Financial liberalisation and Capital structuring decisions of corporate firms: Evidence from India

Jadiyappa, Nemiraja; Vanga, Nagi Reddy; Krishnankutty, Raveesh

doi:10.1016/j.econlet.2016.10.004

Cited by 20 publications

(25 citation statements)

References 13 publications

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“…Other relevant notable features of the Indian economy include the institution of the 1991 financial liberalisation reforms which led to the institution of interest deregulation and easing of entry restrictions into the banking sector (Ataullah et al, 2004;Shanmugam and Das, 2004). This liberalisation facilitated the development of the banking system in terms of size, efficiency, competition and geographical spread (Jadiyappa et al, 2016). The reforms also facilitated an upsurge in financial innovations in the financial sector, ensuring that firms have better availability, access and freedom to choose debt instruments suitable to their funding needs (Jadiyappa et al, 2016).…”

Section: Mf 475mentioning

confidence: 99%

“…This liberalisation facilitated the development of the banking system in terms of size, efficiency, competition and geographical spread (Jadiyappa et al, 2016). The reforms also facilitated an upsurge in financial innovations in the financial sector, ensuring that firms have better availability, access and freedom to choose debt instruments suitable to their funding needs (Jadiyappa et al, 2016). In general, the Indian economy is dominated by the banking sector and, especially, private banks dominate the national and foreign banks in terms of both productivity levels and growth (Sanyal and Shankar, 2011).…”

Section: Mf 475mentioning

confidence: 99%

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Leverage and performance: do size and crisis matter?

Danso

Lartey

Gyimah

et al. 2020

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PurposeThis paper contributes to the capital structure literature by examining the impact of financial leverage on firm performance and also the extent to which firm size and crisis matter in the leverage -performance relationship.Design/methodology/approachUsing data from 2403 Indian firms during the period 1995–2014, generating a total of 19,544 firm-year observations, panel econometric methods are employed to test the leverage-performance relationship.FindingsDrawing insights from agency theory and using Tobin's Q (TQ) as our main measure of performance, the authors uncover that financial leverage is negatively and significantly related to firm performance. The authors also observe that the impact of financial leverage on firm performance is lower for smaller firms than larger ones. Finally, the authors show that the 2007/08 financial crisis had no significant impact on the relationship between financial leverage and firm performance.Originality/valueThe paper provides fresh evidence on the impact of leverage on performance, particularly from the Indian context. This study is also among the first studies to examine the role of firm size and financial crisis in the leverage-performance relationship.

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Section: Mf 475mentioning

confidence: 99%

Section: Mf 475mentioning

confidence: 99%

Leverage and performance: do size and crisis matter?

Danso

Lartey

Gyimah

et al. 2020

View full text Add to dashboard Cite

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“…It has too much change in the coefficient value and their signs of both variable interest rate and APD. It means interest rate has an interaction effect between firms' APD and their GP (Jadiyappa et al, 2016). Table 6 First linear model of the cash conversion cycle.…”

Section: Correlation Matrixmentioning

confidence: 99%

Macroeconomic factors, working capital management, and firm performance—A static and dynamic panel analysis

Hussain

Nguyen

et al. 2021

Humanit Soc Sci Commun

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The aim of the study is to explore the interaction effect of macroeconomics indicators, and working capital flows on financial performance in a developing economy. By using the static and dynamic approach of panel analysis, it has been shown that there is a relationship between the components of working capital and the gross profit and cash conversion duration. Second, while interest rates used as an interaction variable with the average payable days have adverse effects, firm performance would decrease if interest rates increase. The average payable duration extends; instead of primarily regressing, the average payable period positively correlates with firm performance. The conversion cycle of cash has a negative relationship, but it reverses its actions after using interest rate interaction. There is a negative relationship with gross profit in the simple regression exchange rate and cash conversion cycle while using the second interaction variable with the cash conversion cycle, has positive effects. In addition, the exchange rate gets higher to increase the cash conversion length, financial performance will be increased. In addition, the exchange rate gets higher to increase the cash conversion length, financial performance will be increased. This study receives new results, the exchange rate increases, companies that can pay early to payable will get higher firm performance while exchange rate and the interest rate have a significant role in changing the firm performance.

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“…6. This database has been used by many researchers (Khanna and Palepu, 2000; Allen et al , 2012; Jadiyappa et al , 2016). …”

Section: Notesmentioning

confidence: 99%

Social responsibility or smoke screening: evidence from India

Jadiyappa

Parikh

Saikia

et al. 2021

SAMPJ

Self Cite

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Purpose The purpose of this study is to examine whether the choice of a firm to spend resources on corporate social responsibility (CSR) activities is associated with its actual social impacts as measured by its energy consumption and the quality of its financial reporting. Based on legitimacy theory, the authors argue firms in India use CSR expenditures as mere smoke screens to build a positive public image. Design/methodology/approach By using energy consumption per unit of sale as a measure of real environmental impact, the authors model firms' CSR investment behavior. Additionally, the authors use earnings management measures to examine whether CSR spenders engage in manipulating reported earnings, a practice socially responsible firms would not engage in. These hypotheses are tested using a panel data set of Indian firms for the period 2012–2014. Findings Consistent with legitimacy theory, the authors show firms that participate in socially undesirable activities such as heavy energy consumption and accounting manipulation are more likely to pursue CSR voluntarily. Additionally, the authors find evidence suggesting firms that voluntarily engage in CSR tend to have lower firm values. Originality/value This study examines the social and environmental concerns of firms that invest in CSR, especially in an emerging market context. The findings help understand the motivation for CSR behavior of corporate firms and may well explain the observed negative relationship between firm value and voluntary CSR spending observed in many emerging market contexts, especially in India.

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Financial liberalisation and Capital structuring decisions of corporate firms: Evidence from India

Cited by 20 publications

References 13 publications

Leverage and performance: do size and crisis matter?

Leverage and performance: do size and crisis matter?

Macroeconomic factors, working capital management, and firm performance—A static and dynamic panel analysis

Social responsibility or smoke screening: evidence from India

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