Capital Structure Decisions and Corporate Performance: Does Firm’s Profitability Matter?

This study aims to investigate the relationship between financing decisions and firm performance. It particularly investigates the heterogeneous effects of capital structure ratios on financial profitability. The study employs the Quantile regression methodology on a sample of 120 non-financial companies listed on Tadawul stock exchange during the period 2017–2020. Financial performance was measured using return on assets, return on equities and Tobin’s Q variables in order to assess accounting and market performance. Data on the various variables is obtained from the companies’ annual reports. Quantile regression results show that debts to equity ratio hamper firms’ performance where as equity financing ratio increases business profitability. Additionally, findings demonstrate that this relationship is nonlinear. Particularly, a debt to equity ratio has a greater negative effect on performance of high-profitable firms. However, the positive effect of the equity financing ratio seems to be higher in high profitable companies than low ones. These results would help managers of non financial firms regarding optimal capital structure decisions. Indeed, managers of non-financial firms could use results of this study as a benchmark to make efficient decisions related to the structure of the capital such as reducing the proportion of debts in the capital and increasing the weight of equity financing. Particularly, enterprises in the early stages of development, with lower profits reflected in return on assets, return on equities, and Tobin’s Q should carefully avoid debt, whereas firms with big earnings are encouraged to raise their capital by issuing new shares in the financial market

The Role of CSR in Promoting Energy-Specific Pro-Environmental Behavior among Hotel Employees

Mitigating environmental crises requires efforts to reduce carbon emission at every level and segment of an economy. In this respect, the energy sector is blamed for increasing greenhouse gas emissions (GHG) throughout the globe. Specifically, it was specified that electrical energy contributes to 35% of the world’s GHG emissions. Without a doubt, the topics related to clean and green energies remained a part of academic discussion; however, a critical knowledge gap exists in most studies. That is, most of the prior literature focused only on the production side (supply side) of electrical energy, neglecting the consumption side (consumption at the level of individuals). Given that a significant amount of electricity has been consumed by the individuals in buildings (homes, offices, or others) for heating and cooling purposes, it is important to promote a target-specific (energy-specific) pro-environmental behavior (TSPEB) of individuals. However, such a debate did not receive any significant attention previously. Further, psychological factors such as employees’ environmental commitment (EEC) and green self-efficacy (GSE) were identified as critical mediators to drive different employees’ outcomes, but the mediating effect of EEC and GSE was not tested earlier to foster TSPEB in a CSR framework. The data for the current work were collected from employees of different hotels in a developing country by employing a survey strategy (n = 383). The structural equation modeling was used to analyze the data, which confirmed that hospitality employees’ CSR perceptions could improve TSPEB. The statistical results also confirmed the significant mediating effects of EEC and GSE. The finding of this study will help the hospitality sector to improve its efforts for de-carbonization by improving the energy consumption behavior of employees as an outcome of CSR

Is greenness an optimal hedge for sectoral stock indices?

The paper examines the role of green bonds in hedging the risk against industry portfolios and other major asset classes. It mainly focuses on how the greenness of the portfolio reduces the risk of green portfolios containing green bonds and 11 industrial sectors and major financial assets from October 2014 to November 2021. The results show that the risk of green portfolios is lower than that of unhedged (non-green) portfolios. Furthermore, our study provides evidence that the hedging effectiveness of green portfolios improves during the COVID–19 pandemic. Finally, the results show that investors across the risk aversion spectrum gain higher utility after considering the transaction costs while investing in green portfolios. These results are new additions to prior literature that can interest investors, fund managers, and policymakers

The Role of CSR in Promoting Energy-Specific Pro-Environmental Behavior among Hotel Employees

Mitigating environmental crises requires efforts to reduce carbon emission at every level and segment of an economy. In this respect, the energy sector is blamed for increasing greenhouse gas emissions (GHG) throughout the globe. Specifically, it was specified that electrical energy contributes to 35% of the world’s GHG emissions. Without a doubt, the topics related to clean and green energies remained a part of academic discussion; however, a critical knowledge gap exists in most studies. That is, most of the prior literature focused only on the production side (supply side) of electrical energy, neglecting the consumption side (consumption at the level of individuals). Given that a significant amount of electricity has been consumed by the individuals in buildings (homes, offices, or others) for heating and cooling purposes, it is important to promote a target-specific (energy-specific) pro-environmental behavior (TSPEB) of individuals. However, such a debate did not receive any significant attention previously. Further, psychological factors such as employees’ environmental commitment (EEC) and green self-efficacy (GSE) were identified as critical mediators to drive different employees’ outcomes, but the mediating effect of EEC and GSE was not tested earlier to foster TSPEB in a CSR framework. The data for the current work were collected from employees of different hotels in a developing country by employing a survey strategy (n = 383). The structural equation modeling was used to analyze the data, which confirmed that hospitality employees’ CSR perceptions could improve TSPEB. The statistical results also confirmed the significant mediating effects of EEC and GSE. The finding of this study will help the hospitality sector to improve its efforts for de-carbonization by improving the energy consumption behavior of employees as an outcome of CSR

Do Women in Top Management Enhance Firm Financial Sustainability? Evidence from a Large Sample of EmergingEconomies

1100-1108The fifth of the 17 Sustainable Development Goals (SDGs) included in the Sustainable Development Agenda is gender equality. Despite advances in recognizing women's contributions in many areas of life, society has yet to fully appreciate women's positions and influence in business. Financial sustainability, on the other hand, has attracted scholarly attention for several decades as a crucial condition for sustainable growth. Therefore, the present study investigates the influence of women in top management on business financial sustainability. It uses a sample of 55158 firms from 82 developing countries from 2015 to 2022, World Bank Enterprise surveys, in order to examine whether firms’ gender diversity influences financial sustainability. Findings document that firms with females’ top managers are financially more sustainable than their male-led counterparts. Results also indicate that the effect of female in top management on firm sustainability varies between regions. The study's findings give critical management and policy insights into corporate financial sustainability. Gender diversity should be considered by managers and policymakers as a strategy for firms to achieve financial sustainability and ultimately to contribute to the sustainable development agenda

Corporate Sustainability and Firm Performance: The Moderating Role of CEO Education and Tenure

The aim of this research is to investigate the impact of corporate sustainability on a firm’s financial performance. It particularly investigates the effectiveness of CEO characteristics as a moderator on corporate social responsibility (CSR)–firm financial performance linkages. This study is unique since it sheds new insight on how a CEO’s attributes may influence the relationship between CSR and financial performance. The evidence so far is sparse, since previous studies have investigated the direct effects of CEO or CSR on corporate performance. We look at a sample of 34 Saudi publicly traded companies from 2015 to 2020. Data on financial, accounting, and sustainability variables are collected from the Bloomberg database and the annual reports of the selected companies. Findings reveal that firms engaged in corporate social responsibility practices tend to have better financial performance. More importantly, it is found that in the moderation relationship of firm financial performance with corporate sustainability, CEO education and tenure act as positive moderators. In particular, results indicate that CEOs having an engineering- or a science-related degree positively affect the relationship between CSR and business performance. The relationship is further enhanced when the CEO holds an MBA. Finally, longer tenured CEOs play a positively moderating role in the association between firm performance and CSR

Development and financial systems structure : Studying the role of democracy and democratic transition

La présente thèse analyse la relation entre le régime politique et le système financier. Plus précisément, les investigations empiriques menées dans le cadre de cette thèse visent à étudier le rôle de la démocratie dans le développement et la structure des systèmes financiers. Pour cela, nous procédons en trois étapes. Dans un premier temps, nous examinons l’impact de l’événement de la transition démocratique sur le développement du secteur financier des pays qui sont passés vers un régime démocratique. Ainsi, après avoir défini ce qu’on entend par un système financier développé et mis en évidence les facteurs qui déterminent son évolution, nous montrons que la transition vers un régime démocratique accroît la taille du système financier à moyen et long terme. En revanche, cette dernière n’aura pas d’effet à court terme (chapitre 1). Puis, dans un second temps, nous nous intéressons aux facteurs qui conditionnent l’efficacité de ce régime politique. En effet, étant donné que les échanges d’arguments théoriques témoignent d’un manque de consensus autour de la relation entre la démocratie et le développement, il nous semble que cette question peut s’appréhender autrement à travers la prise en compte du rôle du cadre institutionnel dans l’analyse de cette relation (chapitre 2). Ainsi, nous montrons que la démocratie contribuerait au développement du secteur financier en présence de bonnes institutions, tandis qu’elle briderait son évolution lorsque la qualité des institutions se trouve en deçà d’un certain seuil. Enfin, nous tentons d’élargir la littérature existante en abordant la question du rôle de la démocratie dans l’explication de l’architecture des systèmes financiers (chapitre 3). Après avoir passé en revue les principaux facteurs qui influencent la forme du système financier, nous montrons que le régime politique constitue un facteur déterminant de la structure financière des économies émergentes. Plus précisément, nous trouvons que plus de démocratie réduit la part des financements intermédiés et élargit la place des marchés boursiers.This thesis analyzes the relationship between the political regime and the financial system. Specifically, the empirical research conducted throughout this thesis aims to study the role of democracy in the development and structure of financial systems. To this end, we proceed in three steps. First, we examine the impact of the event of the democratic transition in the financial development of the countries that have moved towards democracy. Thus, having defined what is meant by a developed financial system and highlighted the factors that determine its evolution, we show that the transition to a democratic regime increases the size of the financial system in the medium and long term. However, it will have no short-term effect (chapter 1). In a second step, we focus on the factors that influence the effectiveness of this political regime. Indeed, since the exchange of theoretical arguments reflect a lack of consensus on the relationship between democracy and development, it seems important to otherwise understand this issue through the consideration of the role of the institutional environment in the analysis of this relationship (chapter 2). Thus, we show that democracy contributes to the development of the financial sector in the presence of good institutions while it hinders its development where institutional quality is below a certain threshold. Finally, we try to extend the existing literature by questioning the role of democracy in the explanation of the financial system architecture (chapter 3). Having reviewed the main factors influencing the shape of the financial system, we show that the political system is a determining factor in the financial structure of emerging economies. More precisely, we find that further democracy reduces the share of intermediated financing and expands the role of stock markets

Capital Structure Decisions and Corporate Performance: Does Firm’s Profitability Matter?

859-865This study aims to investigate the relationship between financing decisions and firm performance. It particularly investigates the heterogeneous effects of capital structure ratios on financial profitability. The study employs the Quantile regression methodology on a sample of 120 non-financial companies listed on Tadawul stock exchange during the period 2017–2020. Financial performance was measured using return on assets, return on equities and Tobin’s Q variables in order to assess accounting and market performance. Data on the various variables is obtained from the companies’ annual reports. Quantile regression results show that debts to equity ratio hamper firms’ performance where as equity financing ratio increases business profitability. Additionally, findings demonstrate that this relationship is nonlinear. Particularly, a debt to equity ratio has a greater negative effect on performance of high-profitable firms. However, the positive effect of the equity financing ratio seems to be higher in high profitable companies than low ones. These results would help managers of non financial firms regarding optimal capital structure decisions. Indeed, managers of non-financial firms could use results of this study as a benchmark to make efficient decisions related to the structure of the capital such as reducing the proportion of debts in the capital and increasing the weight of equity financing. Particularly, enterprises in the early stages of development, with lower profits reflected in return on assets, return on equities, and Tobin’s Q should carefully avoid debt, whereas firms with big earnings are encouraged to raise their capital by issuing new shares in the financial market

International tax planning techniques: a review of the literature

International audiencePurpose This paper aims to understand the international practices of tax planning. International companies choose their capital structure according to differences in international taxation, in order to minimize the tax burden of the whole company group. This paper reviews the literature that deals with international tax avoidance techniques by highlighting tax planning measurements in the empirical literature. The methodology used is the narrative approach of literature review, which consists on assembling and synthesizing previously published research. The paper concludes that there are several approaches of international tax planning including transfers of revenues by geographical area, redevelopment of the company, haven and loopholes in tax legislation. Moreover, finding more precise measures of tax planning techniques would be of great value to studies in this respect. Design/methodology/approach The authors follow the guideline provided by Templier and Pare (2015) in order to select the type of the literature review to use in this paper. Accordingly, this paper employs the narrative approach of literature review, which consists on assembling and synthesizing previously published research on international tax planning. This narrative review will serve as a starting point for future investigations and research developments. The authors rely on a logic of configuration in order to analyze data. This logic consists on addressing then organizing various aspects of international practices of tax planning. Findings The paper concludes that there are many aspects of international tax planning that need to be covered by future researchers, especially finding more precise measures of tax planning techniques would be of great value to studies in this respect. Research limitations/implications The literature survey reveals the following issues. First, few studies have been conducted to date. Second, several approaches remain unexplored, and studies rely only on surveys' results collected from the annual report of companies (microeconomics variables), while macroeconomic variables can better explain the phenomenon of international tax planning. In this context, studies containing proposals to estimate more accurate international companies' tax planning techniques would also be welcome. Previous literature supposes premises on this issue th:at limit the accurateness of the analysis. Particularly, empirical literature is short of the proper measurement to evaluate corporate tax avoidance. This would explain the various interpretations of research findings. Hence, finding more precise measures of tax planning techniques would be of great value to studies in this respect. Practical implications This literature survey highlights recent studies dealing with tax planning theories within the framework of corporate governance. This theoretical framework particularly specifies which key variables are the most suitable for measuring tax planning methods and highlights the need to examine how those key variables might differ and under what circumstances. In addition, it underlines limits on tax planning measurements by addressing the comparison of the empirical measurements. Originality/value The paper contributes to the literature on internal tax planning in several ways. First, this study is unique in that it constitutes the only literature review that provides a comprehensive overview of research on international tax planning. Especially, it extends previous studies by considering the specific new trend of empirical literature dealing with the techniques of international tax planning. This literature review identifies two categories of tax planning approaches including techniques related to company internal management practices and international tax planning techniques. In addition, the literature survey helps to determine various strategies used by multinationals for tax planning, through an in-depth review of the existing studies. Finally, it provides researchers with a starting point to further explore issues related to tax avoidance techniques