Loan guarantee, management earnings forecasts and cost of debt: evidence from Chinese manufacturing firms

Khan, Muhammad Bilal; Kayani, Umar Nawaz; Saleem, Hummera; Aysan, Ahmet Faruk

doi:10.1080/23322039.2024.2314887

Cogent Economics & Finance

2024

DOI: 10.1080/23322039.2024.2314887

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Loan guarantee, management earnings forecasts and cost of debt: evidence from Chinese manufacturing firms

Muhammad Bilal Khan,

Umar Nawaz Kayani,

Hummera Saleem

et al.

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2024

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Management earnings forecast and technical innovation: the mediating effects of cost of debt

Bilal Khan,

Ezeani,

Saleem

et al. 2024

JAEE

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PurposeThis study examines whether a firm’s management earnings forecasts affect its technical innovation activities. Our study also examines whether the cost of debt plays a mediating role between the management earnings forecasts and the innovation nexus.Design/methodology/approachWe obtained data from 1,032 Chinese non-financial firms listed on the Shanghai and Shenzhen stock markets from 2005 to 2022 (i.e. 18,576 firm-year observations). We used various econometrics techniques, such as Heckman’s (1979) two-stage selection method and two-stage least square, to examine the relationship between management earnings forecasts and the firm’s technical innovation activities.FindingsWe find a positive relationship between management earnings forecasts and the firms' technical innovation. We also find that the cost of debt mediates the relationship between management earnings forecast and technical innovation. Further analysis indicates that frequent earnings forecasts provide incremental information regarding a firm’s future value and cash flows, thus reducing the volatility and uncertainty in cash flow calculations. Our findings are robust to several tests.Originality/valueOur study has implications for policymakers, practitioners and high-level management of Chinese firms, enabling them to understand the relationship between management earnings forecasts and firms' innovation activities.

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Management earnings forecast and technical innovation: the mediating effects of cost of debt

Bilal Khan,

Ezeani,

Saleem

et al. 2024

JAEE

Self Cite

View full text Add to dashboard Cite

show abstract

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Loan guarantee, management earnings forecasts and cost of debt: evidence from Chinese manufacturing firms

Cited by 1 publication

References 102 publications

Management earnings forecast and technical innovation: the mediating effects of cost of debt

Management earnings forecast and technical innovation: the mediating effects of cost of debt

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