scholarly journals Leverage and firm investment: the role of information asymmetry and growth

2019 ◽  
Vol 27 (1) ◽  
pp. 56-73 ◽  
Author(s):  
Albert Danso ◽  
Theophilus Lartey ◽  
Samuel Fosu ◽  
Samuel Owusu-Agyei ◽  
Moshfique Uddin
Keyword(s):  
Information Asymmetry ◽  
High Growth ◽  
Firm Investment ◽  
Financial Leverage ◽  
Content Type ◽  
Growth Firms ◽  
The Impact ◽  
The Relationship ◽  
Role Of Information

PurposeThis paper aims to demonstrate how financial leverage impacts firm investment and the extent to which this relationship is conditional on the level of information asymmetry as well as growth.Design/methodology/approachThe paper relies on data from 2,403 Indian firms during the period 1995-2014, generating a total of 19,544 firm-year observations. Analysis is conducted by using various panel econometric techniques.FindingsDrawing insights from agency theories, the paper uncovers that financial leverage is negatively and significantly related to firm investment. It is also observed that the impact of financial leverage on firm investment is significant for high information asymmetric firms. Finally, the paper shows that the relationship between leverage and firm investment is significant for low-growth firms. However, no significant relationship is found between leverage and investment for high-growth firms.Originality/valueThis paper provides fresh evidence on the leverage–investment nexus and, to the authors’ knowledge, it the first paper to examine the extent to which this leverage–investment relationship is driven by the level of information asymmetry.

Information asymmetry and equity issue decision of low-leverage firms

2018 ◽  
Vol 44 (11) ◽  
pp. 1330-1346
Author(s):  
Bipin Sony ◽  
Saumitra Bhaduri
Keyword(s):  
Information Asymmetry ◽  
Equity Issue ◽  
Content Type ◽  
Equity Issues ◽  
Developed Economies ◽  
Tangible Assets ◽  
Credit History ◽  
The Impact ◽  
Role Of Information

Purpose The purpose of this paper is to investigate the role of information asymmetry in the equity issue decision of two categories of Indian firms with distinct levels of information asymmetry – levered firms and unlevered firms. Design/methodology/approach This paper proposes a novel empirical approach to compare these two categories of firms. Levered firms exposed to the debt markets are under the scrutiny of lenders, reducing their information asymmetry problems. On the other hand, unlevered firms, which are smaller firms with fewer tangible assets and no credit history suffers more information problems. The authors use a propensity score matching method to identify firms that share similar firm-specific characteristics in these groups and compare equity issues to analyze the impact of information asymmetry. Findings The results show that information asymmetry plays a key role in the equity issue decision of Indian firms. Additionally, the authors find that the trends and characteristics of low-leverage (LL) firms in India are comparable to the LL from developed economies, which is consistent with the findings that they face more information problems. Originality/value Unlike the conventional approach of using proxy variables to capture information asymmetry, this study uses a novel framework where the authors compare the equity issue decision of similar firms in two categories with different degrees of information asymmetry.

Choice between rights issue and private placements of equity and the role of information asymmetry

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Bipin Sony ◽  
Saumitra Bhaduri
Keyword(s):  
Information Asymmetry ◽  
Private Equity ◽  
Emerging Market ◽  
Content Type ◽  
Private Placement ◽  
Private Placements ◽  
Rights Issue ◽  
The Impact ◽  
Role Of Information

PurposeThe objective of this paper is to investigate the role of information asymmetry in the equity selling mechanisms chosen by the firms from an important emerging market, India. Specifically, the authors look into the choice between the two most popular mechanisms of equity issues – rights issue and private placement of equity.Design/methodology/approachThis study introduces three analyst specific variables as proxies of information asymmetry as the conventional proxies are fraught with several disadvantages. First, the paper tests the choice between rights issue and private placement using a binary logistic model. In the second approach the authors use rights issue and segregate the private placements into preferential allotments and qualified institutional placements and test the impact of information asymmetry using a multinomial logistic regression.FindingsThe outcome of this empirical exercise shows that only those firms facing lesser information problems choose rights issue of equity. Private placements are chosen by firms facing higher information problems to circumvent information costs. The results remain invariant even after segregating the qualified institutional placements from private equity placement as the firms with information disadvantage choose to place equity privately.Originality/valueIn contrast to the conventional studies that focus on the debt-equity framework, the authors argue that the impact of information asymmetry is applicable even at disaggregated levels of equity selling mechanism.

Does Growth Affect Firms’ Leverage Adjustment Speed? A Study of Indian Firms

2020 ◽  
Vol 8 (2) ◽  
pp. 139-155 ◽  
Author(s):  
Biswajit Ghose ◽  
Kailash Chandra Kabra
Keyword(s):  
High Growth ◽  
Two Dimensions ◽  
Growth Opportunities ◽  
Partial Adjustment ◽  
Partial Adjustment Model ◽  
Adjustment Speed ◽  
Growth Firms ◽  
The Impact ◽  
The Relationship

The significance of firms’ growth opportunities as one of the determinants of leverage is documented in many prior studies. But, there are not enough studies which examine the impact of growth on leverage adjustment speed. In this backdrop, the present study investigates the relationship between growth and leverage adjustment speed. Second, the study also examines the moderating role of two dimensions of target deviation, that is, nature and level of deviation in the relationship between growth and leverage adjustment speed. Using partial adjustment model on a dataset of 28,532 firm-year observations comprising 2,718 listed Indian firms with 4–12 years data for each firm, the study observes faster leverage adjustment speed for high-growth firms (36%) than low-growth firms (24%). The results also confirm the moderating effect of target deviation in the relationship between growth and adjustment speed. Overall, the study concludes that firms’ growth opportunities cause asymmetries in target adjustment speed by altering the costs and benefits of adjustment, and nature and level of target deviation moderates the relationship between growth and adjustment speed. These findings are expected to have substantial practical implications for financial managers in their capital structure decisions.

Financial leverage, debt maturity, future financing constraints and future investment

2020 ◽  
Vol 13 (4) ◽  
pp. 613-634
Author(s):  
Ehsan Poursoleiman ◽  
Gholamreza Mansourfar ◽  
Sazali Abidin
Keyword(s):  
Debt Maturity ◽  
Financing Constraints ◽  
Financial Leverage ◽  
Short Term ◽  
Content Type ◽  
Mediating Role ◽  
The Impact ◽  
The Relationship ◽  
Moderating Role

Purpose This paper aims to investigate the impact of debt maturity on the relationship between financial leverage and future financing constraints. Moreover, it attempts to analyze the moderating role of short-term debt and the mediating role of future financing constraints in the relationship between financial leverage and future investment. Design/methodology/approach To test the moderating role of debt maturity, all the observations are divided into two groups based on short-term debt to total debt ratio. Moreover, Sobel, Aroian and Goodman tests are used to analyze the mediating role of future financing constraints. The sample used in this research includes firms listed on the Tehran Stock Exchange from 2006 to 2018. Findings It is shown that financial leverage is inversely (positively) related to future financing constraints for firms with higher (lower) use of short-term debt and, short-term debt moderates the relation between financial leverage and future investment. The findings also indicate that future financing constraints carry the influence of financial leverage to future investment. Originality/value In an imperfect market where financing is not independent of investment, it is highly required to carry out some studies on the role of different financing scenarios in firms and their impacts on future financing and investment; therefore, this paper is conducted to address one of the most important issues in the capital market, which is almost the pioneer study in this field.

The role of information technology in the environmental performance of the firm

2015 ◽  
Vol 28 (2) ◽  
pp. 273-291 ◽  
Author(s):  
Cristina Gimenez ◽  
Vicenta Sierra ◽  
Juan Rodon ◽  
Jorge Andres Rodriguez
Keyword(s):  
Environmental Performance ◽  
Manufacturing Industry ◽  
Manufacturing Strategy ◽  
Environmental Practices ◽  
Content Type ◽  
It Resources ◽  
The Impact ◽  
The Relationship ◽  
Role Of Information

Purpose The purpose of this paper is to explore the role of information technologies (IT) in the impact of environmental practices on environmental performance. Design/methodology/approach The authors use data from the fifth (2009) round of the International Manufacturing Strategy Survey (IMSS) which includes responses from manufacturing plants within the manufacturing industry in Brazil, China, Germany, Hungary and USA. The authors use multiple regression analysis to test the relationship between environmental practices and environmental performance and the moderating effect of IT. Findings The paper finds evidence that IT strengthens the relationship between environmental practices and environmental performance. The IT construct is operationalized through IT-enabled control and IT-enabled coordination. The results confirm the established relationship between environmental practices and environmental performance and show that IT-enabled coordination moderates the relationship between environmental practices and environmental performance. Originality/value This research contributes to the literature of green operations in the following ways: First, this paper offers an alternative explanation about the role of IT; the authors provide evidence that existing IT resources that support the coordination between product design and manufacturing strengthen the effect of environmental practices. Second, this paper provides evidence that environmental practices can take advantages of the IT resources embedded in daily plants’ routines to enhance plants’ environmental performance. Overall, this research provides suggestions to managers about the role that IT plays in the implementation of environmental practices.

The effect of novelty in in-game advertising: examining the moderating role of interactivity and congruency

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Devika Vashisht
Keyword(s):  
Brand Attitude ◽  
Interactive Marketing ◽  
Content Type ◽  
Brand Recall ◽  
Engagement Theory ◽  
Transportation Theory ◽  
Management Students ◽  
The Impact ◽  
The Relationship

PurposeThe motivation behind the study is to look at the impact of novelty in games on brand recall and attitude, and to dissect the directing job of game interactivity from the points of view of “contrast effect,” “engagement theory” and “transportation theory”.Design/methodology/approachA 2 (novelty: congruent or incongruent) × 2 (game interactivity: high or low) between-subject measures design was used. In total, 172 management students participated in the study. A 2 × 2 between-subjects measure multivariate analysis of variance (MANOVA) was utilized to test the hypotheses.FindingsIncongruent novelty results in higher brand recall but less favorable brand attitude than congruent novelty. Interactivity moderates the relationship between novelty congruence and brand recall such that in a high-interactivity condition, incongruent novelty results in higher brand recall than that in the low-interactivity condition. But, in case of the high-interactivity condition, congruent novelty results in more favorable brand attitude than that in the low-interactivity condition.Practical implicationsDeveloping high brand recall rates and attitudes are the prime objectives of the marketers for choosing a medium to advertise their brands. This investigation adds knowledge to the area of interactive marketing, particularly in-game advertising as a media technique to promote brands taking novelty and game interactivity factors into thought.Originality/valueFrom the perspectives of interactive marketing, psychological elaboration, mind-engagement and transportation of experience, this investigation adds to the literature of advanced media advertising, explicitly to in-game advertising by looking at the effect of novelty and game interactivity.

Perceived stress and psychological well-being of working mothers during COVID-19: a mediated moderated roles of teleworking and resilience

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Vartika Kapoor ◽  
Jaya Yadav ◽  
Lata Bajpai ◽  
Shalini Srivastava
Keyword(s):  
Perceived Stress ◽  
Working Mothers ◽  
Well Being ◽  
Inverse Association ◽  
Psychological Well Being ◽  
Content Type ◽  
The Impact ◽  
The Relationship ◽  
Practical Implications

PurposeThe present study examines the mediating role of teleworking and the moderating role of resilience in explaining the relationship between perceived stress and psychological well-being of working mothers in India. Conservation of resource theory (COR) is taken to support the present study.Design/methodology/approachThe data of 326 respondents has been collected from working mothers in various sectors of Delhi NCR region of India. Confirmatory factor analysis was used for construct validity, and SPSS Macro Process (Hayes) was used for testing the hypotheses.FindingsThe results of the study found an inverse association between perceived stress and psychological well-being. Teleworking acted as a partial mediator and resilience proved to be a significant moderator for teleworking-well-being relationship.Research limitations/implicationsThe study is based at Delhi NCR of India, and future studies may be based on a diverse population within the country to generalize the findings in different cultural and industrial contexts. The present work is based only on the psychological well-being of the working mothers, it can be extended to study the organizational stress for both the genders and other demographic variables.Practical implicationsThe study extends the research on perceived stress and teleworking by empirically testing the association between perceived stress and psychological well-being in the presence of teleworking as a mediating variable. The findings suggest some practical implications for HR managers and OD Practitioners. The organizations must develop a plan to support working mothers by providing flexible working hours and arranging online stress management programs for them.Originality/valueAlthough teleworking is studied previously, there is a scarcity of research examining the impact of teleworking on psychological well-being of working mothers in Asian context. It would help in understanding the process that how teleworking has been stressful for working mothers and also deliberate the role of resilience in the relationship between teleworking and psychological well-being due to perceived stress, as it seems a ray of hope in new normal work situations.

Supervisor-directed OCB and deviant behaviors: the role of LMX and impression management motives

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Fenika Wulani ◽  
Tarsisius Hani Handoko ◽  
Bernardinus Maria Purwanto
Keyword(s):  
Impression Management ◽  
Mediating Effect ◽  
Equation Modeling ◽  
Organizational Deviance ◽  
Content Type ◽  
Deviant Behaviors ◽  
Interpersonal Deviance ◽  
The Impact ◽  
The Relationship

PurposeThis study investigates the effect of supervisor-directed organizational citizenship behavior (OCB) on leader–member exchange (LMX), the moderating role of impression management motives on this relationship, the effect of LMX on organizational and interpersonal deviance and the mediating effect of LMX on the relationship between supervisor-directed OCB and deviant behaviors.Design/methodology/approachThis study uses a survey questionnaire to collect data. Respondents were 342 nonmanagerial employees working in Surabaya Raya, Indonesia. Hypothesis testing is done using Partial least squares structural equation modeling (PLS-SEM).FindingsThe results show that supervisor-directed OCB is positively related to LMX, and LMX is negatively related to organizational deviance but not significantly related to interpersonal deviance. The study also finds that impression management motives moderate the positive relationship between supervisor-directed OCB and LMX. Furthermore, LMX mediates the relationship between supervisor-directed OCB and organizational deviance, but not interpersonal deviance.Practical implicationsThis study suggests the importance of human resource management (HRM) activities and managers being aware of subordinate OCB motives and the impact of LMX on interpersonal and organizational deviance, as well as what supervisors need to do to reduce these negative effects.Originality/valueFew studies examined the relationship between supervisor-directed OCB and workplace deviance behaviors (WDBs). This study provides a mechanism of their relationship by considering LMX as a mediator. Also, heretofore the existing studies tend to focus more on LMX as an antecedent of OCB. This study provides an understanding of OCB as an antecedent of LMX with the moderating effect of impression management motives.

Knowledge management, workplace climate, creativity and performance

2018 ◽  
Vol 30 (8) ◽  
pp. 592-612 ◽  
Author(s):  
Amro Alzghoul ◽  
Hamzah Elrehail ◽  
Okechukwu Lawrence Emeagwali ◽  
Mohammad K. AlShboul
Keyword(s):  
Job Performance ◽  
Knowledge Sharing ◽  
Authentic Leadership ◽  
Equation Modeling ◽  
Workplace Climate ◽  
Content Type ◽  
And Performance ◽  
The Impact ◽  
The Relationship

Purpose This study aims at providing empirical evidence pertaining to the interaction among authentic leadership, workplace harmony, worker's creativity and performance in the context of telecommunication sector. These research streams remain important issues and of interest as the world continues to migrate toward a knowledge-based economy. Design/methodology/approach Applying structural equation modeling, this study diagnosed the impact of Authentic leadership (AL) on employees (n = 345) in two Jordanian telecommunication firms, specifically, how it shapes workplace climate, creativity and job performance. The study also tests the moderating role of knowledge sharing in the model, as well as the mediating role of workplace climate on the relationship between AL and positive organizational outcomes. Findings The empirical result suggests that AL positively influences workplace climate, creativity and job performance; workplace climate positively influences creativity and job performance; workplace climate mediates the relationship between AL and creativity, and job performance; and knowledge sharing behavior moderates the relationship between AL and workplace climate. Originality/value This study highlights the magnificent power of AL and knowledge sharing, not only in shaping the workplace atmosphere but also in delineating how these variables stimulate creativity and performance among employees. The implications for research and practice are discussed.

scholarly journals Does sustainable consumption matter? Consumer grocery shopping behaviour andthe pandemic

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ing Grace Phang ◽  
Bamini K.P.D. Balakrishnan ◽  
Hiram Ting
Keyword(s):  
Social Transformation ◽  
Sustainable Consumption ◽  
Well Being ◽  
Grocery Shopping ◽  
Consumer Decision Making ◽  
Content Type ◽  
The Impact ◽  
The Relationship ◽  
Moderating Role

Purpose The COVID-19 pandemic took the world by surprise in early 2020. The preventive measures imposed by many countries limited human movement, causing uncertainty and disrupting consumption patterns and consumer decision-making. This study aims to explore consumers’ panic buying (PB) and compulsive buying (CB) as outcomes of the intolerance of uncertainty (IU). The moderating role of sustainable consumption behaviours (SCBs) (e.g. quality of life [QOL], concern for future generation and concern for environmental well-being) were also tested to raise awareness of responsible and mindful consumption amongst the society and business stakeholders. Design/methodology/approach To empirically examine the grocery shopping behaviours of Malaysian consumers during COVID-19, a total of 286 valid grocery consumer survey responses based on a purposive sampling were collected and analysed during the movement control order period between March and July 2020. Findings The findings confirmed the statistically significant impact of IU on both PB and CB and the impact of PB on CB behaviour. Amongst the three SCBs tested, only QOL significantly moderated the relationship between the IU and PB. Originality/value To the best of the authors’ knowledge, this is the first study to construct a framework of consumers’ PB and CB during the pandemic, building upon the stimulus-organism-response model and the concepts of IU and SCB. This study further serves as the pioneering study on the moderating role of SCB in consumer behaviour research in the pandemic context, whereby consumers’ QOL significantly moderates the relationship between their IU and PB. This study has also drawn specific implications for grocery retailers and government agencies for retail and policy planning to promote positive social transformation in consumer buying behaviours during a pandemic or crisis.

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