Factors Affecting Corporate Financial Sustainability In Emerging Asian Countries

Identifying the factors that affect the financial sustainability in the emerging countries of Asia

Variables Selected for the research Study

Dependent Variable

• Financial Sustainability

Independent Variable

Internal Factors

• Interest Rate
• Political Stability
• Quality of education
• Infrastructure (Loannou & Serafeim, 2017)

Moderator

• Government rules and regulations

Mediator Variable

• Executive Remuneration
• Law and order situation

Research Framework

                                                Figure: Research Framework for Corporate Financial Sustainability

                                                                                 (Source: As stated by the Author)

Problem Statement

The scope of evidence that is seen in the development in the emerging and developing economies within Asia is considered as a major contributor to the global growth (Davis & Lastra, 2018). However, due to several types of internal factors the growth in emerging Asian countries such as China has been hit with global shock and it to risk and financial stability. Some of the most evident problem due to financial instability within the country is depicted with deceleration towards the growth of 6%. Therefore, China along with other emerging countries of Asia poses a greater scope of risk pertaining to rebalancing and global economic and financial conditions. In addition to this, a slowdown in the world has significantly weakened the commodity prices and a led to tighter control on credit conditions (Wry & Zhao, 2018).

The problem associated to the financial sustainability is mainly depicted to be influenced with multiple factors create a barrier for development among the Asian countries. In addition to this, East Asian emerging country such as Taiwan has faced similar problems in the technological sector which are considered due to insufficient availability of fund and lack of investors’ interest due to several geopolitical issues experienced among the high-tech industries (Borin et al., 2018). The environmental concerns associated with the financial stability in Taiwan has been included with problems relating to economic, environmental and social issues thereby affecting the financial steadiness. Some of the main discourse of the study would identify the various types of internal factors responsible for causing disruption in the financial stability of the emerging Asian countries (Rezaee, 2018). Some of the other scope of studies has shown that the factors affecting financial sustainability in the emerging countries are evident with issues relating to grant seeking, investment and fundraising.

The key issues that have led to the development of this paper have mainly been due to the problems that are related to the variables that have been taken into consideration in this paper. There have been instances when it is seen that many organizations have been incompetent in maintaining an effective managerial structure and this has directly had an impact on the financial performance and accordingly affected the financial sustainability of the companies. Gardini & Grossi, (2018) addressed that ineffective board composition even leads to various issues that have extensive impact on the decision making process of the business, which directly has an impact on the operational process. There have been other instances in which numerous companies have faced issues with respect to the process of financial sustainability and inefficient management that has led to serious impact on the financial performance (Manes Rossi et al., 2018). These have been several issues that have led to the creation of the problem statement and therefore the aspects that have not been addressed has been one of the critical factors because of which research on this topic has been undertaken (Adhikary, 2018).

Research Questions

Research Gap

The primary gap in the present literature is considered with the inclusion of external factors such as corruption, Economic Environment, Market Environment and Social Environment to depict the problems of associated to the financial stability in the emerging Asian countries such as China, Taiwan, Pakistan and Singapore. Some of the relevant literatures has been seen with the study on the “Identifying the Factors that Affect the Financial Sustainability in Baluchistan Province of Pakistan”. Some of the other relevant study on external factors include “Factors that Affect Financial Sustainability of Microfinance Institution- Aderaw Gashayie” and “Factors Influencing Financial Sustainability of Non-Governmental Organizations (Reguera-Alvarado et al., 2017): A Survey of Ngos in Nakuru County, Kenya Kerine Lindah Omeri”.  The angle in accordance to financial sustainability and the missing links in relation to the connected variables are existent in several previous researches because of the fact that the researchers have been unable to determine the positive or the negativity of their relationships and therefore present researches would look to determine the same. It is seen that the external factors that have been highlighted have been the gaps that has not been addressed in the literature. The explanation of the external factors as well as the internal factors in a theoretical as well as empirical manner is helpful in the attainment of a research that would be helpful in addressing the topic (Post & Byron, 2015).

Research Questions

The main form of the research questions formulated for the study are stated below as follows

• What is the most significant internal factor affecting the financial sustainability?
• How is resource availability and Executive Remuneration associated to the corporate financial sustainability?
• What is role of sectoral analysis such B2B/B2B sectors in in terms of the factors affecting financial instability?

Research Objectives

The research objectives wet of the research study is listed below as flows:

• Developing a sustainable financial system for the emerging countries in Asia
• Recommending a policy framework associated to the efficient functioning of the proposed financial system
• Identification of the fundamental reasons which are seen to be associated to the provisional financial sustainability and lesson to be learned from the various perspectives of the emerging Asian countries
• To study the sustainability perspectives in the emerging Asian countries and recommend for better practices by identification of the loopholes of the present policies
• To examine the most significant internal factor affecting financial sustainability in business

Research Hypothesis

Hypothesis (H₁): There is a relation ascertained with the political instability and financial sustainability in the emerging Asian countries

Hypothesis (H₂): There is a relationship between interest rate and the financial stability in the emerging Asian countries

Hypothesis (H₃): There is a relation among the quality of education and the financial stability and stability in the emerging Asian countries

Hypothesis (H₄): There is a relationship of the infrastructure within the organizations and financial sustainability among the emerging countries in Asia

Measurement of the variables

The measurement of the selected independent variables will be mainly done with the conduction of both primary data analysis. Secondary data analysis can even be undertaken however, primary data would provide fresh data from the aspect of the management employees who are working in companies in the selected countries and thereby better results can be attained. It needs to be understood that the measurement of the various types of the variables such as managerial structure, earnings management, board composition, financial performance and firm size will be done with the help of primary data collection (Petrenko et al., 2016). The sample size for the conducted research will be considered with 100 respondents across Asian countries such as China, Taiwan, Pakistan, Singapore and India. The majority of the responses will be taken from the individuals in managerial positions the aforementioned countries. The measurement of the factors would be considered with the use of regression analysis. This approach would be conducive in assessment of the most significant parameters affecting the financial stability across these countries (Khan, Serafeim & Yoon, 2016).

Research Objectives

Survey Questionnaire

                                                                        Source: Open.uct.ac.za., (2018)

References:

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