Firm leverage and investment decisions in an emerging market

Umutlu, Mehmet

doi:10.1007/s11135-009-9250-y

Cited by 22 publications

(16 citation statements)

References 13 publications

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“…Butnotably in our study, it is found that cash flows have no significant influence on investment even though the sign of the coefficients is positive. Our findings are in line with previous studies (Lang et al, 1996;Aivazian et al, 2005;Odit andChittoo, 2008;Umutlu, 2010;Kannadhasan, 2014).…”

Section: Influence Of Leverage and Growth Opportunities On Investmentsupporting

confidence: 94%

“…At the company level, debt has both positive and negative implications. Debt component of financial structure safeguards from tax and increases the valuation of the firm but at the same time creates the problem of bankruptcy (Grossman and Hart, 1982;Umutlu, 2010).Proliferation in leverage ratio has negative impact on stock price of the firm as higher leverage ratio constrains the firm in getting more funds and restricts the future investment prospects. The adverse association between leverage and stock prices is strong in highly leveraged firms as compared to low leveraged firms, as latter face higher default risk.…”

Section: Review Of Literaturementioning

confidence: 99%

“…There are studies (Aivazian et al, 2005;Odit andChittoo, 2008;Umutlu, 2010) that have initially applied pooled regression while examining leverage and investmentrelationship. In pooled data, there is time series of cross-section but the observations in the cross-section do not necessarily remain the same over time.Pooling makes sense where the data is longitudinal with cross-section and randomly sampled.…”

Section: Leverage and Investmentmentioning

confidence: 99%

See 2 more Smart Citations

Does Leverage Influence Firms' Investment Decisions? The Case of BSE 500 Index Companies

Kumar¹,

Verma²,

Rai³

2019

SJCC

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The present paper analyses the impact of leverage on investment for BSE 500 index Indian companies excluding the banking and financial companies. The empirical methodology involves application of random effects and fixed effects models on panel data with 320 cross-sections over a period of 17 years with 5440 observations. We find that Hausman test fixed effects model is appropriate and it has been able to capture significant negative association between investment and leverage for both measures, namely, total leverage and long-term leverage. All the other coefficients except cash flows are significant but the coefficient values are quite low. Therefore, the study applies Wald test wherein all the coefficients are significantly different from zero. Sales, firm size and Tobin's Q have positive whereas firm age has negative association with investment. The association between investment and leverage for low and high growth opportunities firms has been examined using a dummy variable and the results indicate that there is positive association between these variables for high growth companies.

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Section: Influence Of Leverage and Growth Opportunities On Investmentsupporting

confidence: 94%

Section: Review Of Literaturementioning

confidence: 99%

Section: Leverage and Investmentmentioning

confidence: 99%

See 1 more Smart Citation

Does Leverage Influence Firms' Investment Decisions? The Case of BSE 500 Index Companies

Kumar¹,

Verma²,

Rai³

2019

SJCC

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“…On average, this literature shows that stock price positively impacts firms' investment levels. Some of these papers include Aivazian et al (2005), Hanazaki and Liu (2007), Yuan and Motohashi (2008), Bokpin and Onumah (2009), Umutlu (2010), Ma'in and Ismail (2011), Geng and N'Diaye (2012, and Wang et al (2013).…”

Section: The Issue Of Stock Market Liquidity: Literature Reviewmentioning

confidence: 99%

The 2008 Global Financial Crisis: The Case of a Market with Consistent Losses Ever Since

Yaseen¹,

Omet²,

Abdel-Halim³

2015

EJBM

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Following the 2008 global financial crisis, and in common with many stock markets around the world, the Amman Securities Exchange (ASE) experienced some heavy losses. However, what makes the Jordanian market probably different is its inability to recover. The weighted price index fell from 7519.3 points in 2007 to 5520.1 points in 2009, to 4593.9 points in 2012, and to 4336.7 points by the end of 2013 respectively. With a statutory minimum tick which is equal to one pence, this observation has some serious implications to the liquidity cost that prevails in the Jordanian capital market, and the cost of financing listed firms. The primary aim of this research paper is to examine the impact of the stock market crash in Jordan on liquidity cost. Based on a total number of 108 listed stocks and daily data during the years 2007 and 2009, the empirical results indicate that liquidity cost on the Jordanian capital market is high. In addition, the results show that the 2009 stock market crash has led to a substantial increase in liquidity cost. In other words, the market must consider a number of remedial measures to improve its' operational efficiency.

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“…(2009) Türkiye'de 2000-2006 döneminde regresyon ve korelasyon analizi kullanarak yapmış oldukları çalışmada, kaldıracın firma yatırımları üzerinde negatif etkiye sahip olduğunu, düşük büyüme fırsatlarına sahip firmalarda ilişkinin istatistiksel olarak anlamlı olduğunu ifade etmişlerdir. Umutlu (2010) Türkiye'de 1993-2002 döneminde tek yönlü hata bileşen modeline göre sadece düşük büyüme fırsatlarına sahip olan firmalarda kaldıracın yatırımlar üzerinde etkili olduğunu, iki yönlü hata bileşen modeline göre ise bu ilişkinin kaybolduğunu ifade etmişti. Bao (2010), Çin'deki iki sermaye piyasasına kayıtlı firmalar üzerinde 1992-2009 yılları verilerini kullanarak yaptığı OLS analizleri sonucunda, tüm firmalar baz alındığında finansal kaldıraç ve yatırım ilişkisinin istatistiki olarak anlamlı ve negatif olduğunu ortaya koyarken, sektörler arasında ayrıştırma yapıldığında, imalat, ticaret ve finans sektörü için söz konusu ilişkinin istatistiki olarak anlamlı olmadığını ifade etmiştir.…”

Section: Li̇teratür Taramasiunclassified

Yatırım, Kaldıraç ve Büyüme Fırsatları: BIST İmalat Sektörü Firmalarında Bir Uygulama

Dinçergök¹

2015

Muhasebe Ve Finansman Dergisi

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Firm leverage and investment decisions in an emerging market

Abstract: Leverage, Investment, Panel data, Emerging markets,

Cited by 22 publications

References 13 publications

Does Leverage Influence Firms' Investment Decisions? The Case of BSE 500 Index Companies

Does Leverage Influence Firms' Investment Decisions? The Case of BSE 500 Index Companies

The 2008 Global Financial Crisis: The Case of a Market with Consistent Losses Ever Since

Yatırım, Kaldıraç ve Büyüme Fırsatları: BIST İmalat Sektörü Firmalarında Bir Uygulama

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