The effect of financial flexibility on firm's financial leverage

Chegini, Akram; Bashiri, Vahab

doi:10.1504/emjm.2017.085875

Cited by 2 publications

(3 citation statements)

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“…The elevated bargaining power of buyers, reflected in a higher level of accounts receivable turnover, can shorten the cash conversion cycle, enhancing the efficiency of cash flow management and leading to increased profitability, consistent with the theoretical perspective of the cash conversion cycle (Deloof, 2003;Eljelly, 2004). The results corroborate the view that financial flexibility constitutes a component of intangible assets (Kuo et al 2006), which can be utilized to establish competitive advantage (Yi, 2020).The findings of this study support previous empirical research (Chegini & Bashiri, 2017;Yi, 2020) and comport with the behavioral organizational theory and RBV theory, which suggest that there is a link between resources and capabilities with competitive advantage (Barney, 1991;Grant, 1991) or that competitive advantage is a function of resources and capabilities (Wernerfelt, 1984;Conner, 1991). and Sommers, 2012).…”

Section: Resultssupporting

confidence: 88%

“…Financial flexibility, as an intangible resource, provides companies with the ability to cope with unexpected events in the future (Denis and McKeon, 2009;Arslan-Ayaydin et al 2014;Ma & Jin, 2016;Cherkasova and Kuzmin, 2018), potentially leading to the development of competitive advantages (Yi, 2020). These empirical findings are consistent with previous studies that demonstrate financial flexibility's potential to create competitive advantages (Chegini & Bashiri, 2017).…”

Section: Introductionsupporting

confidence: 87%

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Competitive Advantage in Mediating The Effect of Financial Flexibility on Financial Performance: Indonesian Sharia Stock Index

Hasyim,

Budiarta

2023

jabm

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Resources are considered a key driver of organizational performance. However, the means to improve performance through resources remains an issue that is yet to be conclusively addressed in both theoretical and practical terms. This study aims to examine the roles of competitive advantage and Islamic Label (IL) in the relationship between financial flexibility and the performance of companies listed on the Indonesian Sharia Stock Index (ISSI). Using a longitudinal approach covering the period 2012-2021 and observing 88 companies, a total of 880 observations were obtained for this study. The statistical technique used for the analysis was variance-based structural equation modeling utilizing partial least squares with the statistical tool of WarpPLS. The study revealed that competitive advantage is able to partially mediate the impact of financial flexibility on firm performance. Proxies of competitive advantage, such as receivable turnover and financial leverage, were found to be significant to all performance proxies, namely ROA, ROE, and Tobin's Q. However, IL did not significantly enhance the link between financial flexibility and performance. It was found that the mediating impact of competitive advantage on the relationship between financial flexibility and performance indicated that improving performance through financial flexibility is indirect. Thus, contingency factors should be given due consideration in enhancing resource-based performance. For Islamic label companies, competitive advantage can be built to enhance performance by optimizing resource utilization.

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Section: Resultssupporting

confidence: 88%

Section: Introductionsupporting

confidence: 87%

Competitive Advantage in Mediating The Effect of Financial Flexibility on Financial Performance: Indonesian Sharia Stock Index

Hasyim,

Budiarta

2023

jabm

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“…For instance, exchange rate movement shapes macroeconomic, monetary and fiscal outcomes (Haq & Shirwani, 2021;Torres & Jasso, 2017;Lin, 2012;Tsai, 2012;Fowowe, 2015;Olomola & Dada, 2017). It seems to respond asymmetrically to bad and good news (Dodoo et al, 2023;Dada et al, 2023;Gkillas et al, 2018;Salisu & Umar, 2017;Chegini and Bashiri, 2017). Exchange rate movement among other factors is significant to reshaping market dynamics consequential to shocks imposed on the financial market (Agyei et al 2022;Adam, 2020).…”

Section: Introductionmentioning

confidence: 99%

Exchange rate movement and stock returns in most capitalised economies in Sub-Saharan Africa

Ogunsanya,

Adamson

2024

IJEP

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In line with the extant literature that financial markets do mutually cooperate, this study investigates the nexus between exchange rate movement and stock returns in the six most capitalised economies in Sub-Saharan Africa (SSA). The study ascertains the relevance of the traditional or portfolio adjustment theory to sub-Saharan Africa’s financial markets. The study accounted for heterogeneity and dependence among the cross-sections and applied the Driscoll and Kraay and the Feasible Generalised Least Square econometric procedures on Bloomberg (2023) monthly datasets spanning between 2000:1 and 2022:12. The study findings reveal the nexus between the variables flows from stock returns to the exchange rate in SSA and some consistency with the argument of the portfolio adjustment theory. Estimates of Dumitrescu-Hurlin's (2012) Granger non-causal test also reveal a unidirectional causal relationship between both variables in the most capitalised economies in SSA. Macroeconomic policies that vitiate the limitations of both variables in SSA are recommended.

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The effect of financial flexibility on firm's financial leverage

Cited by 2 publications

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Competitive Advantage in Mediating The Effect of Financial Flexibility on Financial Performance: Indonesian Sharia Stock Index

Competitive Advantage in Mediating The Effect of Financial Flexibility on Financial Performance: Indonesian Sharia Stock Index

Exchange rate movement and stock returns in most capitalised economies in Sub-Saharan Africa

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