, this research examines the moderating mechanism of CSR performance on corporate value. Hence, it provides a reference for further improving the efficiency of resource allocation in the capital markets.

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

Cited by 16 publications

References 23 publications

Convex-concave effect of financial flexibility on hospitality performance: quantile regression approach

Convex-concave effect of financial flexibility on hospitality performance: quantile regression approach

The nonlinear relationship between financial flexibility and enterprise risk-taking during the COVID-19 pandemic in Taiwan?s semiconductor industry

Revisiting the nexus between corporate social responsibility and corporate value: Evidence from China

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