2019
DOI: 10.4018/978-1-5225-8109-3.ch013
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Financial Flexibility and Corporate Investment

Abstract: This chapter investigates the impact of financial flexibility (FF) on investments, which constitutes the basis for sustainable corporate development. Using a large database of 1,205 firms from three emerging countries in Europe—Poland, Russia and Turkey—for the time period between 2000 and 2016. The authors provide evidence that financial flexibility, achieved through conservative leverage policies, enhances companies' investments and positively contribute to corporate sustainability. Moreover, as the number o… Show more

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Cited by 4 publications
(3 citation statements)
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“…In terms of financial performance, excessive financial flexibility might result in overly risky investment decisions or a lack of necessary prudence. This conclusion not only broadens the empirical study of Erdo and Bilyay (2019) on the positive impacts of financial flexibility in Poland, Russia, and Turkey [ 22 ] but also provides solid support for the hypothesis proposed in this study. In terms of environmental and social responsibility performance, excessive financial flexibility may lead to a lack of focus and efficiency in investments.…”
Section: Conclusion and Insightssupporting
confidence: 85%
See 1 more Smart Citation
“…In terms of financial performance, excessive financial flexibility might result in overly risky investment decisions or a lack of necessary prudence. This conclusion not only broadens the empirical study of Erdo and Bilyay (2019) on the positive impacts of financial flexibility in Poland, Russia, and Turkey [ 22 ] but also provides solid support for the hypothesis proposed in this study. In terms of environmental and social responsibility performance, excessive financial flexibility may lead to a lack of focus and efficiency in investments.…”
Section: Conclusion and Insightssupporting
confidence: 85%
“…Specifically, companies with higher financial flexibility are more likely to provide financial support for environmental innovation and social responsibility projects, maintaining these critical investments even during economically tight periods [ 21 ]. In terms of financial performance, financial flexibility not only allows companies to quickly seize market opportunities for investment but also to rapidly adjust in unfavorable market conditions, thus minimizing losses [ 22 ]. A concrete manifestation of this flexibility is the ability of companies to rapidly invest in efficient production technologies, enhancing efficiency and profits [ 23 ].…”
Section: Theoretical Basis and Research Hypothesismentioning
confidence: 99%
“…managers, confirming the findings of the surveys stated above. Financial flexibility is significant for companies, not only because flexible companies have the capability to evade financial distress and its associated costs in a negative shock situation, but also because companies can fund investments when profitable opportunities arise, mitigating complications of underinvestment that could arise from restricted access to capital (Erdogan, 2019).…”
mentioning
confidence: 99%