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Financial distress is a research topic in finance that has attracted attention from academia following past financial crises. Although previous studies associate financial distress with several elements, the relationship between distress and ESG has not been broadly explored. This paper investigates these issues by elaborating a Dynamic Network DEA model to address the underlying connections between accounting and financial indicators. Thus, a model that includes profit and loss, balance sheet, and capital and operating expenditures indicators is demonstrated under the dynamic network structure to compute financial-distress efficiency scores. Then, the impact of carryovers is considered for the accurate calculation of efficiency scores for the three substructures. The influence of contextual variables, such as socioeconomic and macroeconomic variables, and whether the firm owns an ESG Risk Score or not, is assessed through a stochastic non-linear model that combines three distinct regression types: Simplex, Tobit, and Beta. The results indicate that firms that hold an ESG Risk Score are less prone to be in financial distress, and Governance Score is negatively associated with financial distress efficiency.
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In this paper, we study whether firms belonging to business groups (BG) have superior operating performance relative to stand-alone firms during the ongoing COVID-19 (COVID) pandemic. Our research is motivated by mixed empirical evidence on the performance of BG-affiliated firms. Using return on equity as a measure of operating performance and a sample of Indian firms, we first show that BG firms have lower ROE than stand-alone firms, on average. We disaggregate ROE into operating profitability (return on net operating assets – RNOA) and financial policy decisions (net borrowing costs – NBC and financial leverage – FFLEV) and show that while BG firms do not experience a significant change in NBC and FLLEV during the pandemic compared to stand-alone firms, relative to pre-COVID times, they experience a significant drop in RNOA. This is driven by much lower sales during the pandemic. Further, the relative decline in BG performance during the pandemic is driven by firms affiliated with smaller BGs, younger BGs, and less diversified BGs. © 2023
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PurposeThis study aims to provide a comparative insight into the level of informational efficiency and irregularities of Shariah-compliant stocks and conventional stocks in three emerging markets, namely, China, Malaysia and Pakistan. The empirical evidence is provided for pre-crisis and crisis periods caused by the Covid-19 pandemic.Design/methodology/approachInformational efficiency is measured using the variance ratio (VR) Test developed by Kim (2006). The Approximate Entropy (ApEn) Metrics is used to investigate the level of irregularities in stock prices caused by the pandemic.FindingsAll the three emerging markets in the sample are not immune to the crisis caused by Covid-19 pandemic. The level of informational efficiency of both the Shariah-compliant and conventional stock is affected by the crisis. However, the former exhibits relatively high level of informational efficiency and stability in returns as compared to more volatility of conventional stocks.Practical implicationsThis study provides market agents and policy makers with a robust assessment of the impact of the Covid-19 pandemic on informational efficiency of Shariah-compliant and conventional stocks. Relatively high informational efficiency of Shariah-compliant stocks indicates that they are more transparent and that investors can trust the Shariah-compliant stocks more. This higher level of transparency and trust leads to more steady returns and lower levels of risk even during turbulent time like Covid-19. Investors can gain superior returns by conducting fundamental analysis and investing in index funds.Originality/valueTo the best of the authors' knowledge, this is the first study that highlights the difference in informational efficiency of conventional stocks and Shariah-compliant stocks in the crisis period caused by Covid-19. Unlike previous studies, this study uses firm level data which enables firm-wise assessment of informational efficiency.
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In a market economy, one of main goals for every company is to maximize the wealth of the shareholders, which is a result of maximizing the market value of the company. There are various profitability measures for company, butfrom ownership perspective most used measure of profitability is Return on equity (ROE) ratio. This ratio relates to the earnings left over for equity investors after debt service costs for company has been deducted from total capital invested in the asset. Numerous studies have been conducted with numerous factors examined to determine factors that have impact on business performance. In this paper, the authors intention was to explore studies so far done on profitability of companies and to find an area that hadn't been yet examined, and to give substantiation ofprofitability determinants grounded on dynamic panel data. For this purpose, this paper explored variables that have impact on profitability of companies whose shares were most traded on Zagreb stock exchange (one of criteria for share to be included in market index). Variables included in research are: Net Financial Debt (NFD)/ EBITDA ratio, yearly revenue percent change, Enterprise Value (EV)/ EBITDA ratio, dividend yield, operating margin ratio, debt to equity ratio and current liquidity ratio. Analysis was done on data of companies included in the official stock index of the Zagreb stock exchange, Crobex from 2010 to 2019 (before Covid-19 pandemic). The data was taken from the Thomson Reuters database where all data for selected companies necessary for this paper were collected.
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PurposeThis study aims to assess the effect of the COVID 19 on small and medium-sized family firms' risk-taking in Iraq.Design/methodology/approachData was collected by distributing the questioners. The statistical population consists of 600 employers and small and medium-sized family and non-family firm managers. Hypothesis analysis was carried out after evaluating the questionnaire's validity and reliability using the structural equation method.FindingsThe results indicate that COVID 19 influences small and medium-size family and non-family firms' risk-taking.Originality/valueSince no study carried out so far on the effect of COVID 19 on risk-taking of family and non-family Iraqi small- and medium-enterprise firms and since the political-economic condition of Iraq has been affected recently due to the presence of ISIS, its effects, as well as the civil war that taken place before COVID 19, assessing such a topic can contribute to the development of science and knowledge in this field.
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The paper aims to determine the effect of financial leverage on the performance of Vietnamese small and medium enterprises during the COVID-19 pandemic. Based on the agency theory and pecking order theory, combined with the quantitative method, the financial leverage and COVID-19 are statistically significant factors affecting the performance of small and medium enterprises in Vietnam. Significantly, the author emphasizes that financial leverage has a positive effect on the performance during the pandemic. Furthermore, there is the existence of homoscedasticity and no-autocorrelation in the model when using feasible general least squares. It confirms that the model estimation is unbiased and reliable. © 2022 IGI Global. All rights reserved.
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The study aimed to determine the impact of the asset management efficiency of small production enterprises on financial leverage and the return on investment in view of the Covid-19 pandemic. The Jordanian Ministry of Social Development - Zarqa Governorate was selected as a case study. The descriptive-analytical approach was used to achieve the study objectives. The data related to the study variables were collected from the statements of Social Development Directorates in Zarqa Governorate, as these directorates are the case study of the study population represented by 40 directorates of the Ministry of Social Development in Jordan. The study concluded that there is a statistically significant negative impact of the asset management efficiency on the financial leverage in small production enterprises in the Ministry of Social Development - Zarqa Governorate. Also, there is a statistically significant positive impact of the asset management efficiency on the return on investment in small production enterprises in the Ministry of Social Development in Zarqa Governorate. The study recommended providing training courses for these enterprises’ ownership to empower them to face economic crises, especially in view of global economic crises such as the Covid-19 pandemic and increase the ability to reduce financial leverage and raise the return on investment for these enterprises. © 2023, The Author(s), under exclusive license to Springer Nature Switzerland AG.
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Purpose>The aim of this study is to examine the effect of financial leverage impact on customer satisfaction and marketing costs including research and development (R&D) and advertisement costs. Furthermore, the authors aim to investigate whether customer satisfaction as well as financial distress moderates the effect of financial leverage impact on customer satisfaction and marketing costs including R&D and advertisement costs.Design/methodology/approach>The statistical population of this study consists of listed companies on the Tehran Stock Exchange manually obtained from different industries in 2017. Multivariate regression based on data compilation methodology is used to test research hypotheses.Findings>The results indicate that financial leverage is negatively and significantly associated with customer satisfaction and this negative relationship is more pronounced in companies with lower sale growth. Furthermore, the authors' results suggest that customer satisfaction negatively (positively) and significantly affects firm value in companies with lower (higher)-financial leverage. The authors also demonstrate that there is no significant relationship between financial leverage caused by financial flexibility and firm value caused by customer's satisfaction (CS). The authors' findings also suggest that financial distress significantly affects the relationship between financial leverage and customer satisfaction. Finally, the authors' find that financial leverage significantly affects firms' R&D and advertisement costs.Research limitations/implications>Since the fundamental institutional assumptions underpinning the Western and even East Asia financial models are not valid in the institutional environment of Iran, the authors' findings could provide substantial implications for the authors' understanding of the relationship between finance and R&D costs and contribute substantially to customer satisfaction and firm value literature as well. The sample country of the present paper has recently experienced a spate of financial collapses that somewhat contributes, indirectly, to financial distress incurred by the Iranian firms. Moreover, R&D costs are growing among the Iranian quoted firms.Originality/value>Since the fundamental institutional assumptions underpinning the Western and even East Asia financial models are not valid in the institutional environment of Iran, the authors' findings could provide substantial implications for our understanding of the relationship between finance and R&D costs and contribute substantially to customer satisfaction and firm value literature as well. The sample country of the present paper has recently experienced a spate of financial collapses that somewhat contributes, indirectly, to financial distress incurred by the Iranian firms. Moreover, R&D costs are growing among the Iranian quoted firms.
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Using a large, non-student sample, we assess and differentiate between borrowers’ Risk Aversion and Ambiguity Aversion levels and their willingness to pay to resolve a mortgage default settlement negotiation. Ambiguity Aversion is found to be negatively associated with willingness to pay for borrowers with high financial literacy in both the gain and loss domains, whereas personality traits matter more for borrowers with low financial literacy. This finding is important to policymakers in that they should adopt differential resolution strategies for defaulting borrowers based on these intervening variables.
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Discussion In this context, eight articles were accepted for publication which discuss the topics of determinants of marketing in globalization, employer branding as a marketing tool for strategic talent management, new ways of working and the analysis of employee engagement, the sustainability of the supply chain and purchasing policies, a new strategy to measure the behaviour of wine tourists, the opinion leaders’ influence on the sustainable development of corporate-led consumer advice networks, and the influence of cross-listing on the relationship between financial leverage and R&D investment. Keywords: sustainability;supply chain;purchasing policies;coffee business and production;Delta Cafés;Grupo Nabeiro;sustainable business;sustainable practices;food safety;buying process;agrifood products. [...]of recent hard times, consumer markets and business markets look toward new examples of ethical behaviour and seek new heroes.
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COVID-19 struck without warning, and by the first quarter of 2020, the world had plunged into a state of total closure as a means of containing the pandemic's devastating effect Certainly, the pandemic shook many economies;some countries were able to cope, while third-world countries lost their invulnerability. Based on this, the current study looked at financial reports from Kuwaiti conventional and Islamic banks from 2019 to 2020 (before and after the pandemic) and compared the findings to see how much of an impact Kuwaiti conventional and Islamic banks had during the COVID-19 epidemic. Financial analysis of financial reports was used as a quantitative methodology, and variables were compared and analyzed, including (the liquidity ratio, profitability ratio, and financial leverage) within (14) Kuwaiti conventional and Islamic banks. The study found that the pandemic had a detrimental impact on both conventional and Islamic banks in Kuwait, as they were the first line of defense for the Kuwaiti economy during lockdowns and quarantines. Furthermore, there were significant implications on the Rate of Return on Investment, Debt, Financial Leverage, and Return on Equity.