The determinants of financial flexibility and their implications on the non-financial and non-heavily regulated industries in the Philippines: 1999-2010

• Main Authors: Brodeth, Ivan, Gatmaitan, Rey Anne, Mananghaya, Marvin, Rivilla, Isabella
• Format: text
• Language: English
• Published: Animo Repository 2012
• Subjects: Financial institutions > Philippines; Finance and Financial Management
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/18413
• Institution: De La Salle University

This paper intends to identify the determinants of financial flexibility by utilizing the 1999 to 2010 financial data of non-financial and non-heavily regulated publicly listed firms in the Philippines. The generalized method of moments (GMM) was used to discover the significance of the variables determining financial flexibility and the partial adjustment model was used to determine the speed of adjustment of firms in the presence of financial flexibility. The sample consists of 1,188 observations divided into four sectors, which are holding firms, industrials, properties and services. The findings showed that the overall data produced different results as compared to each sector. The most common variables affecting financial flexibility are asset tangibility and firm size. Moreover, as a measurement of financial flexibility, the average speed of adjustment of Philippine firms to achieve their target leverage ratios is about a year.