Investigating the effects of financial vulnerability of companies from liquidity and inflation in regimes based on company size
Investigating the effects of financial vulnerability of companies from liquidity and inflation in regimes based on company size
Subject Areas : Financial Knowledge of Securities Analysis
evaz kenarkoohi 1 , seyed yahya abtahi 2 * , Hamid Khajeh mahmood abadi 3 , gholamreza askarzadeh 4
1 - PhD. Student in Financial Engineering, Department of finance, Yazd branch, Islamic Azad University, Yazd. Iran
2 - Assistant Prof. Department of finance, Yazd branch, Islamic Azad University, Yazd. Iran-(Corresponding author)
3 - Assistant Prof,Department of finance, Yazd branch, Islamic Azad University, Yazd. Iran-
4 - Assistant Prof,Department of finance, Yazd branch, Islamic Azad University, Yazd. Iran
Keywords: financial vulnerability, liquidity, inflation, regime rotation models,
Abstract :
It is important to try to determine the factors that cause companies to experience declining financial health or vulnerability. Because the early identification of factors affecting financial vulnerability can help companies to deal with and prevent the occurrence of financial vulnerability to take the necessary measures. In this study, the effect of size-based liquidity and inflation on the vulnerability of companies by applying a state-dependent approach (regime) using balanced panel data including 145 non-financial and non-banking companies admitted to the Tehran Stock Exchange during the period 2010-2021 has been applied.The results show that companies that are in the low regime in terms of size, their vulnerability is most affected by liquidity, and companies at high levels of size, their vulnerability is not significantly affected by liquidity. Also, companies with a low size regime have a negative and significant effect of inflation on vulnerability, and when the regime turns to a high level of company size, the negative effect of inflation on the vulnerability of companies decreases and such an effect is also statistically significant. Therefore, inflation reduces the level of vulnerability of companies, and companies that are smaller in size are most affected by inflation.