|
on Corporate Finance |
| By: | Thomas J.Flavin (Department of Economics Finance and Accounting, National University of Ireland, Maynooth); Abhinav Goyal (Cork University Business School, University College Cork, Cork, Ireland); Thomas O'Connor (Department of Economics Finance and Accounting, National University of Ireland, Maynooth) |
| Abstract: | We analyze the role of firm-level corporate governance in determining the precommitment payout policy of emerging market firms and investigate if there is a precommitment lifecycle effect. Unlike previous studies for the U.S. firms, we only find evidence of precommitment among relatively well-governed firms, who combine good governance with large dividend payouts to shareholders and large debt-related repayments to creditors. We also document a strong precommitment lifecycle effect. Firms in the growth and mature stages of their lifecycle tend to use both debt and dividends to precommit to investors, with an increasing proportion of dividends in total payout measures. Our results are robust to an array of control variables, alternate payout proxies, firm-level corporate governance and addresses any potential endogeneity concerns in the sample. |
| Keywords: | : Precommitment payout, corporate governance, lifecycle effects, emerging market. |
| JEL: | G32 G35 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:may:mayecw:n297-20.pdf&r=all |
| By: | Agustin Palupi (Trisakti School of Management Jakarta, Indonesia Author-2-Name: Author-2-Workplace-Name: Author-3-Name: Author-3-Workplace-Name: Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:) |
| Abstract: | Objective - Corporate social responsibility disclosure (CSRD) is an interesting issue, which has an influence on the decision of an investor when deciding whether to invest in a company. This study examines the empirical evidence about the factors which influence CSRD. The factors include media exposure, taxes aggressiveness, and corporate governance. Methodology/Technique - This study uses companies listed in the non-financial sector on the Indonesian Stock Exchange between 2014-2016. There are 64 companies that meet these criteria using a purposive sampling method. Finding - The results show that media exposure, taxes aggressiveness, institutional ownership, independent commissioner, and firm size have an influence on corporate social responsibility disclosure. Firm age, leverage, profitability, liquidity, and managerial ownership have no influence toward corporate social responsibility disclosure. Type of Paper - Empirical |
| Keywords: | Corporate Social Responsibility; Media Exposure; Taxes Aggressiveness; Firm Age; Leverage; Profitability; Liquidity; Institutional Ownership; Managerial Ownership; Independent Commissioner. |
| JEL: | M14 M19 M41 |
| Date: | 2019–12–31 |
| URL: | http://d.repec.org/n?u=RePEc:gtr:gatrjs:afr180&r=all |
| By: | Patrick Bolton; Neng Wang; Jinqiang Yang |
| Abstract: | We develop a q theory of investment with endogenous leverage, payout, hedging, and risk-taking dynamics. The key frictions are costly equity issuance and incomplete markets. We show that the marginal source of external financing on an on-going basis is debt. The firm lowers its debt when making a profit, increases its debt in response to losses and induced higher interest payments, and even taps external equity markets at a cost before exhausting its endogenous debt capacity. The firm seeks to preserve its financial flexibility by prudently managing its leverage and investment. Paradoxically, it is the high cost of equity issuance that causes the firm to keep leverage low, in contrast to the predictions of static Modigliani-Miller tradeoff and Myers-Majluf pecking-order theories. Our model generates leverage and investment dynamics that are consistent with the empirical evidence. |
| JEL: | G11 G31 G32 G35 |
| Date: | 2020–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:26802&r=all |
| By: | Francesco Aiello (Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF, Università della Calabria); Paola Cardamone (Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF, Università della Calabria); Lidia Mannarino (Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF, Università della Calabria); Valeria Pupo (Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF, Università della Calabria) |
| Abstract: | This article focuses on the relationship between external research and development (R&D) and firm innovation output. Using a sample of Italian manufacturing firms in the period of 2007-2009, the role played by external R&D is evaluated, investigating differences between family and non-family firms. Results show that the R&D acquired from external sources has a positive impact, especially on family firms, suggesting that family companies have a greater capacity to translate external R&D into tangible economic benefits. This result is consistent with those obtained when we consider the combination of internal and external R&D, as well as the family involvement in governance and management. |
| Keywords: | Family firms, R&D investment, Innovative sales, Italian manufacturing industry |
| JEL: | O32 G34 C24 |
| Date: | 2020–02 |
| URL: | http://d.repec.org/n?u=RePEc:clb:wpaper:202002&r=all |
| By: | Silvy Christina (Trisakti School of Management, Indonesia Author-2-Name: Fanny Anggraeni Author-2-Workplace-Name: Trisakti School of Management, Indonesia Author-3-Name: Author-3-Workplace-Name: Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:) |
| Abstract: | Objective - The business world requires that companies not only focus on management and owners, but also that they pay attention to the sustainability of the social environment. This concept is better known as Corporate Social Responsibility. The purpose of this study is to obtain empirical evidence about the factors which influence corporate social responsibility. Methodology/Technique - The independent variables used in this research are: board size, firm size, profitability, liquidity, public ownership, and firm age. The objects used in this study are non-financial companies listed on the Indonesian Stock Exchange (IDX) between 2016 and 2018. The data selected as a research sample of 183 non-financial companies. Sample selection procedures can be obtained from the results of purposive sampling. Finding - The results show that board size, firm size, and profitability all have an influence on corporate social responsibility disclosure. On the other hand, liquidity, public ownership, and firm age have no influence on corporate social responsibility. Type of Paper - Empirical. |
| JEL: | M14 M41 |
| Date: | 2019–12–31 |
| URL: | http://d.repec.org/n?u=RePEc:gtr:gatrjs:afr182&r=all |
| By: | Ron Alquist (AQR Capital Management); Nicolas Berman (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique, CEPR - Center for Economic Policy Research - CEPR); Rahul Mukherjee (Department of Economics, Graduate Institute of International and Development Studies); Linda Tesar (NBER - National Bureau of Economic Research - National Bureau of Economic Research) |
| Abstract: | We develop a model of cross-border acquisitions in which the foreign acquirer's ownership choice reflects a trade-off between easing the target's credit constraints and the costs of operating in an environment with weak institutions. Data on domestic and foreign acquisitions in emerging markets over the period 1990–2007 support the model predictions. The share of full foreign acquisitions is higher in sectors more reliant on external finance, in countries with lower financial development, and in countries with higher institutional quality. Sectoral external finance dependence accentuates the effect of country-level financial development and institutional quality. By contrast, the level of foreign ownership in partial acquisitions is insensitive to institutional factors and depends weakly on financial factors. |
| Keywords: | Institutional quality,Mergers and acquisitions,Financial development,Foreign direct investment,Foreign ownership |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-02111499&r=all |
| By: | Shreekant Gupta (Department of Economics, Delhi School of Economics); Bishwanath Goldar (Institute of Economic Growth); Shubham Dang (SCOPT Analytics) |
| Abstract: | This paper examines whether capital markets in developing countries respond to news about environmental performance of firms thereby creating incentive for pollution control. In particular we conduct an event study of firms in three polluting industries in India (paper and pulp, cement and iron and steel) that were rated under the Green Rating Project. Along lines of earlier research we find the stock market generally penalizes weak environmental performance among firms. Interestingly, paper and pulp firms that were being rated for a second time and did strictly worse relative to their previous performance experienced significant negative returns. In terms of methodology, the paper controls for event day clustering by using the KP-statistic instead of the commonly used Z or BMP-statistic. We show when KP statistic is used, the negative impact of poor environmental performance on the stock returns is not as pronounced as the standard Z or BMP statistic would lead one to believe. |
| JEL: | G14 Q53 G32 |
| Date: | 2019–12 |
| URL: | http://d.repec.org/n?u=RePEc:cde:cdewps:303&r=all |
| By: | Erika Jimena Arilyn (Trisakti School of Management, Indonesia Author-2-Name: Beny Author-2-Workplace-Name: Trisakti School of Management, Indonesia Author-3-Name: Author-3-Workplace-Name: Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:) |
| Abstract: | Objective - The aims to identify the significant factors that influence a company's decision to use debt capital. Methodology/Technique - This study uses 5 independent variables namely; firm growth (growth rate in total gross assets), asset tangibility (ratio of net fixed assets to total assets), cost of debt (interest before tax / long term debt), profitability (Earnings Before Interest and Taxes (EBIT) / Total Asset), and business risk (standard deviation of EBIT to total assets). The dependent variable in this study, debt capital, is measured by the ratio of long-term debt to total assets. A purposive sampling method is used to select 11 out of 18 textile and garment companies listed on the Indonesian Stock Exchange between 2014 and 2018 that report their annual financial positions. A quantitative method, panel data analysis technique and SPSS tools were also used in this study. Finding - The results show that debt capital is influenced by profitability, while the remaining factors do not influence debt capital. Novelty - This study adds to the existing literature on internal factors, market condition as an external factors, and debt capital in developed countries. The benefit of this study is to explore the potential capabilities of the industry in using its profit to minimize the use of debt as a source of capital to decrease business risk. Type of Paper - Empirical. |
| Keywords: | Profitability; Growth; Cost of Debt; Business Risk; Tangibility; Capital Structure. |
| JEL: | G23 G32 |
| Date: | 2019–12–31 |
| URL: | http://d.repec.org/n?u=RePEc:gtr:gatrjs:afr183&r=all |
| By: | Thomas J.Flavin (Department of Economics Finance and Accounting, National University of Ireland, Maynooth); Mardi Dungey (Tasmanian School of Business and Economics, University of Tasmania, Hobart, TAS 7001, Australia); Thomas O'Connor (Department of Economics Finance and Accounting, National University of Ireland, Maynooth); Michael Wosser (Financial Stability Division, Central Bank of Ireland, Dublin, Ireland.) |
| Abstract: | We investigate the systemic importance of U.S. industrial firms and analyse the firm-specific characteristics that identify systemically important industrials. We compute two firm-specific measures of systemic risk for 367 non-financial corporations and confirm that industrial firms are both vulnerable to systemic shocks and contribute to system-wide risk. Systemic risk measures exhibit substantial variation across firms and over time. Debt and trade credit are related to both dimensions of systemic risk, while a range of other firm characteristics are associated with systemic risk in at least one direction. The differences between the dimensions of risk and their associated characteristics underline the importance of analysing both measures of risk. Finally, we report some striking differences vis-Ã -vis the extant literature on banks and non-bank financials. |
| Keywords: | Systemic risk; MES; ∆CoVaR; industrial firms; financial crises. |
| JEL: | G32 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:may:mayecw:n298-20.pdf&r=all |
| By: | Amamou, Raschid; Gereben, Áron; Wolski, Marcin |
| Abstract: | We look at the impact of intermediated funding provided by the European Investment Bank (EIB) on the performance of small and medium-sized enterprises (SMEs) in the 28 member countries of the European Union between 2008 and 2014. We use a combination of propensity score matching and difference-in-differences to evaluate the impact of EIB lending on corporate performance using firm-level data. We find that EIB lending had a positive effect on employment, firm size, investment and innovation capacity, and it also increased firms' leverage. We also find that the positive impact of EIB funding is higher in the countries of Central and East Europe and also in South Europe, while somewhat smaller, yet still significant, in West and North Europe. All in all, our results indicate that EIB-supported funding made a significant and positive difference to the economic and financial performance of the beneficiary SMEs. |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:eibwps:202004&r=all |
| By: | Sabrina T. Howell; J. David Brown |
| Abstract: | This paper examines how employee earnings at small firms respond to a cash flow shock in the form of a government R&D grant. We use ranking data on applicant firms, which we link to IRS W2 earnings and other U.S. Census Bureau datasets. In a regression discontinuity design, we find that the grant increases average earnings with a rent-sharing elasticity of 0.07 (0.21) at the employee (firm) level. The beneficiaries are incumbent employees who were present at the firm before the award. Among incumbent employees, the effect increases with worker tenure. The grant also leads to higher employment and revenue, but productivity growth cannot fully explain the immediate effect on earnings. Instead, the data and a grantee survey are consistent with a backloaded wage contract channel, in which employees of financially constrained firms initially accept relatively low wages and are paid more when cash is available. |
| JEL: | G32 G35 J31 J41 |
| Date: | 2020–02 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:20-06&r=all |