Faculty Publications
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Item Influence of financial distress on exchange rate exposure: Evidence from India(Inderscience Publishers, 2018) Prasad, K.; Suprabha, K.R.; Devji, S.This paper investigates the relationship between exchange rate exposure and level of financial distress. We argue that the exchange rate movements have a higher effect on the value of the firms with higher level of financial distress. The effect of other firm level variables such as profitability, size of the firm, foreign sales and expenses and liquidity on exchange rate exposure were also studied. We use Merton's (1974) structural default model to estimate firms' distance to default as a proxy for their probability of financial distress. A sample 387 firms listed in National Stock Exchange (NSE) is studied for a period of 2012-2016. We find that the level of firms' exchange rate exposure is significantly positively related to distance to default, indicating that firms that have a greater probability of financial distress are more affected by exchange rate movements. © © 2018 Inderscience Enterprises Ltd.Item The impact of ESG disclosure on mitigating financial distress: exploring the moderating role of firm life cycle(Palgrave Macmillan, 2025) Suprabha, K.R.; Sreepriya, J.; Prasad, K.Globally, businesses are increasingly gaining recognition for their non-financial performance due to heightened stakeholder demands about ethical and environmental responsibilities. This noteworthy shift in perspective has catalyzed the inception of this research, which seeks to scrutinize the influence of environmental, social, and governance disclosure (ESGD) on financial distress. To investigate the potential capacity of ESGD in mitigating financial distress, the researchers have employed the Generalized Method of Moments. Additionally, the study takes into account the moderating role played by the firm’s life cycle in this relationship. The findings underscore that the adoption of ESGD is associated with a decreased likelihood of default, thus highlighting its effectiveness as a risk management strategy. Moreover, this investigation emphasizes the impact of the firm’s life cycle on the link between ESGD and corporate financial distress. Rooted in signalling theory as the theoretical framework, the research posits that a wide spectrum of Environmental, Social, and Governance (ESG) initiatives not only enhances the consistency of signals but also amplifies the associated signal costs. Consequently, in alignment with this theoretical perspective and substantiated by empirical evidence, our study confirms a multifaceted influence of ESGD on financial distress, contingent upon the distinctive phases of a firm's life cycle. In consequence, this study offers valuable insights for managerial decision-making, guiding the development of tailored disclosure policies that align with the specific characteristics of a firm’s life cycle. © The Author(s), under exclusive licence to Springer Nature Limited 2024.