16.9 Financial Flexibility

16.9.1 Cash flows

(Chakravarty and Grewal 2011; Malshe and Agarwal 2015) Cash flows = log(operating cash flow in mil)

16.9.2 Financial Leverage

(Kashmiri and Mahajan 2017; Chakravarty and Grewal 2011)

$$\text{financial leverage} = \frac{\text{long-term debt}}{\text{book value of assets}}$$

References

Chakravarty, Anindita, and Rajdeep Grewal. 2011. “The Stock Market in the Drivers Seat! Implications for r&d and Marketing.” Management Science 57 (9): 1594–1609. https://doi.org/10.1287/mnsc.1110.1317.

Kashmiri, Saim, and Vijay Mahajan. 2017. “Values That Shape Marketing Decisions: Influence of Chief Executive Officers’ Political Ideologies on Innovation Propensity, Shareholder Value, and Risk.” Journal of Marketing Research 54 (2): 260–78. https://doi.org/10.1509/jmr.14.0110.

Malshe, Ashwin, and Manoj Agarwal. 2015. “From Finance to Marketing: Impact of Financial Leverage on Customer Satisfaction.” Journal of Marketing, June, 150626124337002. https://doi.org/10.1509/jim.15.0312.