Search Results (83)

Corporate cash holdings provide firms with financial flexibility, yet their economic value depends on the conditions under which liquidity is accumulated and deployed. This study examines how financial risk, corporate governance, and institutional quality jointly shape corporate cash-holding decisions within a dynamic and institutionally heterogeneous setting. Drawing on complementary precautionary, agency, and institutional perspectives, the study uses Liquidity Power and Liquidity Trap as interpretive lenses for understanding when corporate liquidity enhances financial flexibility or becomes associated with inefficient retention. The empirical analysis covers 528 nonfinancial listed firms across nine Asian economies over 2018–2023, yielding 2964 firm-year observations. A two-step System Generalized Method of Moments estimator is employed to account for cash-holding persistence, potential endogeneity, reverse causality, and unobserved firm-specific heterogeneity. The results indicate that financial risk is positively associated with corporate cash holdings, suggesting that firms respond to heightened financial uncertainty by strengthening precautionary liquidity buffers. Growth opportunities do not exhibit a statistically significant direct effect, while leverage and asset tangibility are negatively associated with cash holdings, and intangible intensity is positively associated with liquidity retention. Governance quality is negatively related to cash holdings, consistent with the view that stronger monitoring constrains excessive liquidity accumulation. Institutional quality has no significant direct effect but significantly moderates the relationship between financial risk and cash holdings, indicating that stronger institutional environments attenuate firms’ reliance on internally retained liquidity as financial risk increases. Robustness tests using alternative variable proxies, alternative estimators, and subsample analyses yield broadly consistent evidence. The findings contribute to the corporate liquidity literature by demonstrating that the economic role of cash is conditional on firm-level governance and country-level institutional conditions rather than determined by financial risk alone. Full article

As interactions between digital and physical technologies intensify, understanding their implications for corporate green innovation has become increasingly important. Using panel data on Chinese A-share listed firms from 2008 to 2024, this study investigates the relationship between digital–physical technological integration and both the quantity and quality of green innovation while considering potential endogeneity concerns. The empirical evidence shows that firms with a higher degree of digital–physical technological integration tend to generate more green innovation outputs and achieve higher green innovation quality. Additional analyses show that digital–physical technological integration is positively associated with knowledge depth, knowledge breadth, receipt of general government support, and environmental information disclosure quality, providing evidence consistent with the proposed knowledge, resource, and information explanations. Heterogeneity analysis reveals that the relationship is more pronounced for digital product manufacturing and digital technology applications, and among larger, more mature, and less financially constrained firms. At the regional level, the relationship is stronger in regions with more advanced digital infrastructure, stronger intellectual property protection, and a more favourable business environment. This study advances current understanding of the relationship between digitalisation and green innovation and offers implications for designing differentiated innovation policies across firms and regions. Full article

Digital technologies are increasingly adopted in corporate liquidity management, yet whether financial digitalization enables firms to achieve more effective working capital adjustment remains insufficiently understood. Financial shared services (FSS) may strengthen information integration, process standardization, and operational coordination, but existing research provides limited evidence on how external supply chain conditions shape the relationship between FSS and working capital adjustment effectiveness. Prior studies have focused primarily on adjustment speed rather than adjustment effectiveness, namely the extent to which firms maintain working capital close to target levels. Using panel data from Chinese A-share listed firms from 2014 to 2023, this study examines whether FSS is associated with the effect of working capital adjustment (DEV) and whether supply chain concentration moderates this relationship. Drawing on dynamic trade-off theory and information asymmetry theory, this study employs high-dimensional fixed-effects models to examine how internal information capabilities and external supply chain conditions jointly shape working capital adjustment. The findings show that firms adopting FSS tend to exhibit smaller deviations from target working capital levels, which is consistent with more effective adjustment. However, this association becomes weaker as supply chain concentration increases, suggesting that external dependence may constrain firms’ ability to translate enhanced internal information capabilities into improved working capital outcomes. Further analysis suggests that customer concentration plays a more prominent moderating role. This study extends the understanding of digital-enabled financial management beyond internal process improvement and identifies supply chain structure as an important boundary condition relevant to the value of FSS. Full article

Environmental regulation is widely regarded as an institutional driver of corporate green transformation, yet how it operates on firms and for whom remains unsettled. Treating the 2015 entry into force of China’s revised Environmental Protection Law as a quasi-natural experiment, this study estimates a difference-in-differences (DID) model on 38,910 firm-year observations covering 4447 Shanghai and Shenzhen A-share firms over 2010–2024. Corporate green transformation is measured along three dimensions—the length-normalized intensity of green-transformation language in annual reports, green patent output, and green total factor productivity—and combined into a composite index. The regulation raises green-transformation intensity by 0.156 (about 14.8% of the sample mean) and green total factor productivity by 0.0021; pre-reform event-study coefficients are jointly insignificant, no randomized placebo reaches the observed estimate, and the result survives propensity-score matching and province-by-year fixed effects. It is accompanied by falling greenwashing and rising disclosure specificity, indicating that the additional green language is not merely talk. Bootstrap mediation tests support transmission through executive green cognition and through green exploratory, but not exploitative, innovation. Contrary to the received view, the law did not loosen financing constraints; instead, pre-reform financial capacity bounds the response, and firms that were more constrained respond substantially less. Effects are larger for digitally capable, better-governed firms and in more marketized regions, and command-and-control instruments outperform market-based pilots over this window. Full article

Business model adjustment is a critical capability for microenterprises operating in import-dependent industries within emerging markets, and is increasingly recognised in the sustainable business model literature as a mechanism through which firms build economic resilience under resource constraints and volatile operating conditions. This paper examines how a specialty coffee microenterprise in Almaty, Kazakhstan, has adjusted its business model to create, deliver and capture value in a non-producing, landlocked economy characterised by rapid demand growth, currency volatility and high import dependency. The study answers two research questions regarding this case using Osterwalder and Pigneur’s business model canvas as the main analytical framework: (1) How did the case company set up its business model to create, deliver, and capture value? (2) In the context of Kazakhstani specialty coffee roasting, what possibilities and challenges influenced this business model? The analysis combines secondary market data with qualitative evidence from a semi-structured interview conducted in autumn 2025 with the founder of a nine-employee microenterprise that has evolved from a mobile coffee bar into a hybrid B2B–B2C roaster, café operator and e-commerce subscription service. Although Kazakhstan is not a coffee-producing country, its retail coffee market expanded from USD 326.71 million in 2019 to an estimated USD 554.5 million in 2025, with the fresh-coffee share rising from approximately 30% to 37%. The interview account describes a business model centred on locally roasted, traceable specialty coffee delivered fresh to a young, urban customer base, supported by educational and community-building activities. As reported by the founder, the enterprise faces structural challenges including exposure to international green-coffee price spikes—such as the record nominal highs of 354.32 US cents/lb reached in February 2025—currency-related cost volatility, logistical complexity across Eurasian transit routes and constrained access to growth-stage financing. Because the evidence base is a single founder interview combined with secondary market data, the paper does not independently verify the firm’s resilience, viability or financial outcomes. The findings are presented in the form of analytical generalisations—that is, generalisations relating to theoretical conclusions drawn from this specific case, rather than from a broader set of companies—which illustrate, based on the founder’s own account, how this micro-enterprise pursued a targeted, phased adaptation of its business model rather than a radical overhaul; the study does not independently verify resulting sustainability or resilience outcomes. As this is a case study, the present analysis does not allow us to determine the extent to which this model is representative of other micro-enterprises involved in coffee production, or of other non-manufacturing sectors in developing economies; the contribution of this study is empirical and contextual rather than theoretical: it extends the scope of business model analysis to under-researched geographical and institutional contexts and lays the groundwork for future comparative studies. Full article

Against the backdrop of escalating financial regulation in China, this study examines how regulatory enforcement intensity affects corporate liquidity risk among A-share listed non-financial firms over 2015–2024. We construct a composite regional regulatory intensity index (Enforce) integrating the frequency and monetary magnitude of administrative penalties issued by local securities regulators and employ firm- and year-fixed-effects panel regressions with the current ratio (CR) as the primary liquidity measure. We find that tighter regulatory enforcement significantly depresses the current ratio, consistent with a compliance-cost channel that constrains short-term debt-servicing capacity. Mediation analysis—conducted separately for each ESG sub-dimension and verified via bootstrap tests—reveals that the corporate governance dimension (G) generates a significant positive indirect effect (consistent partial mediation), the social responsibility dimension (S) generates a significant negative indirect effect (competing partial mediation), and the environmental dimension (E) yields no statistically significant indirect effect. Ownership-type heterogeneity tests confirm that non-state-owned enterprises (non-SOEs) are substantially more sensitive to regulatory tightening than state-owned enterprises (SOEs). Moderation analysis further shows that financial leverage plays a non-monotonic role: the regulation–liquidity effect is negative at low leverage levels and reverses to positive above an estimated threshold (Lev ≈ 0.56). Robustness is established through subsample regressions and a lagged-variable endogeneity test. These findings enrich the institutional finance literature and provide evidence-based guidance for differentiated regulatory policymaking. Full article

This study investigates the impact of tax avoidance on dividend policy in listed non-financial firms in Portugal, Italy, Greece, and Spain from 2018 to 2024. Using Refinitiv Eikon panel data for 368 firms—yielding approximately 2200 firm-year observations before lagging—and firm fixed-effects models, the study examines whether tax avoidance increases dividend payouts and whether board independence, financial constraints, and economic policy uncertainty condition this relationship. Tax avoidance is measured using reverse-coded effective tax rate proxies and book–tax differences, while dividend policy is proxied by the dividend payout ratio. The results reveal a positive association between tax avoidance and dividend payout, suggesting that tax planning can operate as a channel for generating additional distributable liquidity in classical double-tax systems. However, this pass-through is not mechanical. The effect of tax avoidance on dividends is weaker in firms with more independent boards and stronger among financially constrained firms. It is also attenuated under heightened policy uncertainty. These findings support a three-dimensional conditionality model in which tax avoidance creates the capacity for higher dividends, but governance quality, financing frictions, and macro-level risk jointly determine whether tax-generated liquidity is paid out, retained, or used for dividend smoothing. Full article

Our study investigated the interaction of credit from suppliers (trade payables) and credit given to customers (trade receivables) in order to better understand how the reliance on credit from suppliers and credit given to customers interact with each other to affect firms’ performance. Using a sample of 26,731 firm-year observations from 28 European countries, we found new empirical evidence that both trade payables and trade receivables have a more positive effect on firm performance than would be the case if their individual effects were considered in isolation; thus, a complementarity may exist between the credit from suppliers and credit given to customers, affecting firms’ performance. Interestingly, our results showed greater sensitivity to certain firm-specific characteristics. In particular, the interaction effect of trade payables and trade receivables was stronger for young firms, firms with growth potential, and financially constrained firms. Further analysis also revealed that the interaction effect of trade payables and trade receivables was stronger for small- and medium-sized enterprises (SMEs), and firms in countries with French/German legal origins, or countries with more debt-reliant bank-based economies. Full article

Despite rapid global growth in renewable energy capacity, fossil fuels still dominate the energy mix. Renewable energy firms often face limited access to bank credit because their asset-light, technology-intensive business models provide little collateral, constraining investment in clean energy deployment. This study examines whether China’s Fintech Reform Pilot Zones, which introduce digital technology-based credit evaluation, can alleviate these financing constraints and accelerate corporate energy transition. Using a staggered difference-in-differences design on a panel of Chinese listed renewable energy firms, we find that pilot zone designation significantly improves firms’ access to external financing and increases Energy Transition Depth (ETD) by approximately 3.6 percentage points, equivalent to 24.7% of the sample mean, indicating economically meaningful improvements in corporate energy transition. The strongest effects are observed in solar photovoltaic deployment and battery storage penetration. Greater energy transition is also associated with lower firm-level greenhouse gas emission intensity, suggesting potential environmental benefits. Mediation analysis identifies two complementary pathways: an innovation-accumulation route which advances renewable energy technology, and a capital-deployment route which supports renewable energy capacity expansion by relaxing firms’ general financing constraints. Regions with more developed renewable energy industries also exhibit lower fossil energy consumption and carbon emissions, suggesting potential regional spillover effects. These findings demonstrate that Fintech-enabled financial reform can facilitate renewable energy deployment and support broader energy transition and decarbonization, with important implications for emerging economies. Full article

The relationship between capital structure and firm market valuation remains a central yet unresolved question in corporate finance, with outcomes shaped critically by industry-specific asset structures and financing environments. This study investigates how capital structure influences market valuations across two structurally divergent sectors in India, the asset-light information technology (IT) industry and the asset-intensive automobile industry, using balanced panel data for 14 firms in each sector over 2005–2024. Fixed effect and random effect panel regression models are employed to isolate the direct effect of leverage on earnings per share (EPS), with model selection determined by the Hausman specification test. Complementing these estimations, the Graphical Lasso is applied to recover a sparse conditional dependence network among key financial variables, an approach particularly suited to this research question, as capital structure, profitability, tangibility, and growth are jointly determined, rendering pairwise correlations insufficient for identifying genuine financial linkages. The findings establish that debt exerts a positive and statistically significant effect on market valuations in both sectors, but through distinct economic channels: moderate leverage amplifies profitable growth signals in IT firms, while tax shield benefits drive valuation in automobile firms, constrained by asset tangibility and debt-servicing thresholds. These results support trade-off theory in the automobile sector and pecking order logic in the IT sector, underscoring that sector-specific financing strategies yield superior valuation outcomes compared to universally applied capital structure prescriptions. Full article

The accelerating diffusion of artificial intelligence (AI) in Europe raises pressing distributional questions about employment, social cohesion, and sustainable development in disadvantaged regions. Research has concentrated on advanced urban economies, leaving the implications of AI for peripheral small and medium-sized enterprises (SMEs) operating under weak human capital, thin digital infrastructure, and constrained social capital, underexplored. We examine the interplay between AI adoption, social capital formation, workforce dynamics, and sustainable development in Eastern Macedonia and Thrace (EMT), one of the EU’s least developed regions. Regional unemployment and educational-attainment data from Eurostat and ELSTAT are incorporated as contextual evidence anchoring the qualitative findings. Drawing on Bitsani’s Biocultural City framework which treats human, social, and cultural capital as interdependent dimensions of regional sustainability, we thematically analysed twelve semi-structured interviews with SME owners and managers conducted in early 2025 using Atlas.ti, yielding 19 codes grouped into six categories. Knowledge deficits and financial constraints emerge as primary barriers, while external technology partnerships, targeted education, and economic incentives operate as enablers, all mediated by social and human capital availability. Read through this framework, AI adoption in peripheral economies emerges less as a purely technological or financial challenge than as a social and human capital one, embedded in a biocultural environment shaped by brain drain, institutional thinness, and weak civic intermediation. Without parallel investment in digital literacy, organizational culture, and inter-firm networks, AI risks reproducing rather than reducing employment inequalities. The study draws policy implications for EU Cohesion programming and Sustainable Development Goals 4, 8, 9, 10, and 17. Full article

Innovation-oriented productive forces are increasingly concentrated in cities, but the multiscale mechanisms through which the built environment shapes these forces remain insufficiently understood. This study develops a spatial analytical framework linking firm-level new quality productive forces (NQPF) to fine-grained urban spatial structures. Using 89 A-share listed firms in the Xiamen–Zhangzhou–Quanzhou (XZQ) urban agglomeration, we first construct an entropy-weighted NQPF index from eleven financial indicators related to R&D human capital, advanced capital stock, intangible assets, and operational efficiency. Kernel density estimation is then used to transform discrete firm-level NQPF values into a continuous 600 m × 600 m grid surface as the dependent variable. On the explanatory side, 27 built-environment variables are organized into an integrated indicator system covering urban form, natural conditions, jobs–housing structure, and service infrastructures. We combine cross-validated recursive feature elimination (RFE-CV) with multiscale geographically weighted regression (MGWR) to construct two model specifications: a 7-variable parsimonious subset and a 14-variable highest-performing subset. This dual-subset design allows us to distinguish core structural drivers from more context-dependent spatial mechanisms. The results reveal three mechanisms. First, ecological adaptation reflects the scale-dependent enabling and constraining effects of infrastructure and natural-foundation variables. Second, structural coordination shows that mature cores may experience crowding-related suppression when functional and institutional resources become spatially mismatched. Third, boundary activation indicates that transport, public-service, and leisure-related facilities can activate peripheral and cross-jurisdictional interface zones when supported by network connectivity and institutional coordination. By coupling variable-specific bandwidths with local coefficients, this study advances the analysis of spatial heterogeneity and provides evidence for differentiated, innovation-oriented urban regeneration. Full article

Since the late 1970s, regional areas in Japan have experienced prolonged contraction driven by population decline, aging, and industrial shrinkage. Prior research has shown that some localities exhibit adaptive resilience under these conditions, yet the firm-level processes underlying such resilience remain insufficiently understood. This study examines Nagano International Country Club (NICC), a regionally central growth-era firm in Nagano Prefecture that increased its visitor numbers to 165% of the 2013 level despite severe financial constraints and flat performance among nearby competitors. Using semi-structured member interviews (n = 3), employee surveys (n = 5), and a reflexively governed autoethnographic analysis, the study explores how stakeholders perceived NICC’s recovery trajectory. Under extreme resource scarcity, the manager repeatedly engaged in a low-cost, labor-intensive practice of personally repairing divots. Participants interpreted this sustained practice as an authentic expression of leadership that appeared to foster trust, activate or generate a sense of belonging, and encourage voluntary participation in course maintenance. These processes were perceived as contributing to spontaneous value co-creation that emerged without crisis framing or financial incentives. The study offers a context-specific interpretation of how endogenous, trust-based value co-creation may be experienced within a resource-constrained legacy firm and suggests that early contours of adaptive resilience observed at the regional level may also manifest at the firm level. Full article

This paper develops a theoretical framework for corporate financial resilience under incomplete-market conditions, in which firm-specific equity derivatives are structurally unavailable or only weakly developed. Using the Romanian capital market and the Bucharest Stock Exchange (BSE) as a focal context rather than as the paper’s sole relevance, the study links Tobin’s q, liquidity policy, capital structure, ESG governance, and the domestic quasi-risk-free benchmark ($R_f^{ROM}$) to explain how firms may partly support financial flexibility when direct hedging instruments are missing. This is a conceptual framework paper: it does not provide empirical tests or validated firm-level results but instead formulates empirically testable propositions (P1–P4) and a future empirical research agenda. Building on selective hedging theory, Tobin’s q investment theory ESG finance and organisational resilience research, the framework identifies six assumptions of the classical model that are violated and four limitations affecting q measurement on the BSE. Within thin and illiquid markets, Tobin’s q is treated as a noisy, imperfect valuation signal rather than as a precise decision threshold. The paper contributes by delimiting the scope conditions under which classical q-based and selective-hedging assumptions weaken in derivative-constrained markets by reframing financial flexibility as a conditional resilience mechanism rather than a hedge substitute and by specifying falsifiable propositions for future empirical testing in the Romanian capital-market context. Full article

Does mandatory sustainability disclosure improve the quality of corporate financial reporting immediately, gradually, or with delay? We address this question using Saudi Arabia’s January 2021 Tadawul ESG Disclosure Guidelines—the first comprehensive sustainability disclosure framework in the Gulf Cooperation Council and a uniform, accurately dated regulatory shock affecting all listed firms. Using a balanced panel of 135 non-financial firms over 2017–2024 (1080 firm-year observations), we estimate absolute discretionary accruals from the Modified Jones Model and employ event-time fixed-effects regressions with Driscoll–Kraay standard errors robust to heteroskedasticity, autocorrelation, and cross-sectional dependence. We document a temporal paradox: reporting quality did not change in the announcement year (2021), deteriorated significantly in 2022 (+28%) and 2023 (+38%) relative to the pre-reform baseline, and then improved significantly in 2024 (−17%). The pattern survives performance-matched discretionary accruals, exclusion of the 2020 COVID-19 year, a placebo test, sectoral disaggregation across nine Tadawul-aligned industry groups, and a battery of pre-reform firm characteristics. Heterogeneity analysis identifies the underlying mechanism: voluntary pre-2021 ESG disclosers and firms with stronger pre-reform governance exhibit amplified short-run deterioration, while larger firms with pre-existing reporting infrastructure show a substantially attenuated paradox. These patterns are jointly consistent with the adjustment-cost mechanism we develop: the reform redirected scarce reporting governance toward the new disclosure margin during a three-year compliance buildout, after which the constraining effect on accrual-based earnings management emerged. The findings carry direct implications for the design and evaluation of mandatory sustainability disclosure reforms currently advancing across emerging and developed markets. Full article