Related Links
News
Statistics
| Number of Journals | 25 |
| Number of Issues | 918 |
| Number of Articles | 7,565 |
| Article View | 12,275,710 |
| PDF Download | 8,681,655 |
More Corporate Social Responsibility, Less Leverage Adjustment Speed: a Fact? | ||
| راهبرد مدیریت مالی | ||
| Article 5, Volume 10, Issue 4 - Serial Number 39, January 2023, Pages 103-124 PDF (503.73 K) | ||
| Document Type: Research Paper | ||
| DOI: 10.22051/jfm.2022.37286.2584 | ||
| Authors | ||
| Mohammadreza Abbaszadeh* 1; Mahmood Lari Dastebayaz1; Azam Pouryousof2 | ||
| 1Associate Professor of Accounting, Faculty of Administrative and Economic Sciences, Ferdowsi University of Mashhad, Mashhad, Iran | ||
| 2Assistant Professor of Accounting, Department of Accounting, Payam Noor University, Iran. | ||
| Abstract | ||
| The purpose of this article is to investigate the effect of corporate social responsibility (CSR) on the speed of adjustment of financial leverage. According to various theories such as signaling theory, information asymmetry, dynamic equilibrium theory, etc., companies that have higher transaction costs move to their target lever at a lower speed, or so-called lever adjustment speed. According to these theories, companies that score higher in terms of CSR indicators have the possibility of financing through more leverage and using financial leverage at a lower cost. Therefore, we expect leverage adjustment to be faster in companies that meet CSR requirements. In this study, a sample of 84 companies listed on the Iranian Stock Exchange over a period of 8 years from 2011 to 2018 have been studied. Multivariate regression model based on composite data was used to analyze the data and test the hypotheses. First, the target lever was estimated using a two-stage GMM. Then, the effect of CSR on lever adjustment speed was investigated. The findings of the present study confirm the positive effect of CSR score on lever adjustment speed. In other words, CSR has an impact on financing methods, transaction costs and leverage changes, and the results of the present study support this effect. Hypothesis testing also showed that firm size, leverage level and information asymmetry can affect the CSR relationship and leverage adjustment speed. | ||
| Keywords | ||
| Corporate Social Responsibility; Leverage Adjustment Speed; Information Asymmetry | ||
|
Supplementary Files
|
||
| References | ||
|
Aflatooni, Abbas. Nikbakht, Zahra. (2017), "Study of the effect of disclosure quality and quality of accruals on the speed of adjustment of capital structure", Financial accounting knowledge, Vol 15: 100-85. (In Persian) Antoniou, Antonios, Guney, Yilmaz, Paudyal, Krishna, 2008. The determinants of capital structure: capital market-oriented versus bank-oriented institutions. J. Finance. Quant. Anal. Vol 43: 59–92. Attig, N., Cleary, S., Ghoul, S. (2014). Corporate Legitimacy and Investment–Cash Flow Sensitivity". J Bus Ethics. DOI 10.1007/s10551-013-1693-3. Barclay, M.J. and Smith, C.W. Jr (1999), “The capital structure puzzle: another looks at the evidence”, Journal of Applied Corporate Finance, Vol. 12 (1): pp. 8-20. Bentley, K. A., T. C. Omer, and N. Y. Sharp. 2013. Business strategy, financial reporting irregularities, and audit effort. Contemporary Accounting Research, Vol 30 (2): 780–817. Byoun, S. 2008. How and when do firms adjust their capital structures toward targets? Journal of Finance, 63 (6): 3069-3096. Castro, P. Tascón Fernández, M. T. Amor-Tapia, B. Miguel, A. (2016), “Target leverage and speed of adjustment along the life cycle of European listed firms”, Business Research Quarterly, Vol 19(3): pp. 188-205. Chang, Xin and Xu, Bin and Yang, Yung Chiang, Does Corporate Social Responsibility Facilitate Public Debt Financing? (January 15, 2020). Available at SSRN: https://ssrn.com/abstract=3442970 or http://dx.doi.org/10.2139/ssrn.3442970. Chen, Joseph, Hong, Harrison, Stein, Jeremy C., 2001. Forecasting crashes: trading volume, past returns, and conditional skewness in stock prices. J. Finance. Econ. Vol 61: 345–381. Cho Seong Y., Lee Cheol & Pfeiffer Jr. Ray J. (2013). "Corporate social responsibility performance and information asymmetry". Journal of Accounting and Public Policy. Vol 32: 71-83 Cuong, N. M. 2012. Essays on Corporate Capital Structure and Cash Holdings, University of Manchester. Devos, E. Rahman, S. Tsang, D. (2017), “Debt covenants and the speed of capital structure adjustment”, Journal of Corporate Finance, Vol 45(August): pp. 1-18. Faulkender, M. Flannery, M.J. Hankins, K. Watson, S. Jason, M. (2012), “Cash flows and leverage adjustments”, J. Finance. Econ, Vol 103: 632–646. Fitzgerald, J. and Ryan, J. (2019), “The impact of firm characteristics on speed of adjustment to target leverage: a UK study”, Applied Economics, Vol 51 (3): 315-327. Flannery, M.J. and Hankins, K.W. (2013), “Estimating dynamic panel models in corporate finance”, Journal of Corporate Finance, Vol 19: 1-19. Flannery, M.J., Rangan, K.P. (2006), “Partial adjustment toward target capital structures”, J. Finance. Econ, Vol 79: 469–506. Frank, Murray Z., Goyal, Vidhan K., 2009. Capital structure decisions: which factors are reliably important? Finance. Manag. Vol 38: 1–37. Goldstein, R. Nengjiu, J. Leland, H. (2001), “An EBIT-based model of dynamic capital structure”, J. Bus, Vol 74: 483–512. Hamrouni, A. Boussaada, R. Toumi, N. (2019) "Corporate social responsibility disclosure and debt financing", Journal of Applied Accounting Research, https://doi.org/10.1108/ JAAR-01-2018-0020. Hovakimian, A. Li, G. (2011), “In search of conclusive evidence: how to test for adjustment to target capital structure”, J. Corp. Finance, Vol 17: 33–44. Huang, R. Ritter, J.R. (2009), “Testing theories of capital structure and estimating the speed of adjustment”, Journal of Financial and Quantitative Analysis, Vol 44 (2): 237-271. Hung, Mingyi., Shi Jing & Wang Yonxian. (2013). "The Effect of Mandatory CSR Disclosure on Information Asymmetry: Evidence from a Quasi-Natural Experiment in China". http://www.ssrn.com. Jung, H. W. Yn, J. Zeng, Q. (2020), “Leverage Dynamics under Segmented Equity and Debt Markets”, Available at SSRN: https://ssrn.com/abstract=3528729 . Lanis, R., and G. Richardson. 2015. Is corporate social responsibility performance associated with tax avoidance? Journal of Business Ethics, Vol 127: 439–457. http://dx.doi.org/10.1007/s10551-014-2052-8 Li, W. Wu, C. Xu, L. Tang, Q. (2017), “Bank connections and the speed of leverage adjustment: evidence from China’s listed firms”, Accounting & Finance, Vol 57 (5): 1349-1381. Leary, Mark T., Roberts, Michael R., 2005. Do firms rebalan | ||
|
Statistics Article View: 716 PDF Download: 316 |
||
