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Financial Flexibility and Corporate Investment: Does Financial Flexibility Affect Sustainability of Firms?

Financial Flexibility and Corporate Investment: Does Financial Flexibility Affect Sustainability of Firms?

Seda Bilyay Erdoğan
Copyright: © 2019 |Pages: 16
ISBN13: 9781522581093|ISBN10: 152258109X|ISBN13 Softcover: 9781522586364|EISBN13: 9781522581109
DOI: 10.4018/978-1-5225-8109-3.ch013
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MLA

Erdoğan, Seda Bilyay. "Financial Flexibility and Corporate Investment: Does Financial Flexibility Affect Sustainability of Firms?." The Circular Economy and Its Implications on Sustainability and the Green Supply Chain, edited by Ulas Akkucuk, IGI Global, 2019, pp. 230-245. https://doi.org/10.4018/978-1-5225-8109-3.ch013

APA

Erdoğan, S. B. (2019). Financial Flexibility and Corporate Investment: Does Financial Flexibility Affect Sustainability of Firms?. In U. Akkucuk (Ed.), The Circular Economy and Its Implications on Sustainability and the Green Supply Chain (pp. 230-245). IGI Global. https://doi.org/10.4018/978-1-5225-8109-3.ch013

Chicago

Erdoğan, Seda Bilyay. "Financial Flexibility and Corporate Investment: Does Financial Flexibility Affect Sustainability of Firms?." In The Circular Economy and Its Implications on Sustainability and the Green Supply Chain, edited by Ulas Akkucuk, 230-245. Hershey, PA: IGI Global, 2019. https://doi.org/10.4018/978-1-5225-8109-3.ch013

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Abstract

This chapter investigates the impact of financial flexibility (FF) on investments, which constitutes the basis for sustainable corporate development. Using a large database of 1,205 firms from three emerging countries in Europe—Poland, Russia and Turkey—for the time period between 2000 and 2016. The authors provide evidence that financial flexibility, achieved through conservative leverage policies, enhances companies' investments and positively contribute to corporate sustainability. Moreover, as the number of years of low leverage kept by firms increase so does the impact of financial flexibility on corporate investment. Besides financial flexibility, internal cash generation capacity of firms, and sales growth also improve the investment capability of firms, improving corporate sustainability. The results support the hypothesis that financial flexibility enhances companies' investment capability, which is an extremely essential tool for firms to have in their businesses.

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