Interest rate, financial reporting quality, and corporate operational efficiency: The mediating role of inventory levels

Abstract

An analysis of multinational businesses and their level of effectiveness in operating efficiency, as it relates to the level of effectiveness in their operating efficiency and the quality of their financial reports ("financial reporting"), and inventory levels as factors determining differences in efficiency among different organizations. The data analyzed consisted of panel data from a sample of multinational companies for the period between 2015 and 2023. The results of the analyses suggest that increases in interest rates will decrease a multinational enterprise's operational efficiency by raising the cost of financing and inhibiting or making it more difficult for a multinational enterprise to obtain financial capital from external sources. Additionally, firms with relatively high-quality financial reporting can respond to changes in monetary conditions more effectively than firms that do not maintain high-quality financial reporting. Conversely, inventory levels do not have a meaningful influence on operational efficiency. Overall, the results suggest that there are influences on firm efficiency other than macroeconomic conditions, such as the quality of financial reporting and an organization's capacity to adjust to changes in the global economy.