Paradigm Change in Financing Sources

Paradigm changes also change the sources of corporate finance. The goal of this chapter is to demonstrate how the sociological changes that will be created by technological developments transform the sources of finance within the framework of “sustainability” and “financial inclusion.” At this point, the basic elements of the financial system in the transition from traditional financing to alternative financing and to platform-based financing, albeit a new one, are examined. For this purpose, first of all, traditional financing sources and alternative financing sources are briefly mentioned, and then platform-ecosystem-based financing sources, which are the main subject of the study, are shed light on. The sources of financing provided through FinTechs are examined within the framework of digital finance-digital inclusion and online finance models (especially crowdfunding). The changes that the COVID-19 process may create in financial resources and the digital technologies it may bring are also assessed.

The Study of Comprehensive Risk Management and Corporate Finance Constraints

The reasons why companies implement comprehensive risk management and the benefits it can bring to companies have been a subject of academic interest. However, there is still room for further exploration of this topic for the following three reasons: firstly, most of the existing literature is focused on the study of corporate performance and value, and there is less research on the level of corporate financing constraints; secondly, a few papers have initially explored the relationship between the implementation of comprehensive risk management and corporate financing costs, but the research on the intrinsic impact mechanism remains at the theoretical level and lacks empirical testing Finally, comprehensive risk management has been a hot topic in recent years, but most of the literature has focused on developed countries such as Europe and the US, and domestic research is still very limited. Therefore, this paper attempts to empirically test how the implementation of comprehensive risk management affects corporate financing constraints, in the hope that it can complement the existing literature.

Boeing: surviving business turbulence after black swan cataclysms

Theoretical basis Capital structure theory. Research methodology The case is meant for teaching and class discussion, and uses only secondary data based on published sources. The interpretation and perspectives presented are based solely on the secondary data. Case overview/synopsis This paper aims to help current and future managers understand capital structure theory and the various equity and debt finance options available for raising capital. It also examines the financial analysis and strategic management of black swan events. After the class discussion, students will understand how to financially and strategically manage a company during black swan events and also have a deep dive into capital structure analysis of a large company. Complexity academic level MBA/postgraduate/undergraduate courses on corporate finance or advanced corporate finance. Executive/management development programs and short duration Massive Open Online Courses on investment decision-making and advanced corporate finance. MBA/postgraduate/undergraduate courses on corporate strategy and economic environment and planning.

Amtek Auto – financing under distress

Learning outcomes The primary teaching objective is to discuss the capital raising efforts of a firm under financial distress. It also provides supporting data to calculate cost of capital, DuPont/modified DuPont values and Altman’s Z-Score that can appropriately be incorporated into the discussion. Case-B provides information and data of the company’s recent performance and to changes in bankruptcy law in India. Overall, this case study provides ample scope to discuss, understand and provide the solution to the following key corporate finance themes as follows: 1. Analyzing accounting statements and examine potential earnings quality issue. 2. Predicting default and bankruptcy using qualitative analysis, financial ratios, traditional and modified DuPont models and Altman’s Z score model. 3. Examining the capital raising efforts of a distressed firm, which has already defaulted on borrowings. 4. To explore the impact of changes in regulation on the turnaround efforts of the firm as well as on the promoters of the firm. Case overview/synopsis Since 2005, Amtek Auto moved at a breathtaking speed with the goal of reaching $10bn in sales, from the current level of about $1.2bn. The group had acquired more than a dozen companies spending about Rs.5,000cr. ($850m) during this period primarily through borrowed funds. However, the market and business expansion was not happening as expected. The company’s capacity utilization was just about 40% (approx.) during much of this period. The mounting fixed costs of operation and debt servicing grew to the level of unsustainability, led the firm to default on its borrowing. Now the company had to quickly recapitalize itself to run its operations and retain the premier position in auto component industry. The company and its promoters were considering various methods of debt restructuring, asset sale and further equity infusion. Complexity academic level Introductory and elective level corporate finance. Supplementary materials Teaching notes are available for educators only. Subject code CSS 1: Accounting and Finance.

Performance, Risk, and Cost of Capital: Trends and Opportunities for Future CSR Research

The information within this study reviews the financial management literature focusing on proponents and opponents of corporate social responsibility (CSR). We review how CSR affects different areas of corporate finance. This study’s core objective is to explore the last 20 years (2000–2019) of CSR top-tier literature to develop and theoretically support CSR and environmental management. Twenty years of publications provide a considerable amount of evidence on CSR’s impacts on firm financial characteristics and some paradoxical findings. The majority of our insights support the argument that doing good is good for business. This study also highlights existing gaps in the literature. Based on our findings, we highlight three areas to further explore in the context of CSR and corporate finance: (1) Does CSR improve specific information contents in stock prices? (2) Does CSR mitigate financial distress risk? and (3) Is CSR good for firm trade credit?