Country-level corporate governance and lines of credit

Mollagholamali, Mohsen; Rao, Ramesh P.

doi:10.1016/j.frl.2021.102159

Cited by 6 publications

(20 citation statements)

References 22 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Lines of credit are popular financial instruments that are used extensively by firms to manage their liquidity (Mollagholamali and Rao 2022). Acharya et al (2020) report that 70% of their US sample firms have access to a line of credit while Lins et al (2010) report that 94% of their sample firms from 29 countries obtained a line of credit.…”

Section: Introductionmentioning

confidence: 99%

“…Empirical studies examine the role of lines of credit as a source of contingent liquidity (Acharya et al 2020(Acharya et al , 2014Sufi 2009), their role in financing investments including research and development (Campello et al 2011;Guney et al 2017;Lee 2022), their impact on gross profit (Aragón et al 2020), and their role in reducing financing constraints (Koussis and Martzoukos 2022;Sufi 2009). In addition, some studies examine the determinants of having access to a line of credit (Berrospide et al 2012;Mollagholamali and Rao 2022) and the usage of line-of-credit facilities (Duran 2017;Jiménez et al 2009;Lee 2022). This study is closely related to the latter strand of research as it examines the determinants of access and usage of line-of-credit facilities focusing on the impact of family-controlled firms by utilizing the context of Jordan, a bank-based emerging market.…”

Section: Introductionmentioning

confidence: 99%

“…However, most studies on the determinants of firm liquidity focus on cash holdings and ignore lines of credit (Mollagholamali and Rao 2022). Although the number of studies on lines of credit is growing, most of them focus on the contexts of the US and to a lesser degree on other developing countries (Duran 2017;Jiménez et al 2009;Lee 2022).…”

Section: Introductionmentioning

confidence: 99%

“…In addition, to the best of the authors' knowledge, previous literature did not examine the impact of firm-level ownership patterns, such as firm identity, on the access and usage of lines of credit. This is an important issue to examine given that there is a strong agency motive that influences firm decisions regarding liquid resources (Dittmar et al 2003;Mollagholamali and Rao 2022;Seifert and Gonenc 2018;Tayem et al 2019).…”

Section: Introductionmentioning

confidence: 99%

“…The second set deals with firm characteristics associated with high costs of external financing due to transaction and information costs. These variables include firm cash flows, volatility, growth opportunities, firm size and age, and asset tangibility (Berrospide et al 2012;Duran 2017;Jiménez et al 2009;Lee 2022;Mollagholamali and Rao 2022).…”

Section: Introductionmentioning

confidence: 99%

See 4 more Smart Citations

Lines of Credit and Family Firms: The Case of an Emerging Market

Tayem

Tayeh

2023

IJFS

View full text Add to dashboard Cite

Lines of credit constitute an integral part of a firm’s liquidity policy; however, there is limited research on lines of credit in emerging markets. This study fills this gap by examining firm incentives to access and draw from lines of credit using the context of Jordan, a bank-based emerging market, focusing on the impact of family firms. To account for the endogeneity of family control, this study estimates the probability of accessing a line of credit using seemingly unrelated bivariate probit regression and its usage using treatment effect regression. The article documents that family firms are less likely to obtain a line of credit and their drawdowns are smaller compared to non-family firms. These findings support the agency’s view on having and using lines of credit. Other findings are consistent with a substitution effect between internal and external liquidity sources which implies a cost wedge between the two sources of liquidity.

show abstract

Section: Introductionmentioning

confidence: 99%