Sources of Corporate Financing and Operating Performance: The effects of strategic ownership and financial restatements

Papadaki, Aphroditi J.; Pavlopoulou-Lelaki, Olga-Chara

doi:10.1016/j.irfa.2021.101732

Cited by 4 publications

(1 citation statement)

References 59 publications

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“…Numerous factors affect the financial performance of construction enterprises, including corporate governance [1][2][3], macro policies [4][5][6], and business operations [7,8]. Financing is the core business activity that determines the financial performance of a company [9], forming the foundation of corporate investment decisions, with financing costs exerting a direct impact on firm financial performance. However, construction enterprises face difficulties in obtaining financing for large-scale and longterm investment projects which normally require significant capital to support project development.…”

Section: Introductionmentioning

confidence: 99%

Enhancing Construction Enterprise Financial Performance through Digital Inclusive Finance: An Insight into Supply Chain Finance

Huang

Zhu

2023

Sustainability

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Digital Inclusive Finance (DIF) is a novel approach that employs digital technology to foster the development of inclusive finance, which can effectively alleviate the financing constraints of enterprises. This paper empirically tests the relationship between DIF and the financial performance of construction enterprises, with a focus of supply chain finance (SCF). The findings indicate that DIF can enhance the financial performance of construction enterprises, and SCF is one of the mechanisms through which DIF affects the financial performance of construction enterprises. Moreover, the cross-sectional analysis reveals that the impact of DIF on financial performance is more pronounced in firms with characteristics of private capital-holding and high operating pressure. This study not only enriches the research perspectives of DIF, but also provides valuable insights for policymakers to formulate effective policies.

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Section: Introductionmentioning

confidence: 99%

Enhancing Construction Enterprise Financial Performance through Digital Inclusive Finance: An Insight into Supply Chain Finance

Huang

Zhu

2023

Sustainability

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Equity financing risk assessment based on PLTS-ER approach in marine ranching from the ecological and circular economy perspectives

et al. 2023

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Balance Sheet Debt Covenants and Seasoned Equity Offerings

Malikov

2024

Int. J. Acc.

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Synopsis The research problem This study examined the effect of having debt contracts that contain balance sheet covenants on the decision to make seasoned equity offerings (SEOs). Motivation Prior studies examined the determinants of equity issuance without considering private debt contracts that contain balance sheet covenants. Generally, firms are not restricted from stock issuance when they have financial debt covenants. This might motivate firms to make SEOs when they are more susceptible to balance sheet debt covenant violations. Making SEOs increases firms’ equity capitals in the short term and, therefore, has the direct effect of improving balance sheet covenants in the current period. This effect motivated this study to examine whether firms are more likely to conduct SEOs when their debt contracts include more-restrictive balance sheet covenants. The test hypothesis The hypothesis of the study is in the null form, which states that balance sheet covenant restrictiveness is unrelated to the probability of conducting SEOs. Target population The target population includes shareholders, debtholders, and firm managers. Adopted methodology Panel data estimation was used, specifically, the fixed effects model. Analyses The empirical analysis was conducted on a unique sample of UK listed firms with private debt covenants that is hand-collected from annual reports. Equity issuance in the sample is based on private placements, which are a common type of SEO in the UK. The restrictiveness of balance sheet-based covenants is defined as the number of balance sheet covenants in a loan contract or the tightness of net worth covenant slack. Findings The results show that balance sheet covenant restrictiveness is positively associated with the probability of conducting SEOs through private placements. The baseline result is robust to the application of a number of the controls often used in the literature, including cash shortage, the use of balance sheet covenants in the previous loan contract, earnings management, and the quality of external governance. It is also robust to excluding the financial crisis period and addressing potential endogeneity concerns using a propensity score-matching procedure. Additionally, further analysis provides some evidence that equity issuance by firms with more-restrictive balance sheet covenants is negatively associated with future operating performance, suggesting that these firms may not efficiently use the raised capital.

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Sources of Corporate Financing and Operating Performance: The effects of strategic ownership and financial restatements

Cited by 4 publications

References 59 publications

Enhancing Construction Enterprise Financial Performance through Digital Inclusive Finance: An Insight into Supply Chain Finance

Enhancing Construction Enterprise Financial Performance through Digital Inclusive Finance: An Insight into Supply Chain Finance

Equity financing risk assessment based on PLTS-ER approach in marine ranching from the ecological and circular economy perspectives

Balance Sheet Debt Covenants and Seasoned Equity Offerings

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