Meta-analysis of the impact of financial constraints on firm performance

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dc.citation.issue2
dc.citation.volume63
dc.contributor.authorAhamed FT
dc.contributor.authorHouqe MN
dc.contributor.authorvan Zijl T
dc.date.accessioned2024-02-14T02:15:42Z
dc.date.accessioned2024-07-25T06:41:10Z
dc.date.available2022-02-09
dc.date.available2024-02-14T02:15:42Z
dc.date.available2024-07-25T06:41:10Z
dc.date.issued2023-06-17
dc.description.abstractA large number of studies have investigated the relationship between financial constraints and firm performance. However, due to heterogeneity in study design factors, such as choice of measures for constraints and performance, control variables, estimation methods and study sample, the empirical results have been mixed. To mitigate this issue, this paper reports a meta-analysis of the association between financial constraints and firm performance. To assess the overall direction of the relationship and the sources of heterogeneity, we apply meta-analytic methods to 26 studies (providing 189 effect sizes) on the association between financial constraints and financial performance in listed companies. Our result shows that, overall, there is a positive relationship between financial constraints and firm performance. In addition, meta-regression results suggest that return on assets (ROA) and return on equity (ROE) as measures of financial performance, and external finance and size as measures of financial constraints, have a significant negative impact on the relationship between financial constraints and firm performance relative to the mean impact on effect size. Similarly, all of North America and Asia as regional differences, control of size and corporate governance as control variables, and journal quality as strength of results, also have a significant negative impact. On the other hand, market value as a measure of financial performance, and the Whited & Wu index as a measure of financial constraints, have significant positive impact relative to the mean impact. Similarly, cross-country and Europe as regional differences, and publication status as strength of results, all have significant positive impact. Given that firm performance is of fundamental importance to investors, this study therefore helps researchers and policymakers to understand the variation in the empirical results on the impact of financial constraints.
dc.description.confidentialfalse
dc.edition.editionJune 2023
dc.format.pagination1671-1707
dc.identifier.author-urlhttp://gateway.webofknowledge.com/gateway/Gateway.cgi?GWVersion=2&SrcApp=PARTNER_APP&SrcAuth=LinksAMR&KeyUT=WOS:000753262300001&DestLinkType=FullRecord&DestApp=ALL_WOS&UsrCustomerID=c5bb3b2499afac691c2e3c1a83ef6fef
dc.identifier.citationAhamed FT, Houqe MN, van Zijl T. (2023). Meta-analysis of the impact of financial constraints on firm performance. Accounting and Finance. 63. 2. (pp. 1671-1707).
dc.identifier.doi10.1111/acfi.12923
dc.identifier.eissn1467-629X
dc.identifier.elements-typejournal-article
dc.identifier.issn0810-5391
dc.identifier.numberARTN e12923
dc.identifier.urihttps://mro.massey.ac.nz/handle/10179/70678
dc.languageEnglish
dc.publisherJohn Wiley and Sons Australia, Ltd on behalf of Accounting and Finance Association of Australia and New Zealand
dc.publisher.urihttps://onlinelibrary.wiley.com/doi/10.1111/acfi.12923
dc.relation.isPartOfAccounting and Finance
dc.rights(c) 2022 The Author/s
dc.rightsCC BY 4.0
dc.rights.urihttps://creativecommons.org/licenses/by/4.0/
dc.subjectFirm performance
dc.subjectInvestment policy
dc.subjectFinancial constraints
dc.subjectMeta-analysis
dc.titleMeta-analysis of the impact of financial constraints on firm performance
dc.typeJournal article
pubs.elements-id451270
pubs.organisational-groupOther
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