The mediating role of cost of capital in the relationship between capital structure and loan portfolio quality

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ester Agasha ◽  
Nixon Kamukama ◽  
Arthur Sserwanga
Keyword(s):  
Capital Structure ◽  
Interest Rates ◽  
Cost Of Capital ◽  
Credit Rationing ◽  
Loan Portfolio ◽  
Content Type ◽  
Mediating Role ◽  
The Impact ◽  
The Relationship

PurposeThe purpose of this paper is to establish the mediating role of cost of capital in the relationship between capital structure and loan portfolio quality in Uganda's microfinance institutions (MFIs).Design/methodology/approachA cross-sectional research design was adopted to collect data and partial least squares structural equation modelling was used to test the study hypotheses.FindingsCost of capital partially mediates the relationship between capital structure and loan portfolio quality. Hence, cost of capital acts as a conduit through which capital structure affects loan portfolio quality.Research limitations/implicationsCost of capital was generalized as financial and administrative costs. The impact of costs like dividend pay-outs, interest rates and/or loan covenants on loan portfolio quality could be investigated individually.Practical implicationsMFIs should be vigilant about loan recovery by using strategies like credit rationing to ensure timely repayments.Originality/valueThe study contributes to the ongoing academic debate by identifying the significant indirect role of cost of capital in explaining loan portfolio quality.

Impact of corporate governance on capital structure: mediating role of cost of capital

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Aisha Javaid ◽  
Mian Sajid Nazir ◽  
Kaneez Fatima
Keyword(s):  
Corporate Governance ◽  
Capital Structure ◽  
Cost Of Capital ◽  
Stock Exchange ◽  
Institutional Ownership ◽  
Managerial Ownership ◽  
Content Type ◽  
Mediating Role ◽  
The Relationship

PurposeThis paper contributes to the existing literature by extending the empirical work on the relationship between corporate governance and capital structure by analyzing the mediating role of cost of capital in the non-financial firms listed on the Pakistan Stock Exchange (PSX).Design/methodology/approachThe sample for this study includes non-financial firms listed on the Pakistan Stock Exchange (formerly Karachi Stock Exchange) for the period of 2004–2016. Based on 1800 firm-year observations, three approaches of panel data analysis are applied for the step-wise analysis of the underlying study. Firstly, Pooled OLS is applied. Secondly, fixed and random effect panel regression followed by the Hausman test to check the unobservable individual heterogeneity of the data. Hausman test indicates that the fixed-effects model is the most appropriate model for the sample panel data.FindingsThe study's findings are that board size, board composition, CEO/Chair duality, institutional ownership and managerial ownership have statistically significant direct effect on the firm's financing decisions. However, CEO/Chair duality, institutional ownership and managerial ownership have significant indirect effect on firm's capital structure decisions. The interesting finding of the paper is on the evidence of mediating role of cost of capital in the nexus of corporate governance and capital structure. Moreover, some conventional determinants of capital structure, including the firm's size, asset structure of the firm, profitability, business risk and growth, are found as determinants of capital structure decisions of the firms.Research limitations/implicationsThere are a few limitations to our study which could be addressed by upcoming research. We did not include all the four mechanisms of corporate governance including board structure, audit structure, compensation structure and ownership structure. However, we used only five important attributes including board size, board composition and CEO/Chair duality form board structure, managerial ownership and institutional ownership form ownership structure of corporate governance as our explanatory variables to examine their impact on the capital structure choices of the firms. Future studies may fill this research gap by involving some other attributes of corporate governance and analyzing their effectiveness and impact on value relevant capital structure decisions. Further, due to limited time and resources, we only tested the mediating role of cost of capital, hence, future researchers can analyze the mediating and moderating roles of different variables which may influence the relationship between corporate governance and capital structure choices of the firms.Practical implicationsThe study has many valuable guidelines and practical implications for the financial managers of the corporations. Our results will facilitate the policymakers in setting their corporate governance policies and practices and making the value relevant capital structure decisions in compliance with the implications of corporate governance mechanism. In addition, our study provides the empirical evidence in accordance with the argument that good governance practices, particularly the voluntary disclosures by the firm may reduce the information asymmetry which, ultimately, reduces the agency cost and the cost of capital for the firm. However, while deciding the financial policy of the corporations, managers can use our findings in order to assess the effectiveness of corporate governance practices employed by the firm in achieving the optimal capital structure at which the weighted average cost of capital is at its minimum level.Originality/valueThis paper contributes to the literature by investigating the mediating role of the cost of capital in the relationship between corporate governance and capital structure decisions of the firms. This paper provides empirical evidence that corporate governance indirectly affects capital structure decisions through the mediating role of cost of capital.

The impacts of high-commitment HRM practices on exploitative and exploratory innovation: the mediating role of knowledge sharing

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Son Thanh Than ◽  
Phong Ba Le ◽  
Thanh Trung Le
Keyword(s):  
Knowledge Sharing ◽  
Equation Modeling ◽  
Innovation Capability ◽  
Content Type ◽  
Mediating Role ◽  
Hrm Practices ◽  
The Impact ◽  
The Relationship ◽  
Exploratory Innovation

Purpose The purpose of this paper is to investigate the mediating roles of knowledge sharing behaviors (knowledge collecting and donating) in linking the relationship between high-commitment human resource management (HRM)practices and specific aspects of innovation capability, namely, exploitative and exploratory innovation. Design/methodology/approach The paper is based on quantitative approach and structural equation modeling to examine the correlation among the latent constructs based on the survey data collected from 281 participants in 95 Chinese firms. Findings The findings of this study support the mediating role of knowledge sharing (KS) behaviors in the relationship between HRM practices and aspects of innovation capability. It highlights the important role of knowledge donating and indicates that the effect of knowledge donating is more significant than that of knowledge collecting on exploitative and exploratory innovation. Research limitations/implications Future research should investigate the impact of high-commitment HRM practices on innovation capability under the moderating effects of organizational variables to bring better understanding on the relationship among them. Originality/value The paper significantly contributes to increasing knowledge and insights on the correlation between high-commitment HRM practices and specific forms of innovation. The understanding on mediating role of KS contribute to advancing the body of knowledge of HRM and innovation theory.

Network externalities and the perception of innovation characteristics: mobile banking

2015 ◽  
Vol 33 (4) ◽  
pp. 592-611 ◽  
Author(s):  
Soo Yeong Ewe ◽  
Sheau Fen Yap ◽  
Christina Kwai Choi Lee
Keyword(s):  
Mobile Banking ◽  
Content Type ◽  
Integrative Framework ◽  
Mediating Role ◽  
Innovation Characteristics ◽  
The Impact ◽  
The Relationship ◽  
Technology Anxiety ◽  
Perception Of Innovation

Purpose – The purpose of this paper is to clarify the relationship between the sub-components of network externalities (NE), investigates the mediating role of the perception of innovation characteristics and explores the potential moderating effects of technology anxiety within an integrative framework using the theories of diffusion of innovation (DOI) and NE on the behavioural intention of mobile banking services. NE theory explains the impact of an increase in number of users and complementary services on perceived value of product innovation. Design/methodology/approach – This study clarifies the relationship between the sub-components of NE, investigates the mediating role of the perception of innovation characteristics and explores the potential moderating effects of technology anxiety within an integrative framework using the theories of DOI and NE on the behavioural intention of mobile banking services. NE theory explains the impact of an increase in number of users and complementary services on perceived value of product innovation. Findings – Empirical results support the positive relationship between perceived number of users and availability of complementary services. The results lend support to the hypothesized mediating role of perceived compatibility and perceived complexity on the influence of indirect NE on the intention to use mobile banking. Finally, technology anxiety did not moderate any of the paths postulated in the hypothesized model. Practical implications – The findings suggest that the willingness to adopt mobile banking may be increased by providing and promoting a wide range of complementary services because the availability of complementary services gives the impression that mobile banking is easy to use and is compatible with their lifestyles. Originality/value – This study contributes to the literature on DOI by using NE theory, a theory borrowed from Economics to explain an underlying motivation to adopt an innovation. This is an original study which tests the proposition that NE may influence the perception of innovation characteristics and intention to adopt an innovation.

The influence of organizational justice on job performance

2017 ◽  
Vol 36 (4) ◽  
pp. 542-559 ◽  
Author(s):  
Abdelaziz Swalhi ◽  
Saloua Zgoulli ◽  
Mahrane Hofaidhllaoui
Keyword(s):  
Job Performance ◽  
Organizational Justice ◽  
Affective Commitment ◽  
Content Type ◽  
Mediating Role ◽  
Overall Justice ◽  
And Performance ◽  
The Impact ◽  
The Relationship

Purpose The purpose of this paper is to propose two models: the first examines the impact of different dimension of justice (distributive, procedural and interactional) on job performance taking into consideration the mediating role of affective commitment and the second model utilizes the notion of overall justice to predict job performance considering the mediating role of affective commitment. Design/methodology/approach This study was conducted with a sample group of 343 employees working within French small-and medium-sized enterprises (SMEs). Findings The results support the mediating role of affective commitment between organizational justice and job performance and demonstrate that overall justice has a greater effect on affective commitment than specific dimensions of justice. Originality/value The current study is the first to explore the relationship between JP and OJ, with the latter being measured in more than one focus, in the French SMEs. Therefore, this study contributes to bridge the gap in the understanding of the relationship between OJ and JP in the SMEs. In the French context of SMEs, the authors have stressed the relevance of the perception of organizational justice as a factor affecting the behavior and performance of employees which is then reflected in the success of these firms. In this paper the authors propose two models, with significant implications for researchers, managers, and HR departments. The first examines the impact of different dimension of justice (distributive, procedural and interactional) on job performance taking into consideration the mediating role of affective commitment. The second model utilizes the notion of overall justice to predict job performance considering the mediating role of affective commitment.

Examining the impact of socialization and information sharing and the mediating effect of trust on innovation capability

2016 ◽  
Vol 36 (11) ◽  
pp. 1601-1624 ◽  
Author(s):  
Nisha Paul Kulangara ◽  
Sherry Avery Jackson ◽  
Edmund Prater
Keyword(s):  
Information Sharing ◽  
Business Environment ◽  
Mediating Effect ◽  
Equation Modeling ◽  
Innovation Capability ◽  
Content Type ◽  
Mediating Role ◽  
The Impact ◽  
The Relationship

Purpose The purpose of this paper is to investigate the interrelationship between trust, socialization, and information sharing on the buying firm’s innovation capability in the context of the buyer-supplier relationship (BSR). A nomological model is developed that examines the mediating role of relational capital (supplier trust) on the relationship between structural capital (socialization and information sharing) and innovation capability. Design/methodology/approach A survey was conducted on 357 US executives. Structural equation modeling was used to analyze the hypothesized relationships. Findings Information sharing and formal socialization activities increased the buying firm’s trust in its key supplier. However, formal socialization activities within the context of the business environment did not have a significant direct impact on buyer’s innovative capabilities; but when mediated by trust, it positively impacted innovation capabilities. Informal socialization within the context of the social environment directly impacted innovation capabilities but trust did not mediate the relationship. Information sharing impacted trust and innovation significantly and trust mediated the impact of information sharing on innovation capabilities. Originality/value This study defines the formal and informal aspects of socialization and investigates its impact on trust and buyer innovation capabilities. This is one of the few studies that highlights the mediating role of trust between firms to facilitate innovation capability.

The role of internationalization in entrepreneurial orientation-performance link: empirical study of SMEs in a developing nation perspective

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Zaynab Dadzie ◽  
Ahmed Agyapong ◽  
Abdulai Suglo
Keyword(s):  
Firm Performance ◽  
Empirical Study ◽  
Entrepreneurial Orientation ◽  
Developing Nation ◽  
Content Type ◽  
Mediating Role ◽  
And Performance ◽  
The Impact ◽  
The Relationship

Purpose This study aims to examine the mediating role of internationalization in the relationship between the dimensions of entrepreneurial orientation (EO) and performance, empirical study of small and medium scale enterprises (SMEs) in a developing nation. Design/methodology/approach The study uses a sample of 158 exporting SMEs based in the sub-Saharan developing economy, Ghana. The use of hierarchical regression (ordinary least square analysis) was used by the researcher to assess the suggested model of the study. Findings Largely supporting the conjectural predictions, the study indicates that EO positively and significantly influences performance; internationalization fully mediates the relationship between innovativeness and performance of export firms; internationalization fully mediates the relationship between risk-taking and performance of export firms; and finally, internationalization partially mediates the relationship between competitive aggressiveness and performance of export firms. Managers are, therefore, encouraged to strategically develop both their EO and internationalization, as the study has confirmed that EO has both a direct and indirect relationship with performance. Originality/value This study integrated a resource-based view of the firm and international entrepreneurship theory as a theoretical foundation. Theoretically, internationalization’s mediating role reveals the relevance of this construct in the linkage between entrepreneurial orientation and firm performance. Furthermore, the study extends the entrepreneurial orientation concept to the international business literature by estimating and testing models of the mediating link between entrepreneurial orientation and performance. Moreover, the study seeks to broaden the knowledge of entrepreneurial orientation and its relationship with performance in small and medium businesses. The study further extends the limited studies on performance, driven by entrepreneurial orientation and internationalization in a developing nation (Ghanaian) context. This paper besides seeks to highlight the impact of entrepreneurial orientation on performance when channeled through internationalization. The study also reveals the dimensions of entrepreneurial orientation to be important antecedents of internationalization, in attempts at unearthing the critical predictors of firm performance, especially those of international characteristics.

The nexus between diversity management (DM) and organizational performance (OP): mediating role of cognitive and affective diversity

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Shagufta Showkat ◽  
Siddharth Misra
Keyword(s):  
Resource Management ◽  
Human Resource Management ◽  
Organizational Performance ◽  
Human Resource ◽  
Diversity Management ◽  
Content Type ◽  
Mediating Role ◽  
The Impact ◽  
The Relationship

Purpose Present day organizations are considering workforce diversity as one of the main challenges in the human resource management. This study aims to find out the relationship between diversity management (DM) in the context of strategic human resource management (SHRM) and organizational performance (OP). An attempt is made to find out the mediation effect of cognitive diversity (CD) and affective diversity (AD) in the relationship between DM and OP. Design/methodology/approach The constructs investigated in the present study include DM, OP, CD and AD. Structural equation modeling has been used to test the model fit. The data was collected from 50 human resource professionals working in different organizations in the information technology (IT) sector in Bangalore, India. Confirmatory factor analysis has been used for establishing the reliability. Findings The results show that there exists a significant relationship between DM and OP. This significant positive relationship can be attributed to the mediating role of CD and significant negative relationship is because of the AD. Research limitations/implications This study has several limitations. In this study, only three DM practices have been considered. The generalization of the results is another limitation as the study has been conducted in the IT sector in Bangalore, India. Similarly, sample size also affects the implications of an empirical study and sample size in this study is small. This study has investigated only the impact of two aspects of diversity, cognitive and affective, while neglecting the effect of communicational and symbolic processes. Practical implications The results indicate that organizations must consider that by providing intercultural trainings (ICTs), work–life balance (WLB) and work-time flexibility options, the negative aspects of diversity can be minimized. Moreover, organizations should encourage the task conflict which leads to better decision-making as well as creates a sense of group identification, which may help in the avoidance of negative consequences of AD. Originality/value This study is undertaken to find out the effect of certain diversity-oriented SHRM practices such as flexible working times, WLB, ICT and its impact on the OP in the Indian IT industry. This study has investigated the mediating role of CD and AD on the relationship between diversity-oriented SHRM practices and OP, which is the novelty of this study. Third, the study has been undertaken considering that there is a dearth of research on the impact of AD and CD on OP in the Indian context.

Fear of terror and employees’ behaviour in terrorist-ridden areas

2020 ◽  
Vol 12 (3) ◽  
pp. 125-137
Author(s):  
Shuaib Ahmed Soomro ◽  
Olivier Roques ◽  
Akhtiar Ali
Keyword(s):  
Terror Management Theory ◽  
Hierarchical Regression ◽  
Content Type ◽  
Stress Theory ◽  
Mediating Role ◽  
The Impact ◽  
The Relationship ◽  
Negative Relationships ◽  
Practical Implications

Purpose This study aims to investigate the impact of fear of terror (FOT) on employee organizational commitment (OC) working in terror-induced areas through examining the role of rumination as a mediator and perceived organization support (POS) as a moderator. Design/methodology/approach The authors develop a model in which the mediating role of rumination in the FOT relationship is conditional to the values of OC. Using a sample size of 268 respondents, questionnaires were used to collect data from Pakistan during a period when terrorist attacks were at a peak. Results from the hierarchical regression analyses provided support for the developed model. Findings Overall, the statistical model is significant (p < 0.05); the authors found negative relationships between FOT and OC. The authors found that FOT positively led to rumination, which then negatively led to OC. It was also found that POS significantly moderated FOT and OC. Practical implications This study revealed that FOT is a deterring factor that changed employees’ OC. It further revealed that organizations providing support to employees working in terrorist-ridden areas showed positive commitment. This paper discusses the theoretical and practical implications of these findings. Originality/value This paper provides an examination of the relationship between FOT and employee OC. It expands our knowledge of the stress theory and terror management theory for employees working in discontinuous areas.

Organizational justice and organizational citizenship behaviour: the mediating role of psychological ownership

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Jnaneswar K ◽  
Gayathri Ranjit
Keyword(s):  
Organizational Justice ◽  
Organizational Citizenship ◽  
Research Work ◽  
Psychological Ownership ◽  
Full Time ◽  
Content Type ◽  
Mediating Role ◽  
The Impact ◽  
The Relationship

PurposeThe purpose of this paper is to propose and empirically test a model that examines psychological ownership as an intervening variable between organizational justice and organizational citizenship behaviour drawing on the social exchange theory, equity theory and event mediated model.Design/methodology/approachThe study was based on a cross-sectional research design, with a sample of 301 full-time employees from various information technology organizations in India. Amos software was used to test the validity of the hypothesised model, and PROCESS macro was used to test the mediation of psychological ownership.FindingsThe findings showed that organizational justice impacted both psychological ownership and organizational citizenship behaviour. Furthermore, psychological ownership impacted the organizational citizenship behaviour of employees. The key finding of this study is the partial mediation of psychological ownership in the relationship between organizational justice and organizational citizenship behaviour.Practical implicationsBesides enriching the organizational behaviour literature, the findings of the study offer valuable messages to the organizational leaders in creating sustained competitive advantage through employee behaviours like organizational citizenship behaviour and psychological ownership.Originality/valueEven though the literature reports the impact of organizational justice on organizational citizenship behaviour, the majority of this research is based on a western context. There is little research work done to examine the direct relationship between these variables in a non-western context, especially in an emerging economy like India. This study bridges this research gap and enriches the literature by elucidating how organizational justice impacts organizational citizenship behaviour by evincing the mediating mechanism of psychological ownership. Moreover, this is one of the primary studies that explore the mediating role of psychological ownership in the relationship between organizational justice and organizational citizenship behaviour.

Mediating role of place identity in the relationship between place quality and user satisfaction in waterfronts: a case study of Penang, Malaysia

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Mohd Ismail Isa ◽  
Massoomeh Hedayati Marzbali ◽  
Siti Nursyahira Saad
Keyword(s):  
User Satisfaction ◽  
Structural Equation ◽  
Outdoor Recreation ◽  
Place Identity ◽  
Urban Life ◽  
Content Type ◽  
Mediating Role ◽  
The Impact ◽  
The Relationship

Purpose One major challenge for urban planners and policymakers is how to strengthen and establish connections between humans and the environment. Evidence suggests that the physical characteristics of the environment enhance both place identity and user satisfaction. This study aims to investigate the mediating role of place identity in the relationship between place quality and user satisfaction in two waterfronts in Penang, Malaysia. However, only few studies have examined the impact of place quality on user satisfaction in waterfronts as natural outdoor recreation spaces. Design/methodology/approach A sample of 300 users was analysed via structural equation modelling, and results show that place quality is a second-order construct with three main dimensions. Findings These results support the theoretical findings in the literature that associate high place quality and place identity with user satisfaction. These results also support the mediating role of place identity in the relationship between place quality and satisfaction and can help policymakers create inclusive and attractive waterfronts that catalyse place identity and user satisfaction. Originality/value Place quality is an essential need for urban life with significant and extensive effects on the lives of residents nowadays. Organising physical activities can help attract more users to waterfronts and consequently increase their level of satisfaction. Local authorities, non-governmental organisations and local communities should also help in monitoring and maintaining the waterfronts.

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