Special Issue "Corporate Finance"

A special issue of Journal of Risk and Financial Management (ISSN 1911-8074). This special issue belongs to the section "Financial Economics".

Deadline for manuscript submissions: 30 April 2020.

Special Issue Editor

Dr. Ştefan Cristian Gherghina
E-Mail Website
Guest Editor
Department of Finance, Faculty of Finance and Banking, Bucharest University of Economic Studies, Romania
Interests: corporate finance; corporate governance; quantitative finance; sustainable development
Special Issues and Collections in MDPI journals

Special Issue Information

Dear Colleagues,

Corporate finance is one of the most noteworthy topics in the financial sphere, being profoundly embedded in our everyday lives. Corporations require corporate finance to function and, more precisely, to create value. It is widely recognized that shareholder wealth maximization is the supreme objective of a company, and shareholders are the residual claimants. Nevertheless, when the suppliers of finance are different from those who control and exploit their assets, the need for corporate governance is crucial. Additionally, corporate social responsibility supports sustainable development by ensuring economic, social, and environmental benefits for all stakeholders. Further, going public leads to the creation of supplementary financing sources, greater visibility, and trustworthiness for the company, but with these opportunities come several downsides, such as openness to government and public scrutiny, strict disclosure requirements, or markets pressures. Therewith, mergers and acquisitions reveal a quick method for companies to advance the scale of their processes, widen their product portfolio, and pass in to novel markets. General topics of interest comprise but are not limited to:

  • Investigating the specific determinants of capital structure;
  • Analyzing the drivers of firm performance;
  • Assessing bankruptcy risk;
  • Inspecting the association between working capital and company performance;
  • Exploring the relationship between corporate governance and firm value;
  • Examining the causality between corporate social responsibility and dividend policy;
  • Estimating the impact of mergers and acquisitions on stock prices.

Dr. Ştefan Cristian Gherghina
Guest Editor

Manuscript Submission Information

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Please visit the Instructions for Authors page before submitting a manuscript. The Article Processing Charge (APC) for publication in this open access journal is 1000 CHF (Swiss Francs). Submitted papers should be well formatted and use good English. Authors may use MDPI's English editing service prior to publication or during author revisions.

Keywords

  • Company performance
  • Business valuation
  • Capital structure decisions
  • Business failure risk
  • Working capital management
  • Corporate liquidity management
  • Dividend policy
  • Corporate governance
  • Corporate social responsibility
  • Mergers and acquisitions

Published Papers (6 papers)

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Research

Open AccessArticle
Optimal Contracting of Pension Incentive: Evidence of Currency Risk Management in Multinational Companies
J. Risk Financial Manag. 2020, 13(2), 24; https://doi.org/10.3390/jrfm13020024 - 03 Feb 2020
Abstract
Using a large sample of multinational companies (MNCs), this paper intends to explore whether executives’ pension incentives will function as a mechanism of optimal contracting in motivating firm risk management. We find that granting more pension to executives is significantly related to the [...] Read more.
Using a large sample of multinational companies (MNCs), this paper intends to explore whether executives’ pension incentives will function as a mechanism of optimal contracting in motivating firm risk management. We find that granting more pension to executives is significantly related to the higher likelihood and intensity of currency hedging strategies in MNCs. This suggests that pension incentive should promote executives to more actively manage firms’ risk. Such a positive relationship is robust to endogeneity and is more prominent in firms with strong shareholder power. We further explore the contribution of currency hedging induced by pension incentives to shareholder value. Supporting the hypothesis of optimal contracting, our results indicate that pension incentives play an important role in reconciling managerial risk preference and shareholder value creation. Full article
(This article belongs to the Special Issue Corporate Finance)
Open AccessArticle
Are Family Firms Financially Healthier Than Non-Family Firm?
J. Risk Financial Manag. 2020, 13(1), 5; https://doi.org/10.3390/jrfm13010005 - 29 Dec 2019
Abstract
This study examines the whether or not family firms are financially healthier than non-family in terms of capital structure and leverage. It therefore takes into consideration the existence of any significant differences between the leverage and risk choices of family and non-family firms. [...] Read more.
This study examines the whether or not family firms are financially healthier than non-family in terms of capital structure and leverage. It therefore takes into consideration the existence of any significant differences between the leverage and risk choices of family and non-family firms. Using a panel data set of 888 firms and 7104 firm-year observations of unlisted small and medium size firms over the period 2007–2014, we present that family owned businesses have lower financial structure than those of non-family owned businesses. This indicates that most family firms use less debt financing than non-family firms, and as such maintain a lower level of debt. Secondly, family firms demonstrate lower risk as illustrated by the Altman Z-score. The Altman Z-score scale illustrates a contrary relationship of significance with respect to family firms and their counterparts in terms of the operation aspect of the business’s risk factors. Family firms managed their business operations with lower risk and are generally healthier financially than their counterpart firms. Lastly, findings from the robust tests for the hypotheses using a sample of bankrupt firms in Iberian Balance sheet Analysis System (SABI) reveal that the proportion of failure of family firms as opposed to their counterpart firms is relatively low. Analyzing the bankruptcy files of firms from 2002 to 2014 shows a considerably low ratio of family firms at the 5% significant level. This affirms that the low risk illustrated in the Altman Z-score regression is consistent to the lower ratio of family firms that were declared bankrupted over the study period, which makes Spain an important case in this study. Full article
(This article belongs to the Special Issue Corporate Finance)
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Open AccessArticle
How Long Does It Last to Systematically Make Bad Decisions? An Agent-Based Application for Dividend Policy
J. Risk Financial Manag. 2019, 12(4), 167; https://doi.org/10.3390/jrfm12040167 - 05 Nov 2019
Abstract
Bad decisions have harmful effects on the quality of human life and an increase of their duration expands these undesirable effects. Systematic bad decisions related to dividend policy can affect the investors’ quality of life in the long-term. We propose an agent-based model [...] Read more.
Bad decisions have harmful effects on the quality of human life and an increase of their duration expands these undesirable effects. Systematic bad decisions related to dividend policy can affect the investors’ quality of life in the long-term. We propose an agent-based model for the estimation of the duration of systematically making bad decisions, with an application on dividend policy. We propose an algorithm that can be used in modelling the interaction between different classes of shareholders and for predicting this duration. We perform numerical simulations based on this model using NetLogo 6.0.4. We prove that, as a result of agents’ interaction, in some conditions, the duration of systematically making bad decisions can be very long: some numerical simulations suggest that, in some circumstances, this duration can significantly exceed the human lifetime. Additionally, in some conditions, the company can fail before the power is switched. This duration can increase dramatically if the shareholders have a great level of trust in the management’s decisions. As an implication, a greater concern for the quality of financial education, and more performant instruments for controlling the power’s decisions are required. Full article
(This article belongs to the Special Issue Corporate Finance)
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Open AccessArticle
Exploring the Determinants of Financial Structure in the Technology Industry: Panel Data Evidence from the New York Stock Exchange Listed Companies
J. Risk Financial Manag. 2019, 12(4), 163; https://doi.org/10.3390/jrfm12040163 - 22 Oct 2019
Abstract
This paper aims to analyze the influencing factors on the financial structure of 51 companies listed on the New York Stock Exchange, in the technology industry, from 2005–2018. The objective is to see the impact of independent company-specific variables such as company size, [...] Read more.
This paper aims to analyze the influencing factors on the financial structure of 51 companies listed on the New York Stock Exchange, in the technology industry, from 2005–2018. The objective is to see the impact of independent company-specific variables such as company size, tangibility of assets, growth opportunity, effective tax rate, current liquidity, depreciation, stock rotation, financial return, working capital, price to book value, price to earnings ratio, as well as the impact of governance variables and macroeconomic variables such as inflation rate, interest rate, market size, gross domestic product per capita. Using panel data and multiple linear regressions, we analyze the relationship between the independent variables listed above and the dependent variables, namely the total debt ratio, the long-term debt ratio and the short-term debt ratio. The results of the analysis showed that variables such as size, tangibility, liquidity, profitability have a significant influence on the dependent variables in accordance with the theories regarding the capital structure. Full article
(This article belongs to the Special Issue Corporate Finance)
Open AccessArticle
Sectoral Analysis of Factors Influencing Dividend Policy: Case of an Emerging Financial Market
J. Risk Financial Manag. 2019, 12(3), 110; https://doi.org/10.3390/jrfm12030110 - 26 Jun 2019
Abstract
This study aims to determine whether a firm’s dividends are influenced by the sector to which it belongs. This paper also examines the explanatory factors for dividends across individual sectors in India. This longitudinal study uses balanced data consisting of companies listed on [...] Read more.
This study aims to determine whether a firm’s dividends are influenced by the sector to which it belongs. This paper also examines the explanatory factors for dividends across individual sectors in India. This longitudinal study uses balanced data consisting of companies listed on the National Stock Exchange (NSE) of India for 12 years—from 2006 to 2017. Pooled ordinary least squares (POLSs) and fixed effects panel models are used in our estimation. We find that size, profitability, and interest coverage ratios have a significant positive relation to dividend policy. Furthermore, business risk and debt reveal a significantly negative relation with dividends. The findings on profitability support the free cash flow hypothesis for India. However, we also found that Indian companies prefer to follow a stable dividend policy. As a result of this, even firms with higher growth opportunities and lower cash flows continue to pay dividends. We also find evidence that dividend policies vary significantly across industrial sectors in India. The results of this study can be used by financial managers and policymakers in order to make appropriate dividend decisions. They can also help investors make portfolio selection decisions based on sectoral dividend paying behavior. Full article
(This article belongs to the Special Issue Corporate Finance)
Open AccessArticle
Optimal Cash Holding Ratio for Non-Financial Firms in Vietnam Stock Exchange Market
J. Risk Financial Manag. 2019, 12(2), 104; https://doi.org/10.3390/jrfm12020104 - 20 Jun 2019
Abstract
The purpose of this research is to investigate whether there is an optimal cash holding ratio, in which firm’s performance can be maximized. The threshold regression model is applied to test the threshold effect of the cash holding ratio on firm’s performance of [...] Read more.
The purpose of this research is to investigate whether there is an optimal cash holding ratio, in which firm’s performance can be maximized. The threshold regression model is applied to test the threshold effect of the cash holding ratio on firm’s performance of 306 non-financial companies listed on the Vietnam stock exchange market during the period of 2008–2017. Experimental results showed that a single-threshold effect exists between the ratio of cash holding and company’s performance. A proportion of cash holding within a threshold of 9.93% can contribute to improvement of the company’s efficiency. The coefficient is positive but tends to decrease when the cash holding ratio passes the 9.93% check point, implying that an increase in cash holdings ratio will continue to diminishment of efficiency eventually. Therefore, the relationship between cash holding ratio and firm’s performance is nonlinear. From this result, this paper provides policy implications for non-financial companies listed on the Vietnam stock exchange market in determining the proportion of cash holding flexibly. In detail, non-financial companies listed on the Vietnam stock exchange market should not keep the cash holding ratio over 9.93%. To ensure and enhance the company’s performance, the optimal range of cash holding ratios should be below 9.93%. Full article
(This article belongs to the Special Issue Corporate Finance)
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