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Corporate Finance: Financial Management of the Firm
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Corporate Finance: Financial Management of the Firm

A special issue of Journal of Risk and Financial Management (ISSN 1911-8074). This special issue belongs to the section "Economics and Finance".

Deadline for manuscript submissions: closed (31 March 2024) | Viewed by 11504

Special Issue Editor

Prof. Dr. Rebecca Abraham

E-Mail Website
Guest Editor
H. Wayne Huizenga School of Business and Entrepreneurship, Nova Southeastern University, Fort Lauderdale, FL 33319, USA
Interests: corporate finance; drivatives; corporate governance; ESG investing
Special Issues, Collections and Topics in MDPI journals

Special Issue Information

Dear Colleagues,

We are soliciting manuscripts for a Special Issue on Corporate Finance, for the Journal of Risk and Financial Management. The deadline for submissions is March 31, 2024. Papers on all aspects of corporate finance, including capital structure, real options, agency theory, capital budgeting, firms in distress, initial public offerings and seasoned equity offerings, emerging areas such as ESG variables, corporate governance, disclosure, emerging markets, and new venture funding, are of particular interest and therefore strongly encouraged. Samples from countries that have not been studied extensively are encouraged.

We aim to provide authors with timely feedback on their submissions. It is our goal to advance knowledge in two ways. We wish to build on the findings based on traditional theoretical papers, while encouraging the opening of critical new areas of inquiry. While we expect the majority of our submissions to be the results of empirical examination, we may consider purely theoretical papers with sound grounding in theory. In all cases, critical thinking is encouraged, with support for new ideas, new methodologies, and the opening up of new research streams. 

Prof. Dr. Rebecca Abraham
Guest Editor

Manuscript Submission Information

Manuscripts should be submitted online at www.mdpi.com by registering and logging in to this website. Once you are registered, click here to go to the submission form. Manuscripts can be submitted until the deadline. All submissions that pass pre-check are peer-reviewed. Accepted papers will be published continuously in the journal (as soon as accepted) and will be listed together on the special issue website. Research articles, review articles as well as short communications are invited. For planned papers, a title and short abstract (about 100 words) can be sent to the Editorial Office for announcement on this website.

Submitted manuscripts should not have been published previously, nor be under consideration for publication elsewhere (except conference proceedings papers). All manuscripts are thoroughly refereed through a single-blind peer-review process. A guide for authors and other relevant information for submission of manuscripts is available on the Instructions for Authors page. Journal of Risk and Financial Management is an international peer-reviewed open access monthly journal published by MDPI.

Please visit the Instructions for Authors page before submitting a manuscript. The Article Processing Charge (APC) for publication in this open access journal is 1400 CHF (Swiss Francs). Submitted papers should be well formatted and use good English. Authors may use MDPI's English editing service prior to publication or during author revisions.

Keywords

  • capital structure
  • IPOs
  • financial distress
  • ESG
  • seasoned equity offerings

Published Papers (7 papers)

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Research

16 pages, 1287 KiB  
Article
Flight-to-Liquidity and Excess Stock Return: Empirical Evidence from a Dynamic Panel Model
by Asif Ali, Habib Ur Rahman, Adam Arian and John Sands
J. Risk Financial Manag. 2023, 16(12), 515; https://doi.org/10.3390/jrfm16120515 - 12 Dec 2023
Viewed by 1229
Abstract
This study examines the impact of the flight-to-liquidity (FTL) phenomenon on the excess stock return by applying the previously developed generalised method of moments (GMM) framework. For this purpose, we use the data covering the period from 2004 to 2018 for 122 public [...] Read more.
This study examines the impact of the flight-to-liquidity (FTL) phenomenon on the excess stock return by applying the previously developed generalised method of moments (GMM) framework. For this purpose, we use the data covering the period from 2004 to 2018 for 122 public companies listed on the Pakistan Stock Exchange (PSX). This study uses six proxies to measure the expected and unexpected illiquidity. The empirical investigation reveals that expected and unexpected illiquidities greatly influence smaller firms more notably than larger ones, which induces FTL phenomena into the market. Moreover, a FTL phenomenon triggered the Pakistani equity market during the financial crisis, when a significant decline appeared and the less liquid stocks were strongly affected. The results reveal that FTL risk is priced in the Pakistan equity market, making large stocks relatively more attractive in times of dire liquidity. These findings further suggest that the market participants in the Pakistan equity market, including policymakers, regulators and investors, should not ignore FTL phenomena while designing their portfolios. Full article
(This article belongs to the Special Issue Corporate Finance: Financial Management of the Firm)
23 pages, 7593 KiB  
Article
Cash Holdings and Marginal Value of Cash across Different Age Groups of U.S. Firms
by YoungHa Ki and Ramesh Adhikari
J. Risk Financial Manag. 2023, 16(11), 484; https://doi.org/10.3390/jrfm16110484 - 14 Nov 2023
Viewed by 1314
Abstract
Using a sample of 11,365 unique US firms over the period 1966 to 2021, this study examines the relationship between the age of a firm and its cash holdings. We categorize firms as young, mature, or old based on their age or years [...] Read more.
Using a sample of 11,365 unique US firms over the period 1966 to 2021, this study examines the relationship between the age of a firm and its cash holdings. We categorize firms as young, mature, or old based on their age or years of operation. Our results show that firm age is one of the important determinants of cash holdings and that managers adjust cash holdings in response to changing financial needs and risks as firms age. We find that young firms tend to hold higher levels of cash than more established firms and that the marginal value of cash holdings is higher for younger firms. This is consistent with the notion that young firms are more focused on growth and investment and may have limited access to external financial resources. In contrast, mature and old firms tend to hold lower cash levels, possibly due to greater financial stability, increased creditworthiness, and a lower need to manage financial risks. Controlling for significant variables, we confirm our findings with the robustness tests. Taking care of the endogeneity issue, we still can confirm that firm age is negatively significant to the level and the marginal value of cash holdings. Full article
(This article belongs to the Special Issue Corporate Finance: Financial Management of the Firm)
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18 pages, 356 KiB  
Article
The Effect of COVID-19 on Consumer Goods Sector Performance: The Role of Firm Characteristics
by Irwansyah, Muhammad Rinaldi, Abdurrahman Maulana Yusuf, Muhammad Harits Zidni Khatib Ramadhani, Sitti Rahma Sudirman and Rizky Yudaruddin
J. Risk Financial Manag. 2023, 16(11), 483; https://doi.org/10.3390/jrfm16110483 - 14 Nov 2023
Cited by 4 | Viewed by 1615
Abstract
This study investigates the impact of the COVID-19 pandemic on company performance in the consumer goods industry. Additionally, it explores how company characteristics influence the relationship between the pandemic and company performance based on industry type and region. Analyzing data from 1491 companies [...] Read more.
This study investigates the impact of the COVID-19 pandemic on company performance in the consumer goods industry. Additionally, it explores how company characteristics influence the relationship between the pandemic and company performance based on industry type and region. Analyzing data from 1491 companies across 79 countries between 2018 and 2022, we utilized ordinary least squares (OLS) with robust standard errors. Our findings confirm the pandemic’s overall adverse effect on the performance of consumer goods companies. However, variations emerged when examining diverse industries and regions. Notably, larger companies, particularly in the Americas, Europe, and Asia–Pacific, demonstrated greater resilience and performance during the pandemic. Furthermore, effective leveraging, especially in the Americas and Asia–Pacific, contributed to supporting performance amid the pandemic. These results hold crucial policy implications for companies aiming to enhance their performance in the face of health crises. Full article
(This article belongs to the Special Issue Corporate Finance: Financial Management of the Firm)
19 pages, 550 KiB  
Article
Impact of Liquidity on the Efficiency of Banks in India Using Panel Data Analysis
by Anureet Virk Sidhu, Rebecca Abraham, Venkata Mrudula Bhimavarapu, Jagjeevan Kanoujiya and Shailesh Rastogi
J. Risk Financial Manag. 2023, 16(9), 390; https://doi.org/10.3390/jrfm16090390 - 31 Aug 2023
Cited by 1 | Viewed by 1249
Abstract
The current study investigates the impact of the liquidity coverage ratio (LCR) on the efficiency of Indian banks for the period 2010 to 2019. The study examines the effect of internal bank elements like ownership structure, transparency and disclosure, and technological advancement on [...] Read more.
The current study investigates the impact of the liquidity coverage ratio (LCR) on the efficiency of Indian banks for the period 2010 to 2019. The study examines the effect of internal bank elements like ownership structure, transparency and disclosure, and technological advancement on the relationship between the LCR and efficiency. Bank efficiency proxied as technical efficiency is evaluated by applying the data envelope analysis approach. Applying the panel data regression technique, the authors discover that the LCR has a positive impact on the technical efficiency at a constant return to scale of banks. The relationship between the LCR and the technical efficiency at a variable return to scale is non-linear. Initially, as liquidity increases, the efficiency of banks improves, after reaching its optimum level, efficiency starts to decline. Furthermore, liquidity tends to improve efficiency of banks with higher promoter stakes, whereas opposing results are evidenced for institutional investors and technological advancement. Full article
(This article belongs to the Special Issue Corporate Finance: Financial Management of the Firm)
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20 pages, 405 KiB  
Article
Does Competition Affect Financial Distress of Non-Financial Firms in India: A Comparison Using the Lerner Index and Boone Indicator
by Jagjeevan Kanoujiya, Shailesh Rastogi, Rebecca Abraham and Venkata Mrudula Bhimavarapu
J. Risk Financial Manag. 2023, 16(7), 340; https://doi.org/10.3390/jrfm16070340 - 20 Jul 2023
Viewed by 987
Abstract
Firms’ financial distress (FD) is a major issue for smooth business activities. Timely recognition of FD should be a prime concern; otherwise, it may cause a nasty bankruptcy situation. The FD issue is paramount to researchers, policymakers, and investors. Several factors, whether they [...] Read more.
Firms’ financial distress (FD) is a major issue for smooth business activities. Timely recognition of FD should be a prime concern; otherwise, it may cause a nasty bankruptcy situation. The FD issue is paramount to researchers, policymakers, and investors. Several factors, whether they are financial or non-financial, may be responsible for financial distress. Such aspects specific to the firms have been explored. Exogenous factors such as competition can also be responsible for a firm’s FD situation. In view of this, this study proposes to determine competition’s impact on financial distress in the Indian context. BSE 100 (“Bombay Stock Exchange”)-listed non-financial firms (NFFs) in India, over a timeframe of 2016–2020, are incorporated in this study. Panel data econometrics is performed for hypothesis testing. This study is novel in its approach, employing multi-technique analysis for measuring financial distress. FD is measured using Altman Z-scores, BOS, and AC distress scores variants. The Boone index (BI) and Lerner index (LI) are undertaken for the competition assessment of NFFs in India. The findings have contrasting views based on BI and LI; BI is positively connected to Z-scores; however, LI negatively connects to Z-scores. The findings suggest that competition (reverse of BI) positively affects financial distress (reverse of Z-score), while competition (reverse of LI) has an adverse effect on FD. It is also found that competition as BI affects FD non-linearly (inverted U shape connection). This means that competition (or market power) initially increases financial distress (or financial stability), and after a specific limit, it reduces financial distress. It can also be said that market power improves financial soundness to a specific limit, and after that, it starts decreasing financial stability. The study’s findings provide fresh and exciting evidence for the connectivity of competition and financial distress. This situation has noticeable implications for all stakeholders and policymakers concerned with the survival of Indian listed firms. The significant connection of competition with financial distress implies that all stakeholders should consider competition an essential element for a firm’s financial distress. Full article
(This article belongs to the Special Issue Corporate Finance: Financial Management of the Firm)
20 pages, 556 KiB  
Article
Transparency and Disclosure and Financial Distress of Non-Financial Firms in India under Competition: Investors’ Perspective
by Jagjeevan Kanoujiya, Rebecca Abraham, Shailesh Rastogi and Venkata Mrudula Bhimavarapu
J. Risk Financial Manag. 2023, 16(4), 217; https://doi.org/10.3390/jrfm16040217 - 29 Mar 2023
Cited by 3 | Viewed by 2333
Abstract
Transparency and disclosure (T&D) of information trigger the interest of all stakeholders, including investors in a company. Cognizance of the company’s financial health before investing is very necessary. Disclosure of information in the firm’s financial reports reflects the firm’s financial performance. A firm’s [...] Read more.
Transparency and disclosure (T&D) of information trigger the interest of all stakeholders, including investors in a company. Cognizance of the company’s financial health before investing is very necessary. Disclosure of information in the firm’s financial reports reflects the firm’s financial performance. A firm’s financial health protects investors’ and other stakeholders’ interests and the firm’s long-term sustainability. Owing to the importance of T&D and a firm’s financial health, this paper investigates the impact of T&D on the financial distress (FD) of non-financial firms (NFFs) listed in India. This study examines both linear and nonlinear connectivity of T&D and financial distress (FD). Their association is also investigated in a competitive scenario (under the moderating effect of competition). The panel data analysis is incorporated into the study having 78 NFFs as cross-sectional units with a timeframe from 2016 to 2020. Altman Z-score measures a firm’s FD (higher Z-score means low FD). BOS (Berger, Ofek and Swary) and AC (Almeida and Campello) scores are taken to consider investors’ perspectives of the firm’s FD. The T&D and Lerner indexes are used to assess the level of T&D and competition. The findings reveal that a higher T&D level decreases a firm’s financial stability or increases a firm’s FD. In nonlinear association, it is found that T&D has an inverted U-curved connection with financial stability or U-curved association with FD. It indicates that initially, higher T&D reduces FD, and after a threshold, it increases FD. However, under competition, T&D is not found to be significantly impactful for FD. The study is novel as no previous study has focused on such association under competition and taking investors’ perspective of a firm’s FD. Full article
(This article belongs to the Special Issue Corporate Finance: Financial Management of the Firm)
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22 pages, 318 KiB  
Article
The Influence of Cash Ownership on Financial Performance: An Examination of Disruptors and Acquirers
by Rebecca Abraham, Venkata Mrudula Bhimavarapu, Zhi Tao and Shailesh Rastogi
J. Risk Financial Manag. 2023, 16(3), 197; https://doi.org/10.3390/jrfm16030197 - 14 Mar 2023
Viewed by 2014
Abstract
Cash ownership emits a powerful positive signal. We examine four sources of cash in firms, i.e., cash flows, cash holdings, cash proceeds from debt, and cash proceeds from equity. We examine the effects of cash ownership for firms growing by disruption, and firms [...] Read more.
Cash ownership emits a powerful positive signal. We examine four sources of cash in firms, i.e., cash flows, cash holdings, cash proceeds from debt, and cash proceeds from equity. We examine the effects of cash ownership for firms growing by disruption, and firms growing by acquisition. Information signaling theory maintains that free cash flows may be used to increase shareholder wealth. Two-stage least squares regressions determined the impact of cash funding on disruptors and size of acquisition in the first stage, and cash-funded disruption or cash-funded acquisition in the second stage, for a US sample of 832 disruptor firms and 924 acquirers, from 2000–2020. Disruptions funded by cash holdings, cash flow, and cash proceeds from debt, significantly increased stock returns. A size effect was observed, with small disruptors showing significant effects. Acquisitions funded by cash holdings, cash flow, and cash proceeds from debt, significantly increased stock returns and return on assets. Agency costs significantly reduced returns and profits. Results for disruptions and acquisitions support signaling theory with free cash flows signaling higher share prices for both disruptors and acquirers, and higher profits for acquirers. Full article
(This article belongs to the Special Issue Corporate Finance: Financial Management of the Firm)
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