Analyzing the impact of board vigilance on financial distress through the intervention of leverage structure and interaction of asset tangibility in the non-financial sector of Pakistan

2021 ◽  
pp. 2150004
Author(s):  
Wen Xuezhou ◽  
Rana Yassir Hussain ◽  
Haroon Hussain ◽  
Muhammad Saad ◽  
Sikander Ali Qalati
Keyword(s):  
Capital Structure ◽  
Financial Distress ◽  
Ordinary Least Squares ◽  
Debt Maturity ◽  
Financial Firms ◽  
Debt Maturity Structure ◽  
Maturity Structure ◽  
The Impact ◽  
The Relationship

This study focuses on the relationship between board vigilance and financial distress in non-financial firms listed on the Pakistan Stock Exchange (PSX). The mediating role of leverage structure and moderating role of asset tangibility is also studied following Baron and Kenney’s approach. The study analyzed the data of 284 firms ranging from 2013 to 2017 by using ordinary least squares (OLS) and panel corrected standard errors (PCSE) regressions. The study revealed that the debt maturity structure mediates the relationship between board independence and financial distress and between CEO non-duality and financial distress but the capital structure did not mediate any of the stated relationships. Similarly, asset tangibility negatively moderated the relationship between debt maturity and financial distress. However, there was no such moderation detected between the relationship of capital structure and financial distress. The results remained consistent throughout the analysis with both regression techniques. These results suggest using more long-term debt in debt maturity structure to have control over financial distress and also to reduce the reliance on non-productive tangible assets in the asset structure of non-financial firms of Pakistan.

scholarly journals Debt maturity structure and firms’ performance: Evidence from Vietnam

2020 ◽  
Vol 6 (03) ◽  
Author(s):  
Hoang duc LE
Keyword(s):  
Positive Impact ◽  
Stock Exchange ◽  
Debt Maturity ◽  
Financial Firms ◽  
Debt Maturity Structure ◽  
Maturity Structure ◽  
Generalized Methods Of Moments ◽  
Methods Of Moments ◽  
The Impact

This paper investigates the impact of debt maturity structure on firms’ performance for all non-financial firms listed on Ho Chi Minh City Stock Exchange and Hanoi Stock Exchange between 2010 and 2017. We find that an increase in the ratio of long-term debt over total debt is associated with a decrease in firms’ performance. We also show that long-term debt financing can lead to a reduction in firms’ performance because it dampens the positive impact of the investment on firms’ performance. Our results are robust when we employ a System Generalized Methods of Moments to deal with endogeneity problems.

scholarly journals Debt and financial performance of SMEs: The missing role of debt maturity structure.

2013 ◽  
Vol 10 (3) ◽  
pp. 354-365 ◽  
Author(s):  
Hayam Wahba
Keyword(s):  
Financial Performance ◽  
Opposite Effect ◽  
Debt Maturity ◽  
Random Effects Model ◽  
Short Term ◽  
Debt Maturity Structure ◽  
Maturity Structure ◽  
The Relationship

This paper focuses on an important issue, which has generally received less attention in SMEs literature, being the effect of debt maturity structure on financial performance. The random effects model, as a panel data technique, is used to examine the relationship between debt and various measures of financial performance. The results reveal that it is not the level of leverage that determines financial performance, but rather the debt maturity structure. Specifically, the findings demonstrate that short-term debt and long-term debt have an opposite effect on financial performance and therefore tend to cancel out. This is the first study, to the best of knowledge, which offers empirical evidence regarding debt maturity structure not only in SMEs context, but also from an Egyptian perspective.

scholarly journals Capital Structure-Firm Value Nexus: Moderating Role of Profitability

2020 ◽  
Vol 11 (2) ◽  
pp. 375-386
Author(s):  
Hamed Ahmad Almahadin ◽  
Yazan Salameh Oroud
Keyword(s):  
Capital Structure ◽  
Firm Value ◽  
Panel Data Analysis ◽  
Policy Implications ◽  
Ample Evidence ◽  
Functional Models ◽  
The Impact ◽  
The Relationship ◽  
Moderating Role

This study aims to investigate the moderating role of profitability in the relationship between capital structure and firm value in Jordan, as an example of an emerging economy. For this purpose, two functional models were formulated to capture the direct relationship as well as the interaction impact of capital structure on firm value. The robust empirical findings of panel data analysis provide strong evidence of an adverse relationship between capital structure and firm value. The findings confirm that the impact of capital structure appears to be complicated in nature and difficult to examine without controlling for the interaction of profitability as one of the major determinants. Therefore, studying the interaction effect provides ample evidence and enhances the understanding of the link between firm value and capital structure. The empirical results of the study may provide important insights and policy implications to decision-makers.

scholarly journals Role of Capital Structure in Firm’s Value: A Case of Pakistani Firms

2021 ◽  
Vol 1 (2) ◽  
pp. 55-64
Author(s):  
MUHAMMAD ASIF ◽  
MUHAMMAD USMAN HAMEED ◽  
ZAINULLAH KHALIL
Keyword(s):  
Capital Structure ◽  
Negative Relationship ◽  
Debt Financing ◽  
Financial Firms ◽  
Effect Regression ◽  
The Impact

The Most important and critical decision for a finance manager is adequate Capital structure. Modigliani and Miller had started the debate of capital structure in creating firm’s value. The research was conducted to find out the impact of capital structure and the value of the firm in Pakistan. The research was conducted on 71 non-financial firms of KSE 100 index. Using fix effect regression in the study it was found that there is significant effect of Capital structure on firm’s value but the use of debt financing had negative relationship with the firm’s value.

Does Stock Liquidity Affect Corporate Debt Maturity Structure?

2020 ◽  
pp. 2150005
Author(s):  
Joseph M. Marks ◽  
Chenguang Shang
Keyword(s):  
Stock Market ◽  
Debt Maturity ◽  
Market Liquidity ◽  
Stock Liquidity ◽  
Yield Spreads ◽  
Debt Maturity Structure ◽  
Bond Yield ◽  
Maturity Structure ◽  
Stock Market Liquidity ◽  
The Impact

We show an inverse relation between the use of short-term debt and stock market liquidity. This finding is robust to a battery of control variables, alternative measures of the key variables, and various identification strategies. A difference-in-difference (DiD) approach suggests that the relation between debt maturity structure and stock liquidity may be causal. The impact of stock liquidity on debt maturity is stronger in the presence of large institutional holdings and when borrowers are subject to greater refinancing risk. We also provide evidence that firms with liquid stock tend to issue longer-term bonds and enjoy lower bond yield spreads. Overall, our results support the view that the governance function of stock market liquidity reduces the necessity of debt market monitoring, which allows firms to shift toward longer-term debt to avoid the costs and risk of frequent refinancing.

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