Dynamic effect of corporate governance on financing decisions: Evidence from Sri Lanka

This study investigates the role of corporate governance in influencing the debt financing decision of 198 non-financial listed companies in Sri Lanka from 2009 to 2016. Sri Lanka’s corporate governance (CG) code promotes dispersed ownerships, larger board size and balance of power and authority through various means, such as exclusivity between the Chief Executive Officer and Chairperson and the independent Board composition. This study tests the role of CG through four indicators while controlling for other firm-specific variables. Results of the two-step system Generalized Method of Moments on a balance panel data shows that the effect of CG indicators on financing decision depends on the financing terms. In general, the influence of CG indicators is significant on the two debt financing measurements, except for managerial ownership when investments in assets are involved. This influence appears eminent in predicting the debt ratio, although the effect is not necessarily consistent with the hypotheses. The latest revision on CG codes of best practices has also improved firms’ access to debt financing, except for raising long-term debt to acquire assets. Results imply that the Sri Lankan firms adopting the CG best practices would need to rely on other factors to access long-term debt financing or on other external financing sources.

Prosedur Pembiayaan Mudharabah Pada PT. Bank BSI Tbk Kc Padang

The purpose of the study was to determine the mudharabah financing procedure carried out by PT. Bank Syariah Indonesia, Tbk KC Padang. In analyzing the data, the writer uses qualitative data analysis method as a method that describes descriptively about the mudharabah financing procedure at PT. Bank Syariah Indonesia, Tbk KC Padang. The results of this study there are several stages of the Mudharabah Financing Procedure at Bank Syariah Indonesia, namely the submission of an application for mudharabah financing, analysis of mudharabah financing, the decision to apply for mudharabah financing is divided into two decisions, namely the financing decision is accepted and the financing decision is rejected, if the financing decision is accepted or rejected, it is submitted in writing. by providing clear and wise reasons, then the mudharabah financing agreement, the disbursement of the mudharabah financing, the supervision of the mudharabah financing and the return of the mudharabah financing

The zero-leverage phenomenon in European listed firms: A financing decision or an imposition of the financial market?

This article provides empirical evidence on the zero-leverage phenomenon for a sample of European listed firms for the period 1995–2016. It is shown that there are two types of firms with zero leverage: the financially constrained firms that face obstacles in obtaining external finance, as predicted by the financial constraints hypothesis; and the financially unconstrained firms that maintain zero leverage as a consequence of a financing decision, which supports the financial flexibility hypothesis. The zero-leverage phenomenon is also influenced by the financial system that prevails in each country, being boosted (inhibited) in market-based (bank-based) financial systems, and by the country’s macroeconomic conditions, with the recent financial and sovereign debt crises increasing the propensity for zero leverage in market-based countries. We also find that the financial flexibility hypothesis seems to be more important in market-based systems and that the financial constraints approach did not gain importance during the crisis period. Our results are robust to the use of alternative measures of debt conservatism, explanatory variables, and econometric methods and maintain their validity when we allow for endogeneity in firm size and dividend payments. JEL CLASSIFICATION G32

The Staged Financing Selection Mechanism for Government to Maximize the Green Benefits of Start-Ups

In this study, we investigate the most common forms of government grant in green start-ups, which are appropriation, interest-free bank loans, and tax subsidies. These mechanisms are used to mitigate the problem of higher research costs and sunk costs of start-ups on green innovation and help venture investors better monitor the business plan, asset use, and agency cost and regularly collect information of start-ups to retain the right to terminate financing projects and improve the efficiency of them. The aim of this work is to develop a theoretical model of the agency among the government, the venture capitalists who only pursue monetary income, the strategy investors who pursue strategic objectives and monetary income, and the entrepreneur who takes into account both the influence of different forms of government grant on entrepreneur financing at a different stage and the improved monitoring process of venture investors owe to the staged capital infusion of government. The model shows that the optimal staged financing decision is given when the first target of the government is to achieve social welfare optimization and the secondary goal of maximizing green benefits. Moreover, the model explains the optimal staged financing decision of venture investors and equity stake share in different rounds. Ultimately, we find the optimal staged financing portfolios for green start-ups to acquire venture investment, reduce the staged financing uncertainty, and help the government realize a national green innovation strategy.

The Financing Decision, Size and Firm Value: A Conceptual Review

This study intends to conduct a non-systematic literature review on empirical and theoretical studies of capital structure policies in relation to firm value, as well as reviewing its nature and dimensions. Until now, no consensus has emerged, and the results cannot be concluded. This study also tries to include empirical of capital structure policies and firm value from various countries, which show that the phenomenon of capital structure policies and firm value differs from one country to another. Various discussions on capital structure policies and firm value have resulted in a literature review and its development over time. Another development is the link between capital structure and size. Size can determine the company's capital structure related to access to sources of financing. Generally, large companies are easier to obtain external financing sources than small companies. Keywords: Capital Structure, Size, Firm value