Inventory Behavior and Financial Constraints: Theory and Evidence

Dasgupta, Sudipto; Li, Erica X. N.; Yan, Dong

doi:10.1093/rfs/hhy064

Cited by 45 publications

(31 citation statements)

References 36 publications

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“…There have been new challenges in the forestry sector in marketing (Hansen and Juslin, 2005) with which business finance and liquidity has correlations in terms of collection of accounts receivable and sales policies on cash or credit. Nonetheless, financial difficulties may force businesses to increase incompetent liquidity from inventories (Dasgupta et al, 2014). Figure 1 reports the independent variables of the study versus the dependent STI which has had become more dependent on accounts receivable by 2010, and on cash and short-term bank credit by 2014.…”

Section: Resultsmentioning

confidence: 99%

The effects of liquidity on inventory: Evidence form forestry subsector in Turkey

Acikgoz

Demirkol

Apak³

2018

Eurasian Journal of Forest Science

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As a part of Agriculture sector, forestry subsector is the main provider for the forestry products industry which has been neglected in terms of short-term liabilities and liquidity analysis. Liquidity is a function of the liabilities of the businesses in the short-run and it is expected to consist much of trade credit rather than bank credit. This study tries to reveal the long-term dependence of the short-term inventories on cash and cash equivalents, short-term bank credit used, and short-term accounts receivable as a percentage of short-term liabilities in the forestry products subsector in Turkey. We analyze the sectoral three years averages of aggregate balance sheet data in the long-term (1998-2016) and we depict that inventories have correlations with cash and cash equivalents, short-term bank credit and short-term accounts receivable and we also reveal that the sector's short-term liabilities have had a diminishing trend in the very long-run. After introducing the model, we have run the linear regression of the model and we share the robust results of the tests. The findings give evidence that inventories, which are in fact the most illiquid part of the current assets, have bank credit dependency as much as accounts receivable though decreasing liabilities in the short-term. We therefore offer suggestions on the results for the forestry products subsector so as to hedge against the potentially adverse liquidity conditions in the near future. Each precaution held for a subsector will therefore help the sustainability of the forestry and the agriculture sector as a whole and it will also contribute as an example therein integrated especially with the marketing strategies.

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Section: Resultsmentioning

confidence: 99%

The effects of liquidity on inventory: Evidence form forestry subsector in Turkey

Acikgoz

Demirkol

Apak³

2018

Eurasian Journal of Forest Science

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“…This is well documented in the literature on CEOs’ concerns about the threat of turnover (e.g. Dasgupta et al, ; Dikolli, Mayew, & Nanda, ; Jenter & Kanaan, ; Kaplan & Minton, ; Murphy, ). The threat of turnover can come from multiple sources, one of which is the firm's bad market performance (e.g.…”

Section: Hypothesis Developmentmentioning

confidence: 66%

“…The threat of turnover can come from multiple sources, one of which is the firm's bad market performance (e.g. Dasgupta et al, ). That is, a firm's bad market performance leads to a high turnover threat for its CEOs.…”

Section: Hypothesis Developmentmentioning

confidence: 99%

“…Consequently, peer firms encounter more competitive pressure, and the corresponding threat of CEO turnover in peer firms increases (e.g. Dasgupta, Li, & Wang ). Due to the increasing threat of turnover, the peer firms’ CEOs also increase their efforts in running their firms more efficiently and increasing their firms’ product differentiation.…”

Section: Introductionmentioning

confidence: 99%

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Positive externalities of CEO delta

Feng¹,

Jia

2018

Euro Fin Management

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Increases in delta incentives are dramatic for a small group of firms (leader firms) but negligible for the majority. We show that leader firms have larger market capitalization and higher irreversibility, and are in industries with negative shocks. When leader firms experience substantial growth in delta incentives, industry peers experience positive abnormal returns and abnormal improvement in fundamentals despite no significant change in delta. Further, we provide evidence that abnormal returns are induced by peer CEOs' extra efforts in response to the increasing competitive pressure caused by leader firms. To mitigate their competitive pressure and turnover threat, peer CEOs allocate their extra efforts to firms' operating efficiency and product differentiation. KEYWORDSCEO delta incentive, incentive spillover, positive externality JEL CLASSIFICATIONS G14, G34FENG AND JIA 594

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“…Researchers have extensively used these characteristics to identify the financial constraints. See, for example,Kashyap, Lamont and Stein (1994), Petersen (1994, 1998) andDasgupta, Li and Yan (2019) …”

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confidence: 99%

Three Essays in Macroeconomics with a Focus on Conﬁdence, Investment and the Business Cycle

Upadhayaya¹

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This thesis includes three essays on empirical macroeconomics. The first chapter studies how informative business confidence is for investment growth, using US business confidence survey data for 1955Q1-2016Q4. Our main findings are: (i) business confidence has predictive ability for investment growth; (ii) remarkably, business confidence has superior forecasting power, relative to conventional predictors, for investment downturns over 1-3 quarter forecast horizons and for the sign of investment growth over a 2-quarter forecast horizon; and (iii) exogenous shifts in business confidence reflect short-lived non-fundamental factors, consistent with the 'animal spirits' view of investment. Our findings have implications for improving investment forecasts, developing new business cycle models, and studying the role of social and psychological factors determining investment growth. The second chapter explores the hypothesis that consumer confidence drives household investment. We use a survey-based consumer confidence measure in structural VAR analysis to identify a confidence shock. Household investment increases and follows a persistent hump-shaped response after a positive confidence shock. The responses of total hours-worked and output are also highly persistent. Confidence First and foremost, I would like to express my sincere gratitude to my main advisor Professor Hashmat Khan, Carleton University for his invaluable guidance, support and encouragement throughout the dissertation process. He taught me to be determined and motivated in following a research project to its end. Without his advice, patience and knowledge, I would have not been able to complete the dissertation.

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Inventory Behavior and Financial Constraints: Theory and Evidence

Cited by 45 publications

References 36 publications

The effects of liquidity on inventory: Evidence form forestry subsector in Turkey

The effects of liquidity on inventory: Evidence form forestry subsector in Turkey

Positive externalities of CEO delta

Three Essays in Macroeconomics with a Focus on Conﬁdence, Investment and the Business Cycle

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