Capital Structure and Debt Maturity in Nonprofit Organizations

This article examines the capital structure and debt maturity in nonprofit organizations (NPOs). In particular, we analyze whether these financing decisions are made as expected according to the two main theories used to explain the capital structure, that is, the trade-off and pecking order theories. To do so, we study the associations between NPOs’ indebtedness and their size, age, tangibility, liquidity, profitability, risk, and growth. We use fixed effects, probit, and Heckman selection models with unbalanced panel data containing 8,721 charities in the United Kingdom for the period 2011–2018 (60,222 year-obs). Our results show that the financing patterns of NPOs are consistent with the arguments of the pecking order theory. We also find that less than half of our sample uses long-term debt. Moreover, debt maturity is longer in larger NPOs, those with more tangible assets, or those with higher liquidity.

Determinan Efisiensi Investasi dengan Risiko Litigasi sebagai Variabel Moderasi

Latar Belakang:Pada tahun 2020, BPS menyatakan laju pertumbuhan PDB sektor manufaktur mengalami penuruan sebesar -2,93 dibanding tahun 2019 yaitu sebesar 3,80. Penurunan laju pertumbuhan PDB yang dialami perusahaan sektor manufaktur merupakan dampak dari Covid-19 yang sedang melanda dunia. Penurunan laju pertumbuhan PDB perusahaan sektor manufatur berpengaruh terhadap tingkat efisiensi investasi yang dilakukan perusahaan.Tujuan:Penelitian ini memiliki tujuan untuk menguji pengaruh kualitas laporan keuangan, konservatisme, debt maturity dan sustainability reporting terhadap efisiensi investasi dengan risiko litigasi sebagai variable moderasi.Metode Penelitian:Dalam penelitian ini menggunakan teknik analisis data yaitu Regresi Linear Berganda dan Moderated Regression Analysis (MRA).Hasil Penelitian:Hasil penelitian ini menunjukkan bahwa kualitas laporan keuangan, konservatisme, dan debt marurity berpengaruh positif terhadap efisiensi investasi. Sementara sustainability reporting tidak berpengaruh terhadap efisiensi investasi. Hasil penelitian ini juga menunjukkan bahwa risiko litigasi memperkuat pengaruh positif kualitas laporan keuangan dan debt maturity terhadap efisiensi investasi.Keterbatasan Penelitian:Penelitian ini memiliki keterbatasan hanya berfokus pada perusahaan sektor manufaktur saja dan hanya menguji pengaruh kualitas laporan keuangan, konservatisme, debt maturity, dan sustainability reporting terhadap efisiensi investasiKeaslian/Novetly Penelitian:Penelitian ini memiliki pembaharuan yaitu menambahkan risiko litigasi sebagai variabel moderasi. Hal ini dikarenakan hasil penilitian yang tidak konsisten memungkinkan terdapat faktor lain yang mempengaruhi efisiensi investasi.

Stock returns, oil prices and leverage: evidence from US firms

PurposeThis paper aims to investigate how the relation between stock returns of US firms and West Texas Intermediate (WTI) oil prices is affected by leverage from 1990 to 2020.Design/methodology/approachThis paper examines how the relationship between stock returns of US firms and WTI oil prices is affected by leverage from 1990 to 2020 using a fixed-effect model estimation framework.FindingsResults from the fixed-effect regression models suggest that leverage effects on stock returns are pervasive both in aggregate and cross-industry levels, while the mining industry is more sensitive. In addition to the positive oil price effects attenuated by leverage at the aggregate level, the authors observe stronger marginal effects of leverage only for the mining sector. Being more exposed to commodity prices, the positive effects of oil prices on stock returns in the mining sector are offset by large debt ratios. Asymmetries, effects of debt maturity structure and implications are also discussed.Research limitations/implicationsThis study is grounded on the contemporary cash flow claim of leverage NOT on the long-run effect of leverage considering cash flow constraints. The oil price increase is assumed to represent an advancement of the overall economy. This study does not capture the oil prices response to some other economic forces and vice-versa.Practical implicationsMining companies should therefore reduce the stock of debt with respect to their assets to make possible the “pass-through” from oil prices to the stock market.Originality/valuePreviously undocumented and the authors show that leverage reduces the total effect of oil prices on stock returns, consistent with the hypothesis. Asymmetric and debt maturity structures effects are also discussed.

Generational Socioemotional Wealth and Debt Maturity: Evidence from Private Family Firms of GIPSI Countries

In this paper we investigate the relationship between generational socioemotional wealth (SEW) and debt maturity structure in private family firms of GIPSI countries for the period 2010-2018. This appears to be quite an important issue to study, given that SEW is a peculiar aspect of family firms and its impact on the debt maturity structure, still relatively unexplored, is likely to change according to the generation running the family business. We show that the importance attached to SEW decreases when moving from the firms’ founder to the subsequent generations, with a negative effect on the amount of long-term debt. The forward-looking orientation of first-generation family firms favours long-term credit by banks in order to expand a healthy business which can be inherited by future generations. These businesses are hence perceived as less risky and more value-creating by external creditors, compared to later-generation family firms. Alternatively, SEW preservation is often less of a target in later-generation family firms, because some descendants consider the firm simply as a source of extra finance and conflicts of interest often arise between multiple generations or different family branches entering the business. Short-term debt may then be employed as a signaling effect of the quality of the firm. At the same time, borrowing long-term capital may become difficult if lenders question the creditworthiness of these businesses. This issue emerged dramatically during the sovereign debt crisis, when a significant contraction of credit to firms was observed throughout the GIPSI countries.

The impact of contract enforcement efficiency on debt maturity structure using mathematical derivation and comparative static analysis

In recent years, the systematic use of advanced mathematical methods to express, study and argue economic theories has become an important branch and research hotspot in economics. The choice of debt maturity structure is an interesting economics issue in corporate finance. The signing of debt financing contract is not only the enterprises’ independent behavior, but also will be affected by the contract environment. Differences in the contractual environment will inevitably lead to differences in the efficiency of contract enforcement between borrowers and lenders in debt contracts. This paper introduces the contract enforcement efficiency factor on the basis of the standard structure model constructed by Holmstrom and Tirole, and then theoretically investigates the influence mechanism of contract enforcement efficiency on debt maturity structure based on the mediating role of contract enforcement efficiency on the investors’ liquidation claims. By transforming the financing contract into a linear programming problem, and then solving the optimization model, mathematical derivation and static comparative analysis, the research shows that as the efficiency of contract enforcement increases, the amount of short-term debt and long-term debt increases, while the direction change in debt maturity structure is uncertain and the specific relationship between them is closely related to the magnitude of all exogenous variables.