scholarly journals The influence of risk on the equity share of build-operate-transfer projects

2017 ◽  
Vol 7 (1) ◽  
pp. 45-58 ◽  
Author(s):  
Alberto De Marco ◽  
Giulio Mangano ◽  
Timur Narbaev
Keyword(s):  
Risk Factors ◽  
Capital Structure ◽  
Design Methodology ◽  
Data Set ◽  
Content Type ◽  
Special Purpose Vehicle ◽  
Main Factors ◽  
The Relationship ◽  
Improved Methods ◽  
The Capital Structure

Purpose The purpose of this paper is to contribute to the understanding of the crucial influence of risks on the capital structure of build-operate-transfer (BOT) projects. Design/methodology/approach The equity portion of capital injected in a BOT investment is selected as the response variable and its relation with select identified risk factors is examined using a regression analysis on a data set of BOT projects. Findings Results have pointed out that the level of equity is significantly influenced by several sources of risk. Country, revenue, project and special purpose vehicle-related risks have been shown to have an impact on the size of the equity share of a BOT investment. Research limitations/implications The results could support both investors and lenders to better define the financial leverage of BOT projects. In particular, the study could help to have a better understanding of the main factors that influence the equity apportion of capital in BOT investments. Originality/value This paper contributes to fulfilling the lack of works addressing the relationship between risk factors and capital structure in BOT projects. In this way, this research leads to a better understanding of the risk factors that influence the capital structure of BOT project and they have therefore been proposed as a base for the establishment of improved methods to design refined capital structures in BOT projects.

scholarly journals Risk factors influencing the debt leverage of project financing initiatives in the energy industry

2017 ◽  
Vol 11 (3) ◽  
pp. 444-462 ◽  
Author(s):  
Alberto De Marco ◽  
Giulio Mangano
Keyword(s):  
Risk Factors ◽  
Capital Structure ◽  
Capital Investment ◽  
Stability Index ◽  
Energy Industry ◽  
Project Financing ◽  
Data Set ◽  
Content Type ◽  
Average Size ◽  
The Capital Structure

Purpose This paper aims to contribute to understanding the crucial influence of risks on the capital structure of project financing (PF) initiatives in the energy sector. Design/methodology/approach The debt leverage of a capital investment is selected as the response variable, and its relation with select identified risk factors is examined using a regression analysis on a data set of 72 projects carried out all over the world in the energy industry. Findings Results have highlighted that the debt leverage is significantly influenced by several sources of risk measured through specific indicators, namely, country stability index, the construction duration, the concession period and the average size of partners. Therefore, country, project and special purpose vehicle-related risks have been shown to have an impact on the debt leverage of a PF scheme. Research limitations/implications The results could support both investors and lenders to better define the financial leverage of projects delivered under a PF mechanism. In particular, the study could help to have a better understanding of the main factors that influence the debt leverage in PF initiatives. Originality/value This paper contributes to filling the lack of works addressing the relationship between risk factors and capital structure in PF projects. In this way, this research leads to a better understanding of the risk factors that influence the capital structure of a PF initiative, and they have, therefore, been proposed as a basis for the establishment of improved methods to design refined capital structures.

Does intellectual capital impact firms' capital structure? Exploring the role of firm risk and profitability

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
A. D'Amato
Keyword(s):  
Capital Structure ◽  
Intellectual Capital ◽  
Value Added ◽  
Firm Risk ◽  
Financial Leverage ◽  
Data Set ◽  
Content Type ◽  
Novel Approach ◽  
Firm Profitability ◽  
The Relationship

PurposeThe purpose of this paper is to analyze the relationship between intellectual capital and firm capital structure by exploring whether firm profitability and risk are drivers of this relationship.Design/methodology/approachBased on a comprehensive data set of Italian firms over the 2008–2017 period, this paper examines whether intellectual capital affects firm financial leverage. Moreover, it analyzes whether firm profitability and risk mediate the abovementioned relationship. Financial leverage is measured by the debt/equity ratio. Intellectual capital is measured via the value-added intellectual coefficient approach.FindingsThe findings show that firms with a high level of intellectual capital have lower financial leverage and are more profitable and riskier than firms with a low level of intellectual capital. Furthermore, this study finds that firm profitability and risk mediate the relationship between intellectual capital and financial leverage. Thus, the higher profitability and risk of intellectual capital-intensive firms help explain their lower financial leverage.Research limitations/implicationsThe findings have several implications. From a theoretical standpoint, the paper presents and tests a mediating model of the relationship between intellectual capital and financial leverage and its underlying processes. In terms of the more general managerial implications, the results provide managers with a clear interpretation of the relationship between intellectual capital and financial leverage and point to the need to strengthen the capital structure of intangible-intensive firms.Originality/valueThrough a mediation framework, this study provides empirical evidence on the relationship between intellectual capital and firm financial leverage by exploring the underlying mechanisms behind that relationship, which is a novel approach in the literature.

The price of cider: empirical analysis in Québec province

2019 ◽  
Vol 122 (1) ◽  
pp. 87-98 ◽  
Author(s):  
J. François Outreville ◽  
Eric Le Fur
Keyword(s):  
Design Methodology ◽  
Percent Level ◽  
Region Of Origin ◽  
Content Type ◽  
Production Factors ◽  
Wine Sector ◽  
Main Factors ◽  
The Impact ◽  
The Relationship

Purpose The purpose of this paper is to investigate the main factors and mechanisms that govern the price of cider, and to apply the analysis to the price of ciders in the Province of Québec, Canada. Design/methodology/approach The analysis is following the methodology applied to the determinants of the price of wine. A model for the price of cider is estimated with 70 prices representing five regions and five types of products. Findings The analysis is limited to one geographical factor, i.e. the region of origin and factors related to the producer, i.e. the age and the size of the firm. The results conclude on the importance of geographical factors related to the region of origin. The relationship between the price of ciders and the region of origin is statistically significant at the 1 percent level for two regions and shows a high premium for ciders produced in these two regions. Production factors related to the age and the size of the production unit although showing the expected sign are not statistically significant to conclude on the impact. There is a small premium for producing effervescent cider compared to still or rosé cider but the most statistically significant results at a 1 percent level are for ice ciders and fortified ciders which are two typical products from Québec. Research limitations/implications The analysis has important potential implications on the role of certification of origin. Cider regions in Québec, Canada have recently defined quality standards applied to specialties like Ice cider and Fire ciders. The choice of high quality products is reflected in the premium associated to the price of these products. Originality/value Contrary to the wine sector, there is a lack of research and literature on the determinants of the price of ciders. This study is the first to propose a pricing model to examine some of the determinants of prices.

scholarly journals Political connections: a threat to auditor independence?

2015 ◽  
Vol 5 (2) ◽  
pp. 222-246 ◽  
Author(s):  
Effiezal Aswadi Abdul Wahab ◽  
Mazlina Mat Zain ◽  
Rashidah Abdul Rahman
Keyword(s):  
Design Methodology ◽  
Institutional Environment ◽  
Audit Fees ◽  
Auditor Independence ◽  
Political Connections ◽  
Panel Regression ◽  
Data Set ◽  
Content Type ◽  
The Relationship

Purpose – The purpose of this paper is to examine whether political connections further impair auditor independence by investigating the relationship between non-audit fees and audit fees and as to whether political connections moderate such relationship. Design/methodology/approach – This study employs panel regression analysis. The panel data set consists of 379 firm-year observations for three years from year 2001 to 2003. Findings – Based on 379 firm-year observations for the period of 2001-2003, grounded on two proxies of political connections namely politically connected firms and the proportion of Bumiputras directors, the authors find a positive and significant relationship between non-audit fees and audit fees, and the relationship becomes weaker, only for Bumiputra-dominated firms connected firms. Originality/value – This study contributes to the extant literature by examining the role of political connections in the context of auditor independence. In addition, this study is conducted in Malaysia, which provides a unique institutional environment with the existence of political connections that is built on ethnic grounds.

Does CEO power moderate the relationship between board leadership and strategy involvement in private firms? Evidence from Kenya

2016 ◽  
Vol 16 (5) ◽  
pp. 906-922 ◽  
Author(s):  
Joel Kiplagat Tuwey ◽  
Daniel Kipkirong Tarus
Keyword(s):  
Design Methodology ◽  
Board Members ◽  
Private Firms ◽  
Ceo Power ◽  
Data Set ◽  
Leadership Efficacy ◽  
Content Type ◽  
Personal Motivation ◽  
Board Leadership ◽  
The Relationship

Purpose The purpose of this paper is to determine how board leadership affects the board strategic involvement in private firms in Kenya and how CEO power moderates this relationship. Design/methodology/approach The authors used a Kenyan data set to investigate what makes boards in private firms get involved in strategy. Survey data derived from a sample of 186 CEOs of private firms were used, and the hypotheses were tested using moderated regression analysis. Findings The results indicate that board members’ knowledge, board chairman’s leadership efficacy, board members’ personal motivation and board members’ background all have a positive and significant effect on board strategy involvement. The authors also found that CEO power moderates the relationship between board leadership and strategy involvement. The study concludes that when the CEO wields immense power, the board tends to become passive and to submit to the direction of the CEO. Originality/value The study adds value to the understanding of the effect of the board leadership on strategic involvement in private firms and how CEO power influences this relationship, particularly in a developing country like Kenya.

Post M&A innovation in family firms

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Abdul-Basit Issah
Keyword(s):  
Design Methodology ◽  
Family Firms ◽  
Empirical Support ◽  
Data Set ◽  
Resource Based View ◽  
Content Type ◽  
External Resources ◽  
Merger Wave ◽  
The Relationship ◽  
Better Than

PurposeThe paper empirically investigates how family firms appropriate acquired resources to become more innovative in the context of merger waves. It draws on resource-based view and the theory of first mover (dis)advantages to examine the implications of the timing of acquisitions on innovation in family firms.Design/methodology/approachThe paper uses a panel data set of Standard & Poor's (S&P) 500 manufacturing firms followed over a period of 31 years.FindingsThe study finds empirical support for the predictions that family firms are more able to utilize acquired resources better than nonfamily firms. Furthermore, targets acquired during the upswing of a merger wave are more valuable to family firms and associated with more innovation than for nonfamily firms.Originality/valueThe paper establishes that resources acquired during the upswing of a merger wave are more valuable, provide better resource synergies and impact innovation positively in family firms than nonfamily firms. Second, the paper makes an empirical contribution that family firms absorb external resources markedly differently and more efficiently than nonfamily firms. Third, the paper enhances a better understanding of the influence of family ownership on the relationship between acquisitions and innovation outputs.

Capital structure and business process management: evidence from ambidextrous organizations

2018 ◽  
Vol 24 (5) ◽  
pp. 1255-1270 ◽  
Author(s):  
Nicola Miglietta ◽  
Enrico Battisti ◽  
Elias Carayannis ◽  
Antonio Salvi
Keyword(s):  
Capital Structure ◽  
Business Process ◽  
Mixed Method ◽  
Design Methodology ◽  
Business Process Management ◽  
Process Management ◽  
Listed Companies ◽  
Exploration And Exploitation ◽  
Content Type ◽  
The Relationship

Purpose The purpose of this paper is to investigate the relationship between capital structure and business process management (BPM) within ambidextrous firms. In particular, referring to the listed companies in the Mercato Telematico Azionario (MTA) and Mercato degli Investment Vehicles (MIV) markets with large- and mid-sized capitalization, divided into ambidextrous and non-ambidextrous companies, the authors examined the capital structure to fill a gap in the current literature. Design/methodology/approach This study uses a mixed-method sequential exploratory design. In particular, a qualitative study was conducted to identify some Italian-listed companies, called ambidextrous firms, which have implemented incremental (exploitative) and radical (explorative) innovations in an ambidexterity perspective of process management. A quantitative study was designed to provide insights into the different degrees of leverage of the listed companies selected by the qualitative analysis. Findings The research is based on an empirical analysis undertaken with 69 companies listed on Italian markets (starting from the MTA and MIV Italy 100 – large- and mid-sized capitalization). In particular, the authors highlight 11 companies that, based on the literature, can be defined as ambidextrous organizations. These firms, in each year analyzed (2014, 2015, and 2016), have more leverage than non-ambidextrous ones. Considering that firms today need to constantly revisit their portfolio of debt and equity, ambidextrous organizations could evaluate the largest debt available in order to implement new BPM tools. Originality/value To the authors’ knowledge, this is the first exploratory study based on capital structure and the simultaneous exploration and exploitation of knowledge (ambidexterity) that also is informed by a BPM perspective. The paper presents evidence from Italian-listed companies that are referred to as ambidextrous and have different degrees of leverage.

Do leverage decisions mediate the relationship between board structure and insolvency risk? A comparative mediating role of capital structure and debt maturity

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Rana Yassir Hussain ◽  
Xuezhou Wen ◽  
Haroon Hussain ◽  
Muhammad Saad ◽  
Zuhaib Zafar
Keyword(s):  
Capital Structure ◽  
Structural Equation ◽  
Debt Maturity ◽  
Equation Modeling ◽  
Content Type ◽  
Insolvency Risk ◽  
Mediating Role ◽  
The Relationship ◽  
The Capital Structure

PurposeCorporate boards monitor managerial decisions as concluded by the monitoring hypothesis. In this scenario, the present study stresses that leverage decisions can be used as a tool to control insolvency risk.Design/methodology/approachThis study aims at investigating the intervention of capital structure and debt maturity on the relationship between corporate board composition and insolvency risk by employing Preacher and Hayes’s (2008) approach. The study sample comprises 284 firms from 2013 to 2017. Structural equation modeling is used to study the direct and indirect relationships among study variables.FindingsResults show that debt maturity is a significant mediator between CEO duality and insolvency risk and between board size and insolvency risk relationships. However, the capital structure did not mediate any of the proposed links.Research limitations/implicationsThis study suggests using more long-term debt to tackle insolvency risk in listed non-financial firms of Pakistan. It is also inferred that decisions regarding debt maturity are more crucial than capital structure decisions because insolvency risk is concerned.Originality/valueThis study evaluates the comparative mediating role of the debt maturity and the capital structure. Such role is uncommon in the literature addressing the relationship between governance variables and insolvency risk.

Tax evasion, firm’s value and governance: evidence from Tunisian Stock Exchange

2020 ◽  
Vol 27 (3) ◽  
pp. 781-799
Author(s):  
Olfa Nafti ◽  
Ines Kateb ◽  
Oumaima Masghouni
Keyword(s):  
Tax Evasion ◽  
Design Methodology ◽  
Stock Exchange ◽  
Moderating Effect ◽  
Family Management ◽  
Data Set ◽  
Content Type ◽  
The Relationship ◽  
Moderating Role

Purpose The purpose of this study is to analyze the relationship between tax evasion and firm’s value while determining the moderating role of family management and the ownership’s concentration in this relationship. Design/methodology/approach The empirical study employs a Panel Data set of 34 firms listed on the Tunisian Stock Exchange (TSE) for the period 2007 to 2014. Regression analysis is used to estimate the relationships proposed in the hypotheses. Findings The results show that tax evasion has no direct effect on a firm’s value. This study highlighted the presence of a moderating effect of family management on the relationship between tax evasion and firm’s value. However, no moderating effect of the concentration of property on the mentioned relationship was detected. Originality/value This study represents a first empirical essay focusing on the relationship between tax evasion and firm’s value. Furthermore, it analyzes the moderating effect of some aspects of governance, such as family management and ownership’s structure, on this relationship in a Tunisian context.

Capital structure and firm performance in European SMEs

2019 ◽  
Vol 45 (5) ◽  
pp. 582-601 ◽  
Author(s):  
Kang Li ◽  
Jyrki Niskanen ◽  
Mervi Niskanen
Keyword(s):  
Firm Performance ◽  
Capital Structure ◽  
Credit Risk ◽  
Design Methodology ◽  
Debt Ratio ◽  
Cross Sectional ◽  
Content Type ◽  
The Uk ◽  
The Relationship ◽  
Practical Implications

Purpose The purpose of this paper is to investigate whether the relationship between capital structure and firm performance in small- and medium-sized enterprises (SMEs) is moderated by credit risk. Design/methodology/approach The authors empirically test whether an SME’s credit risk affects the SME’s relationship between capital structure and firm performance by using a 2012 cross-sectional sample of European SMEs from Austria, Belgium, Finland, France, Germany, Italy, Portugal, Spain, Sweden and the UK. Findings The empirical results suggest that in low credit risk SMEs, the debt ratio is negatively related to firm performance; however, this relationship is not present in high credit risk SMEs. Therefore, it is indicated that SME credit risk moderates the relationship between capital structure and firm performance. Practical implications The findings of the paper will enable financial managers to understand the importance of SMEs’ credit risk and will assist them in maximizing firms’ performance. Originality/value This paper extends the findings of previous studies by examining whether credit risk affects the relationship between capital structure and firm performance.

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