Japan is widely regarded as one of the world’s most developed nations. The country’s electronics industry, in particular, is consistently ranked among the global leaders in innovatiion. Industries such as automotive, construction, electronics, metal, and telecommunications, companies have traditionally leaned more heavily on debt financing for both their day-to-day operations and investment endeavors, rather than relying on equity financing. In Japan, debt financing is favored as cost-effective source of capital compared to equity financing. The study selected 257 automotive, construction, electronic, metal, and telecommunications companies between 2000 and 2021. To find the effect of financial leverage on financial performance, the study used the random effect and the GMM to estimate the effect of the firms’ leverage on financial performance. The study found that interest coverage has a positive and statistically significant effect on ROA, ROE, and Tobin’s Q. The study discovered that cash coverage has a positive and statistically significant effect on ROE. The study found that debt service obligations have a negative and statistically significant effect on financial performance.

Purpose: The study seeks to find the effect of financial leverage on the firm performance of non-financial companies listed in the Tokyo stock market.Design/methodology/approach: The study collected data from 263 companies in the automobile and industrial producer sectors listed on the Tokyo stock exchange between 2001 and 2021. The generalized method of moments was used to estimate the effect of leverage on financial performance due to its ability to overcome the problems of endogeneity and autocorrelation.Findings: The study found that the equity multiplier has a positive and statistically significant effect on return on assets (ROA), return on equity (ROE) and earning per share (EPS). The study discovered that the interest coverage ratio has a positive and statistically significant effect on ROA, ROE, EPS and Tobin’s Q. The results revealed that the degree of financial leverage and debt to earnings before interest, taxes, depreciation and amortization (EBITDA) have a negative and statistically significant effect on ROE, EPS and Tobin’s Q. The study also found that the capitalization ratios of the firms have a negative and statistically significant effect on ROA, ROE, EPS and Tobin’s Q.Practical implications: The use of debt financing, which presents financial leverage, indicates that the companies can make enough earnings to pay off the interest and principal (debt service obligations), which were shown by the interest coverage ratio, as well as to pay all the long-term fixed expenses, which were shown by the fixed charge coverage ratio. Interest and fixed charge coverage have a positive statistically significant effect on the financial performance of automobile and industrial producer companies.Originality/value: The study focused on the effect of financial leverage on financial performance by relying on pecking and trade-off theories to contribute to the existing body of literature in finance.

Non-financial companies listed on the Frankfurt Stock Exchange face considerable difficulties due to expensive funding and the need to make complex decisions about their capital structure. These problems impact their judgments about dividend policy, resulting in ambiguity and possible inefficiency. This study draws on the bird-in-hand theory to investigate the influence of the cost of capital on dividend policy decisions among non-financial firms listed on the Frankfurt Stock Exchange, focusing on 227 companies from 2005 to 2022. The data for this study were sourced from Thomson Reuters Datastream. Employing the common shock autoregressive distributed lag (CS-ARDL) and two-step generalized method of moments (GMM) estimations, findings reveal that the cost of debt consistently negatively impacts dividend payouts and coverage ratios. In contrast, the cost of equity has an insignificant effect. Conversely, the weighted average cost of capital positively influences dividend payouts and coverage ratios but negatively influences dividend yield. All the findings supported the bird-in-hand theory except for the negative impact of WACC on dividend yield. These insights highlight the importance of considering the cost of capital and market share dynamics in dividend policy formulation. Firms should prioritize efficient debt management to sustain dividend distributions, and aligning dividend policies with overall capital structure management is crucial in this regard, providing a sense of reassurance and confidence to the firms and their stakeholders. This study provides valuable guidance for financial decision-makers navigating dividend-related strategies within corporate environments.

Non‐financial companies listed on the London Stock Exchange actively engage in corporate social responsibility (CSR), significantly impacting communities and the environment. However, they face challenges related to environmental innovation and reputation management, particularly under strict reporting requirements and public scrutiny. This study employed signaling theory to examine the impact of CSR on environmental innovation and corporate reputation. Using purposive sampling, 13 years of data (2011–2023) were collected from 172 non‐financial companies listed on the London Stock Exchange, sourced from Thomson Reuters Eikon DataStream. The analysis utilized the augmented mean group (AMG) estimator and the two‐step generalized method of moments (GMM). Findings indicate that CSR expenditures, sustainability reporting, sustainability strategies, external auditing, and sustainability committees all have a positive and significant effect on both environmental innovation and corporate reputation. Furthermore, firm size was found to moderate the relationship between CSR expenditures, sustainability reporting, and the study's outcomes, also with a positive and significant effect. The study recommends that corporations develop integrated CSR investment plans aligned with their strategic goals and clearly communicated to stakeholders. This approach can enhance market positioning and reinforce trust among consumers and investors by showcasing a genuine commitment to social responsibility.