Search Results (75)

Immigrant households frequently face liquidity constraints upon arrival, which potentially hinders their long-term economic integration. The Family Investment Hypothesis (FIH) suggests that couples may respond to these constraints by coordinating their labor supply: one spouse works to finance the other’s investment in local human capital. Previous studies have tested the FIH by comparing married immigrants to married natives, attributing differences in outcomes to financial constraints. However, this approach may conflate such constraints with other inherent differences between immigrants and natives. This paper introduces a novel identification strategy that compares the differences in labor market outcomes of married and single immigrants to those of their native-born counterparts, allowing for better isolation of the effects of liquidity. Applying this strategy to repeated cross-sectional data on immigrants from the Former Soviet Union who arrived in Israel during the 1990s, the analysis finds no supporting evidence for the FIH. One possible explanation for this finding is the substantial government support extended to these immigrants, which may have mitigated their financial constraints. Alternatively, the results may indicate that immigrant households do not systematically adjust their labor supply in accordance with the FIH framework. These findings highlight the importance of the institutional context in shaping household labor supply decisions. Full article

This study investigates the non-linear effect of the cash conversion cycle (CCC) on a firm’s profitability for a sample of 6072 firms from five countries (Germany, Spain, France, Great Britain, and Italy) from 2006 to 2015. Additionally, this study explores the sensitivity of economic crises to the non-linear effect of the CCC on a firm’s performance. This study employs fixed-effects unbalanced panel data and weighted least squares (due to heteroscedasticity) to examine a firm’s performance, using return on assets (ROA) to measure profitability. The cash conversion cycle, financial leverage, size, and tangibility are independent variables. The results of this study show that the effect of the cash conversion cycle on firms’ performance is an inverted U-shape (non-linear). It also shows that the economic conditions vis-à-vis crises influence firm performance. This study found the optimal number of the CCC to be 90 days for the entire sample, 85 days for the non-crisis period, and 92 days for the crisis period. It also finds that the marginal effect of the CCC on ROA is 3.9 times higher during economic crises versus non-economic crisis periods. This study contributes to the existing working capital management literature by examining the non-linear effect of the cash conversion cycle on profitability and the sensitivity of these effects during economic crises. Thus, empirical evidence can serve scholars, business policymakers, and corporate finance professionals in managing their working capital strategically. Full article

Green credit is an important practical exploration to reduce the environmental pollution of enterprises through the allocation of financial resources. Based on the panel data for the Chinese enterprises, this research constructs a difference-in-differences (DID) model to explore the influence of green credit policy (GCP) on the enterprise’s pollution emission and discusses the moderation effect of digital economy. The results show that the GCP can reduce the enterprise pollution emission. Specifically, the implementation of the GCP has reduced the sulfur dioxide emission intensity of enterprises by 1.53 kg/thousand yuan. The pollution reduction effect of GCP on different enterprises shows significant asymmetry: the implementation effect is better on enterprises with stronger financing constraints and state-owned enterprises, while enterprises in capital-intensive industries inhibit the effect of the policy. Specifically, the implementation of the GCP has reduced the sulfur dioxide emission intensity of state-owned and non-state-owned enterprises by 1.72 and 0.977 kg/thousand yuan, respectively, and reduced that for enterprises in capital-intensive and non-capital-intensive industries by 0.719 and 1.437 kg/thousand yuan, respectively. The development of digital economy will promote the pollution reduction effect of GCP, and the two will work together to reduce pollution emissions. Finally, some policy suggestions are put forward to optimize the current green credit policies. Full article

This study examines how firm-specific financial policies and external factors influence the volatility of implied volatility (VOV), a measure of uncertainty about future risks. Using a sample of 6023 firms from January 2000 to December 2022, we derive VOV measures from IvyDB OptionMetrics and employ high-dynamic fixed-effect (HDFE) regressions to analyze the relationship between corporate debt ratios, working capital financing policies (WCFPs), and investor sentiment. Our findings reveal that aggressive debt policies increase VOV, while moderate WCFPs generate the highest uncertainty, indicating investor ambiguity regarding indecisive strategies. Additionally, high sentiment amplifies the effect of debt ratios on VOV, whereas moderate sentiment drives the influence of WCFPs. Industry dynamics, particularly in sectors like finance and manufacturing, further contribute to variations in VOV. Full article

The savings behavior of individuals has been a topic of both macroeconomic and policy importance throughout history. Theoretical and empirical research shows that savings result from several demographic and economic factors working together to produce long-term, sustainable economic growth. This study therefore examined the nexus between domestic savings and sustainable economic growth in a South African perspective between 1990–2023, emphasizing the critical role that savings play in fostering long-term economic stability and environmental resilience. The ARDL framework was used to analyze data from the World Bank and the South African Reserve Bank. The results of the study demonstrate that corporate savings have a major effect on sustainable economic growth, especially over the long term. When corporate savings rise by 1%, the economy expands by 3.12%, which highlights the significant multiplier effect of investment. The extent of this impact depends on factors such as the efficiency of capital allocation, technological capacity, financial market development, government policies, and macroeconomic stability. These factors collectively determine how effectively corporate savings are transformed into productive investments that drive sustainable economic growth. Conversely, savings made by the government and the public, especially in the long run, have no appreciable impact on sustainable economic growth. Given that domestic savings mobilization is the most suitable channel for financing capital accumulation to support economic growth and development, the study suggests reviewing current policies to encourage domestic savings mobilization. This paper contributes to the broader discourse on sustainable economic policies in emerging markets, offering actionable insights for policymakers, financial institutions, and stakeholders promoting a more sustainable economic future for South Africa. Full article

In recent years, investing based on ESG performance has become a mainstream investment strategy in the market. In this context, this study selected A-share listed companies from 2010 to 2022 as samples and adopted a panel fixed-effect model to empirically test the impact and mechanism of ESG performance on continuous innovation. The research showed that ESG performance could significantly promote corporate continuous innovation. The mechanism tests found it worked mainly through the channels of alleviating financing constraints, increasing social trust, reducing agency costs, focusing on human capital, and enhancing social capital. Heterogeneity tests found that this effect was more significant for state-owned enterprises, weak marketization, and epidemic shocks. Further research showed that ESG exhibited a more significant level of sustained innovation in the growth and maturity stages. And ESG performance had a significant contribution to corporate innovation resilience. The conclusions of this study enrich the research in the field of ESG performance and corporate continuous innovation and provide empirical evidence for strengthening sustainable development strategies. Full article

This study delves deeply into the multifaceted nature of investor value creation, focusing on financial health, growth, profitability, cash flow, and ESG (environmental, social, and governance) risk ratings. The research employs partial least squares structural equation modeling (PLS-SEM) to dissect the interactions among these variables in a sample of 482 S&P 500 firms. Data were obtained from the FINRA database (2023) and Sustainalytics ESG risk ratings (2023). The results indicate that solid financial health enhances investor value creation. While growth fosters profitability, its direct impact on value creation and cash flow appears limited. The study also uncovers that ESG risk ratings negatively moderate the relationship between cash flow and value creation. This finding suggests that higher ESG risks lead to increased operational and compliance costs, which can reduce working capital and operating cash flow. Additionally, although sustainability investments may initially incur higher costs, they generate long-term value in terms of investment cash flow. A high perception of ESG risk can also raise financing costs, negatively impacting financial cash flow. These findings offer significant contributions to both academic theory and practical applications, shedding light on the complex interplay between financial and sustainability indicators in driving value creation for investors. Full article

Channel encroachment and financing decisions are prevalent in practice. Utilizing the Stackelberg game framework, we investigate the impact of a retailer’s capital position and financing strategies on supply chain dynamics in which a supplier considers establishing a direct sales channel. We find that the retailer’s equilibrium financing strategy is impacted by demand volatility and the initial working capital. The supplier’s encroachment decision hinges on the entry cost when neither trade credit financing nor bank credit financing is available. When both types of credit are available, the choice of financing is a complex interplay involving initial working capital, entry cost, and demand volatility. Notably, the supplier’s decision to encroach may shift from a binary stance of either encroaching or not encroaching, or it may oscillate from encroachment to non-encroachment and back to encroachment, particularly with an increase in demand volatility when the entry cost is moderate. The novelty of this study lies in its integration of supplier channel decisions with retailer operational decisions and financing strategies, examining how the capital position and financing strategies impact channel decisions. This study provides managerial insights into the interplay between supplier’s channel dynamics and retailer’s financial considerations, shedding light on unexplored aspects of channel management. In future studies, some assumptions in this study can be modified to obtain more managerial insights. Full article

The need for organizations to increase resilience is still growing, not least because of economic crises, such as the 2007–2009 global financial crisis, the COVID-19 pandemic, and supply shortages in raw material procurement combined with rising commodity costs and energy prices. We use an attention-based view approach as a theoretical lens to investigate the shift in management’s attention due to a crisis, with a particular focus on working capital management (WCM) as a decisive finance tool. In addition, we examine how management’s attention shifts to organizational resilience (OR). We also analyze how managers’ cognitive flexibility (CF), which reflects their ability to anticipate and quickly adapt, moderates the change in attention. By surveying 307 top and middle managers in German small- and medium-sized enterprises, we measure the crisis effect on the shift in managerial attention to WCM and OR. In addition, we measure managers’ CF and examine the contribution of these individual characteristics in the context of WCM and OR. Our mediation model reveals a positive, indirect-only effect of the crisis on the shift in management attention to OR mediated by the shift in management attention to WCM. In addition, our results show that managers’ CF negatively moderates the effect between managerial focus shifts to WCM and to OR. Our study’s results deepen the understanding of the importance of managers’ CF in times of crisis and the impact of CF on sales development, suggesting that managers’ CF may influence the link between the focal characteristics of WCM and OR. Full article

The simultaneous estimation of multiple quantiles is a crucial statistical task that enables a thorough understanding of data distribution for robust analysis and decision-making. In this study, we adopt a Bayesian approach to tackle this critical task, employing the asymmetric Laplace distribution (ALD) as a flexible framework for quantile modeling. Our methodology implementation involves the Hamiltonian Monte Carlo (HMC) algorithm, building on the foundation laid in prior work, where the error term is assumed to follow an ALD. Capitalizing on the interplay between two distinct quantiles of this distribution, we endorse a straightforward and fully Bayesian method that adheres to the non-crossing property of quantiles. Illustrated through simulated scenarios, we showcase the effectiveness of our approach in quantile estimation, enhancing precision via the HMC algorithm. The proposed method proves versatile, finding application in finance, environmental science, healthcare, and manufacturing, and contributing to sustainable development goals by fostering innovation and enhancing decision-making in diverse fields. Full article

In today’s modern era, digital transformation serves as a crucial element for organizations to gain a competitive edge and optimize their operating systems. However, medium-sized enterprises in Thailand face difficulties in accessing capital market financing, despite its significance in promoting the development of small- and medium-sized enterprises according to the 13th National Economic and Social Development Plan. One potential solution to this issue is digital transformation, which can help these enterprises achieve their strategic business objectives and find a reliable source of funding while enhancing their reputation and credibility, thereby contributing to the growth of the economy as a whole. This study utilized a mixed-methods approach to explore how digital transformation can assist medium-sized enterprises in accessing LiVEx, a new capital market for Thai SMEs. We conducted extensive research and interviewed 12 senior executives across three groups, government agencies, LiVEx-listed companies, and social associations, to develop a questionnaire and conceptual model. Data collected from 360 individuals working in medium-sized enterprises in Thailand collected using an online questionnaire were then analyzed, using CFA and SEM techniques to validate the model. Our study emphasizes the importance of digital literacy, digital usage, and digital advocacy in the success of digital transformation in accessing Thai capital market financing. These findings serve as a valuable knowledge repository for future research. Full article

Financial signaling and stock return synchronicity may not be at crossroads. This paper optimizes the signaling effect of firms’ financial indicators on stock return synchronicity. The ultimate objective is to align firms’ financial signaling and stock return synchronicity, which implies a benefit of hedging against fluctuations in the stock market index. The data cover quarterly periods from June 1992 to March 2022 for the non-financial firms listed in the DJIA30 and NASDAQ100. This paper examines the observed return synchronicity as the dependent variable. The independent variables are classified into six groups namely, Solvency (or Liquidity) ratios, Assets Efficiency ratios, Expense Control ratios, Debt (or Leverage) ratios, Profitability ratios, and Dividend ratios. The analysis is conducted on two different groups. The first group examines the observed firms’ financials that affect observed stock return synchronicity. The second group examines optimal firms’ financials that help optimize stock return synchronicity. The final results show that (a) current stock return synchronicity is affected positively by cash ratio, and negatively by receivables and historical growth of earnings; (b) optimal stock return synchronicity can be elevated using significant financial indicators namely, Inventory/Current Assets, Net Working Capital/Total Assets, Net worth/Fixed Assets, and Sales Annual Growth; (c) agency conflicts between managers and shareholders can be mitigated by the aforementioned financial indicators, which do not include debt financing being the common source of agency conflicts; and (d) dividends are still insignificant to stock return synchronization. Full article

The policy of linking the increase and decrease in urban and rural construction land is a land policy that gradually forms and develops to solve the contradiction between “food and construction” under the background of urbanization in China. It is of great significance to the sustainable development of China’s social economy. In order to grasp the evolution of the policy of linking the increase and decrease in urban and rural construction land in China as a whole, this paper used the content analysis method to analyze the changes in the content of China’s urban−rural construction land increase/decrease linkage policy from different perspectives, such as the levels of policy promulgation and the types of policy promulgation. Firstly, 105 directly related policy texts were selected from a large amount of policy information and read in detail with this as a sample, and 11 keywords were extracted, which were “balance of occupation and compensation”, “clear property rights”, “reasonable planning”, “project area”, “turnover indicators”, “linkage procedure”, “voluntary principle”, “resettlement compensation”, “cultivated land protection”, “supervision and management”, and “capital finance and taxation”. Secondly, the policy text was coded to provide quantitative data on policy development. Finally, the trajectory of policy development was analyzed on the basis of the quantitative data on policy development. The results show that the existing policies were mostly issued in the form of notifications, management measures, implementation plans, working rules, and so on, involving the nature, principles, conditions, methods, procedures, capital finance and taxation, and circulation indicators of the linkage between the increase and decrease, but the policy effectiveness is low, and there is a lack of formal laws and regulations. Improving the legal status of the policy, changing the relationship between the government and the market, strengthening the protection of cultivated land, and reconstructing the income distribution mechanism will help to further improve the policy of linking the increase and decrease in urban and rural construction land. Full article

In this study, we provide a thorough analysis, conducted on a company-by-company basis, of the impact of bank concentration and the bank-relative power of banks on firm profitability, financing costs, and capital structure in a small economy like Portugal. Using a sample of 434,990 Portuguese companies, the study spans a time frame of 13 years (from 2006 to 2018). Principal component analysis (PCA) was used to determine bank concentration, and a new variable, “bank-related power”, was introduced. This work employed linear regression with static panel data for fixed and pooled effects, using Driscoll–Kraay standard errors and robust standard error estimation. A direct association was found between business performance and the use of bank credit in highly concentrated banking markets (SMEs), and there is evidence of an inverse relationship when the relative power of banks increases (small business). Evidence also shows that financing costs increase with greater bank concentration, while firms’ capital structure improves under similar conditions. When a bank holds greater relative market power, it tends to exert a negative impact on the capital structure of large companies. However, an inverse relationship is observed in the case of SMEs. Unlike previous studies, the article assesses the effects of bank market power on each of the different companies involved by using both bank concentration (as a composite variable) and a new variable that measures the relative power of banks. Due to its extensive database and expanded time frame, this research is innovative in the context of small-sized companies. Full article

Land use efficiency is primarily limited by the fragmentation of land management. China’s fragmented farmland poses a significant threat to the country’s food security and rural revitalization. Therefore, promoting land transfer to establish large-scale operations is a significant solution. With digital technology’s advancements, digital inclusive finance (DIF) has permeated rural regions to provide financial assistance for farmers’ livelihood and rural development. However, it remains unclear if and how DIF can incentivize land transfer. Therefore, this paper aims to establish an econometric model to analyze the impact of digital inclusive finance on land transfer. Additionally, a chain mediation effect model is established to analyze how DIF affects land transfer through an exploration of the mechanisms of farmers’ livelihood capital and the use of digital information. Therefore, the findings from the analysis of data from 3165 farmers demonstrate that DIF has the potential to notably facilitate land transfer and work through the chain mediation channel. Moreover, the impact of DIF on land transfer is even more pronounced in economically developed regions. Consequently, this paper’s results hold the potential to inform policy making by offering insight into three viable paths—digital inclusive financial support, livelihood capital, and digital information—as means to promote land transfer. Full article