Document Type : Research Paper
Authors
1 Department of Accounting, Payame Noor University, Tehran, Iran
2 MSc.Student, Department of Accounting, Payame Noor University .Tehran, Iran
Abstract
The purpose of this study is to investigate the effect of fixed asset investment and financial performance on the relationship between social responsibility and debt financing. The present study is applied and from the methodological point of view, it is a causal correlation (post-event). The statistical population of the study is all companies listed in the Tehran Stock Exchange and using the systematic elimination sampling method, 141 Firms were selected as the research sample and were studied in a 10-year period between 2014 and 2023. The findings of testing the research hypotheses showed that there is a direct and significant effect between social responsibility and financing through debt.Investing in fixed assets does not affect the relationship between social responsibility and debt financing, but financial performance has an inverse and significant effect on the relationship between social responsibility and debt financing. By adhering to social responsibilities and respecting the rights of stakeholders and society, company managers can easily enjoy external financing by gaining a better image. Also, obtaining a higher social rank can show the company's image for investors more securely.
1. Introduction
Companies and economic institutions need appropriate and timely financing to invest and repay debts and increase working capital. Financial managers are always trying to increase the value of the company by inventing new financing methods.to be determined. Companies don't just use one type of resource, they try to use multiple resources to implement their plans and issues. Various factors can affect access through debt. Corporate social responsibility is one of the important issues that can affect the company's financing process, and it has been expressed as the process of creating wealth, promoting the company's competitive advantage, and maximizing the value of wealth and benefits created for the society, which generally considers the commitment and attention of the business to the quality of life of employees, customers, the local community, and the whole society in order to develop a sustainable economy.
2. Literature Review
Debt financing is a more desirable solution for financing due to tax savings and its lower rate compared to the expected returns of shareholders, but what is important for creditors is its repayment ability (Ebrahimi et al., 2019). The organization should always consider itself a part of the society and have a sense of responsibility towards the society and in order to improve the public welfare, employees, etc. to work independently of the direct interests of the company. The company's social responsibility focuses on important issues such as ethics, environment, security, education, human rights, etc. (Kordestani et al., 2018). Companies that have higher social responsibility can in fact be a high guarantee for the repayment of the company's debt, a guarantee for the proper functioning of the company, a guarantee for the absence of managers' behavioral biases, and a guarantee for the provision of correct information by managers to the capital market, which can increase the access of companies in financing through debt (Oyar et al., 2024). Therefore, according to the above, the first hypothesis of the present study is as follows:
H1: Social responsibility affects access to financing through debt.
Financial performance is an objective measure of how much an organization has used its assets to generate revenue. The financial performance of a company is one of the most important indicators for evaluating its performance and the degree of achievement of predetermined goals (Rahimian et al., 2013). Financial performance somehow indicates the efficiency or inefficiency of the company, so it can affect the opinions of investors and creditors in order to guarantee the company's performance. Therefore, according to the above, the second hypothesis of the present study is as follows:
H2: Investment in fixed assets affects the relationship between social responsibility and access to financing through debt.
One of the fundamental variables affecting the future status of the performance of companies and consequently the return on the shares of companies is the amount of investment of companies in fixed assets, which can pave the way for achieving the desired return in the future, or due to the tolerance of more risk on the company's financial position as a result of more investment, it reduces the company's power to maintain the current return and its growth in the future periods. In the long run, it also leads to a decrease in the company's efficiency and performance (Oyar et al., 2024). Therefore, according to the above, the third hypothesis of the present study is as follows:
H3:Financial performance affects the relationship between social responsibility and access to financing through debt.
3. Methodology
The present study is applied and from the methodological point of view, it is a causal correlation (post-event). The statistical population studied in this study is all companies listed in the Tehran Stock Exchange and the period under study is from 2014 to 2023. In this study, the systematic elimination method has been used to reach the sample, and 141 companies have been selected as the research sample. Data analysis was done using the combined data method and the data panel approach and using Eviews 12 software to test the hypotheses.
4. Results
The findings of testing the research hypotheses showed that there is a direct and significant effect between social responsibility and financing through debt . Investment in fixed assets does not affect the relationship between social responsibility and financing through debt, but financial performance has an inverse and significant effect on the relationship between social responsibility and financing through debt. By adhering to social responsibilities and respecting the rights of stakeholders and society, company managers can easily enjoy external financing by gaining a better image. Also, obtaining a higher social rank can show the company's image for investors more securely.
5. Discussion
The results showed that corporate social responsibility directly affects financing through debt. In fact, when companies adhere to the principles and responsibilities that they have in the social field, those who want to work with the company on credit will have a more favorable environment for paying their debts, and this can increase the access of companies to financing from the The way of debt is simplified. One of the fundamental variables affecting the future status of companies' performance and consequently the return on companies' stocks is the amount of companies' investment in fixed assets, which can pave the way for achieving desirable returns in the future, or due to bearing more risk on the company's financial position as a result of more investment, it can reduce the company's ability to maintain its current return and its growth in future periods. Investing in fixed assets should be effective in financing through debt because such assets have the characteristic of collateralization, but the results showed that this feature has no effect on the relationship between social responsibility and financing through debt. Financial performance indicates the overall performance of the company and the amount of profitability derived from expenses and assets. Weaken the relationship between social responsibility and financing through debt. In fact, it can be interpreted that financial performance affects the relationship between social responsibility and debt financing.
Keywords
- Debt Financing
- Investment in Fixed Assets
- Financial Performance
- Social Responsibility
- Responsibility
Main Subjects
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