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on Corporate Finance |
| By: | Shinichi Kamiya; Jun-Koo Kang; Jungmin Kim; Andreas Milidonis; René M. Stulz |
| Abstract: | We examine which firms are targets of successful cyberattacks and how they are affected. We find that cyberattacks are more likely to occur at larger and more visible firms, more highly valued firms, firms with more intangible assets, and firms with less board attention to risk management. These attacks affect firms adversely when consumer financial information is appropriated, but seem to have little impact otherwise. Attacks where consumer financial information is appropriated are associated with a significant negative stock market reaction, an increase in leverage following greater debt issuance, a deterioration in credit ratings, and an increase in cash flow volatility. These attacks also affect sales growth adversely for large firms and firms in retail industries, and there is evidence that they decrease investment in the short run. Affected firms respond to such attacks by cutting the CEO’s bonus as a fraction of total compensation, by reducing the risk-taking incentives of management, and by taking actions to strengthen their risk management. The evidence is consistent with cyberattacks increasing boards’ assessment of target firm risk exposures and decreasing their risk appetite. |
| JEL: | G14 G32 G34 G35 |
| Date: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24409&r=cfn |
| By: | Giorgio Albareto (Banca d’Italia); Giuseppe Marinelli (Banca d’Italia) |
| Abstract: | The recent financial crisis has induced firms to turn increasingly to financing sources other than bank credit, and banks to boost their income from non-lending services. This paper provides some evidence concerning possibility and convenience for Italian banks to expand the supply of financial services to firms by examining the placement market for Italian corporate securities and its relationship with the credit market in the period 2000-2016. The paper shows that when firms entered the stock and bond markets, bank credit was partially crowded-out and interest rates dropped for both first-time issuers and risky firms. However, when banks also played a major role both in placing corporate issues and in financing the issuers, lending relationships did not weaken. |
| Keywords: | stock and bond issues, securities placement, banks’ profitability, corporate financing |
| JEL: | G21 G24 G30 G32 |
| Date: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:opques:qef_432_18&r=cfn |
| By: | Francesco Manaresi (Bank of Italy); Nicola Pierri (Stanford University) |
| Abstract: | We study the impact of bank credit supply on firm output and productivity. By exploiting a matched firm-bank database which covers all the credit relationships of Italian corporations over more than a decade, we measure idiosyncratic supply-side shocks to firms' credit availability. We use our data to estimate a production model augmented with financial frictions and show that an expansion in credit supply leads firms to increase both their inputs and their output (value added and revenues) for a given level of inputs. Our estimates imply that a credit crunch will be followed by a productivity slowdown, as experienced by most OECD countries after the Great Recession. Quantitatively, the credit contraction between 2007 and 2009 could account for about a quarter of the observed decline in Italy's total factor productivity growth. The results are robust to an alternative measurement of credit supply shocks that uses the 2007-08 interbank market freeze as a natural experiment to control for assortative matching between borrowers and lenders. Finally, we investigate possible channels: access to credit fosters IT-adoption, innovation, exporting, and the adoption of superior management practices. |
| Keywords: | credit supply, productivity, export, management, it adoption |
| JEL: | D22 D24 G21 |
| Date: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_1168_18&r=cfn |
| By: | Claire Giordano (Banca d’Italia); Marco Marinucci (Banca d’Italia); Andrea Silvestrini (Banca d’Italia) |
| Abstract: | Using significantly under-exploited data from institutional sector accounts, we assess the main drivers of both firms’ and households’ investment in Italy over the past two decades. We estimate a vector error correction model separately for firms and for households. Our findings support the existence in both institutional sectors of a long-run equilibrium relationship between investment, income and the user cost of capital, as predicted by the flexible neoclassical model, as well as adjustment dynamics towards the equilibrium level. Moreover, we find evidence that an increase in uncertainty and a decline in economic sentiment have a dampening effect on investment. Furthermore, high indebtedness, measured by financial accounts data, and tight credit constraints, based on survey data for firms, are found to have significantly hindered both firms’ and households’ capital accumulation, again in the short run. This leads us to conclude that studies that disregard the role of debt or financing constraints are unable to fully explain investment dynamics in Italy, especially in the most recent years of sharp contraction. |
| Keywords: | gross fixed capital formation, institutional sectors, credit constraints |
| JEL: | E22 G01 G31 |
| Date: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_1167_18&r=cfn |
| By: | Clement Moyo (Department of Economics, Nelson Mandela University); Hlalefang Khobai (Department of Economics, Nelson Mandela University); Nwabisa Kolisi (Department of Economics, Nelson Mandela University); Zizipho Mbeki (Department of Economics, Nelson Mandela University) |
| Abstract: | Financial intermediation through the banking system plays an important role in economic development through the allocation of savings, thus improving productivity, and ultimately increasing the rate of economic growth. This paper examines the interrelationships between financial development and economic growth using the Nonlinear Autoregressive Distributed Lag (NARDL) model for Brazil. The time component of the study’s database is 1985 – 2015 inclusive. The study focused on the banking sector and stock market indicators of financial developments. The empirical results suggest that the banking sector measures of financial development have a negative relationship with economic growth while the financial development indicators representing stock market development are positively related to economic growth. The study also established an evidence of a long run and short run asymmetric relationship between financial development and growth. The empirical results open new insights for policy makers for long run and sustainable economic development. |
| Keywords: | Financial development, economic growth, Non-linear ARDL, Brazil. |
| JEL: | C13 C22 G20 G21 |
| Date: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:mnd:wpaper:1811&r=cfn |