Impact Of Firm Reputation On Firm Financing Decision: Evidence From Non- Financial Sector Of Pakistan
The corporate reputation plays a dynamic role in firm financing decisions of business and it helps the manager to choose appropriate way for efficient financing. This study finds that how important is firm reputation for firm financing? The study is using nine years data ranging from the years 2008 to 2016. The size of the research consist of 337 firms of non-financial sector of Pakistan. The fixed effect model (FEM) was used to check the regression among the variables. The outcomes of this study approve the impact of firm reputation on firm financing decision. The price-earnings ratio has positive impact on financial leverage because an increment in P/E ratio increases the financial leverage due to stability. The firm which have high market capitalization shows positive impact on financial leverage. There is positive impact of long-term investment on firm financial leverage because of this investment, a firm can enhance its debt. There is negative relationship between firm age and leverage because older firms reduce the usage of leverage with the passage of time. There is significant and negative impact of firm age on trade-credit because older firms do not prefer to use the trade-credit. There is positive and significant impact of tangibility on trade-credit because tangible assets can be used as loan collateral to get the trade-credit. There is significant and positive impact of firm size on trade-credit because big size firms can do financing easily through short-term financing. The study shows the importance of firm reputation in firm financing decision. There is a financing policy for finance managers, that they can use reputation as an instrument of financing. The reputation helps to secure the financial future of firm and it also helps to give freedom from stringent covenants problem and gives the suggestion of low cost of financing. Supervisor:- Dr Jalil Ahmad
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