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Financial Flexibility as an Investment Efficiency Factor in Asian Companies

Gadjah Mada International Journal of Business (GamaIJB) · Vol. 20 No. 2 (2018) · pp. 137–164

DOI
10.22146/gamaijb.26239
ISSN
2338-7238, 1411-1128
Published
2018-08-30
Publisher
Master in Management, Faculty of Economics and Business, Universitas Gadjah Mada
Language
eng
License
creativecommons.org/licenses/by-sa/4.0

Abstract

This study explores the impact of a company’s financial flexibility on the effectiveness of its investments.The number of companies that have financial flexibility was calculated with the application of thespare debt capacity method. The research identifies the impact of financial flexibility on investment activity and on the level of suboptimal investments. The data from 1,736 companies in theAsian region, during the 2005-2015time period, are presented. The Asian region has unique institutional, economic and commercial environments that present a great basis for this paper. The results of the research reveal that financially flexible companies spend more on their investment expenditure and conduct more effective investment policiesby reducing the level of over- and underinvestment. Financial flexibility helps companies to make effective investments during a crisis period, but the difference in the flexibility between developed and developing countries and between large and small companies was not observed.

Keywords

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  • National Research University Higher School of Economics
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Metadata source: OAI-PMH (metadata jurnal) https://journal.ugm.ac.id/gamaijb/oai, first harvested 28 Okt 2026, last seen 28 Okt 2026.
Original metadata (oai_dc) 
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	<dc:title xml:lang="en-US">Financial Flexibility as an Investment Efficiency Factor  in Asian Companies</dc:title>
	<dc:creator>Cherkasova, Victoria</dc:creator>
	<dc:creator>Kuzmin, Evgeny</dc:creator>
	<dc:subject xml:lang="en-US">Financial management; Capital budgeting; Investment analysis</dc:subject>
	<dc:subject xml:lang="en-US">financial flexibility, investment expenditure, spare debt capacity, suboptimal investment, financial leverage</dc:subject>
	<dc:subject xml:lang="en-US">G01, G31, G32</dc:subject>
	<dc:description xml:lang="en-US">This study explores the impact of a company’s financial flexibility on the effectiveness of its investments.The number of companies that have financial flexibility was calculated with the application of thespare debt capacity method. The research identifies the impact of financial flexibility on investment activity and on the level of suboptimal investments. The data from 1,736 companies in theAsian region, during the 2005-2015time period, are presented. The Asian region has unique institutional, economic and commercial environments that present a great basis for this paper. The results of the research reveal that financially flexible companies spend more on their investment expenditure and conduct more effective investment policiesby reducing the level of over- and underinvestment. Financial flexibility helps companies to make effective investments during a crisis period, but the difference in the flexibility between developed and developing countries and between large and small companies was not observed.</dc:description>
	<dc:publisher xml:lang="en-US">Master in Management, Faculty of Economics and Business, Universitas Gadjah Mada</dc:publisher>
	<dc:contributor xml:lang="en-US">Irina V. Ivashkovskaya, Corporate Finance Center, Faculty of Economic Sciences, National Research University Higher School of Economics</dc:contributor>
	<dc:date>2018-08-30</dc:date>
	<dc:type>info:eu-repo/semantics/article</dc:type>
	<dc:type>info:eu-repo/semantics/publishedVersion</dc:type>
	<dc:type xml:lang="en-US">Peer-reviewed Article</dc:type>
	<dc:format>application/pdf</dc:format>
	<dc:identifier>https://journal.ugm.ac.id/gamaijb/article/view/26239</dc:identifier>
	<dc:identifier>10.22146/gamaijb.26239</dc:identifier>
	<dc:source xml:lang="en-US">Gadjah Mada International Journal of Business; Vol 20, No 2 (2018): May-August; 137-164</dc:source>
	<dc:source>2338-7238</dc:source>
	<dc:source>1411-1128</dc:source>
	<dc:language>eng</dc:language>
	<dc:relation>https://journal.ugm.ac.id/gamaijb/article/view/26239/22101</dc:relation>
	<dc:rights xml:lang="en-US">Copyright (c) 2018 Gadjah Mada International Journal of Business</dc:rights>
	<dc:rights xml:lang="en-US">http://creativecommons.org/licenses/by-sa/4.0</dc:rights>
</oai_dc:dc>