Do selected board governance mechanisms strengthen the link between institutional and macroeconomic variables and the financial flexibility of corporations? Empirical evidence from an emerging economy

Wijerathna, Harshani Shashikala; Anuradha, Niluka; Ajward, Roshan

doi:10.1108/jabs-06-2023-0219

Cited by 2 publications

(7 citation statements)

References 73 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Either they have focused on companies in a single sector [22] or only listed companies [21]. Most importantly, however, the list of macroeconomic variables considered in the studies was limited and focused on a few basic macroeconomic variables, such as GDP or its growth, inflation, unemployment, or interest rates [19,20,23]. This constitutes an important research gap that the present study was designed to fill.…”

Section: Literature Review and Research Questionsmentioning

confidence: 99%

“…Studies on the impact of macroeconomic variables on cash holdings have typically focused on a limited set of macroeconomic variables. However, some of these studies have indicated that the role of macroeconomic factors in relation to liquidity is significant [19,20]. A study by Dottori and Micucci [18] indicated that the increase in the liquidity levels of Italian firms between 2011 and 2015 was mainly due to macroeconomic factors, such as the fall in interest rates.…”

Section: Literature Review and Research Questionsmentioning

confidence: 99%

“…While the impact of firm-specific factors on corporate liquidity has been widely reported [8][9][10]12,13,16], the impact of macroeconomic factors remains a research gap. However, there are studies that highlight the importance of studying macroeconomic factors for corporate liquidity [18][19][20]. Moreover, the literature on corporate financial distress explicitly states that the addition of macroeconomic variables significantly improves the explained relationships relative to when only firm-specific variables are considered [52][53][54].…”

Section: Literature Review and Research Questionsmentioning

confidence: 99%

“…While research on the impact of macroeconomic factors on firm performance has been conducted [3][4][5][6], the analysis of the determinants of firm liquidity has been less frequently conducted and has generally focused on firm-specific factors [7][8][9][10][11][12][13][14][15][16][17]. Studies on the impact of macroeconomic factors on corporate liquidity are much less frequent, but point to the importance of macroeconomic factors [18][19][20]. This represents an important research gap.…”

Section: Introductionmentioning

confidence: 99%

“…Moreover, previous studies have either concentrated on companies within a single industry [22] or only on listed companies [21]. Most notably, the list of macroeconomic variables analysed was limited to a few basic variables, such as GDP, inflation, unemployment, and interest rates [19,20,23]. However, the most significant research gap pertains to moderation analysis, which has not yet been employed to assess the influence of macroeconomic variables on corporate liquidity, and has also been rarely addressed in studies conducted in related areas [24][25][26].…”

Section: Introductionmentioning

confidence: 99%

See 4 more Smart Citations

Impact of Macroeconomic Factors on Financial Liquidity of Companies: A Moderation Analysis

Nowicki,

Ratajczak,

Szutowski

2024

Sustainability

View full text Add to dashboard Cite

The objective of this study was to examine the potential moderating effects of the relationship between macroeconomic variables and the financial liquidity of enterprises. Given the significance of liquidity for companies and the profound impact of the macroeconomic environment, a research gap was identified in relation to the limited number of studies investigating the influence of macroeconomic factors on corporate liquidity. Additionally, the limited scope of companies surveyed in this area, in terms of sector, size, capital market presence, and the limited range of macroeconomic variables examined were notable. Most importantly, the absence of studies examining moderators of the relationship between macroeconomic factors and liquidity was a significant concern. To this end, two main research questions were formulated. First, what factors moderate the relationship between macroeconomic variables and the financial liquidity of companies? Second, what is the nature of the moderating effects on the relationship between macroeconomic variables and corporate financial liquidity? This research employed panel data analysis on an unbalanced panel comprising 5327 Polish enterprises spanning from 2003 to 2021. The primary analytical technique utilised was linear regression (pooled OLS) with robust standard errors clustered at the firm level. The main results of this study indicate that: (1) debt level, profitability, and the fixed assets to total assets ratio are significant moderators of some of the relationships between macroeconomic variables and corporate liquidity; (2) debt level moderates the relationship between the ratio of internal expenditures on research and development to GDP and financial liquidity, as well as the relationship between inflation rate and liquidity; the relationship is statistically significant and positive only for those enterprises with above-median debt levels; (3) profitability moderates the relationship between the employment coefficient and financial liquidity, as well as the relationship between the inflation rate and liquidity; in the high-profitability group, those relationships are positive, whereas in the low-profitability group, they are negative; (4) the ratio of fixed assets to total assets moderates the relationship between the money supply and corporate financial liquidity; for enterprises with low asset flexibility, there is a negative relationship between the money supply and financial liquidity; conversely, for enterprises with high asset flexibility, there is a positive relationship between the money supply and financial liquidity; (5) the rationale behind these findings can be derived from capital structure theory and financial analysis theory. The results of this study represent a step towards a more comprehensive understanding of the relationship between the macro environment and corporate liquidity, as well as the factors that moderate this relationship from both a microeconomic and a macroeconomic perspective. The findings of this study may also inform policy decisions governing the corporate sector due to a more nuanced understanding of the relationships between macroeconomic factors and corporate liquidity.

show abstract

Section: Literature Review and Research Questionsmentioning

confidence: 99%

Section: Literature Review and Research Questionsmentioning

confidence: 99%

Section: Literature Review and Research Questionsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 3 more Smart Citations

Impact of Macroeconomic Factors on Financial Liquidity of Companies: A Moderation Analysis

Nowicki,

Ratajczak,

Szutowski

2024

Sustainability

View full text Add to dashboard Cite

show abstract

Influence of Macroeconomic Factors on Financial Liquidity of Companies: Evidence from Poland

Nowicki,

Ratajczak,

Szutowski

2024

Risks

View full text Add to dashboard Cite

The objective of this study is to examine the relationship between macroeconomic variables and the financial liquidity of companies. In this context, two main research questions were formulated. Firstly, which macroeconomic variables impact the financial liquidity of companies? Secondly, what is the direction and strength of the influence of these macroeconomic variables on the financial liquidity of companies? This study employed panel data analysis conducted on an unbalanced panel of 5327 Polish enterprises over the period 2003–2021. The primary research method employed was linear regression (pooled OLS) with robust standard errors clustered at the firm level. The main results of this study indicate that (1) the majority of macroeconomic variables, which illustrate the overall efficiency of the economic system (GDP per capita, ratio of foreign trade goods balance to GDP, CPI, and money supply), demonstrate a positive relationship with corporate liquidity; only the consumption-to-GDP ratio exhibits a negative relationship; (2) a positive relationship was observed between the number of building permits for housing and financial liquidity; (3) variables from the informal institutional environment indicate a positive relationship for the employment rate and a negative relationship for the share of the pre-working age population in the overall population; (4) the relationship between the ratio of internal expenditures on research and development to GDP and corporate liquidity is positive. This study addresses limitations of previous research by examining the impact of macroeconomic factors, particularly those from the institutional and technical environment, on corporate financial liquidity.

show abstract

Do selected board governance mechanisms strengthen the link between institutional and macroeconomic variables and the financial flexibility of corporations? Empirical evidence from an emerging economy

Cited by 2 publications

References 73 publications

Impact of Macroeconomic Factors on Financial Liquidity of Companies: A Moderation Analysis

Impact of Macroeconomic Factors on Financial Liquidity of Companies: A Moderation Analysis

Influence of Macroeconomic Factors on Financial Liquidity of Companies: Evidence from Poland

Contact Info

Product

Resources

About