Journal of Corporate Finance最新文献

This research investigates the impact of cyberattacks on tax aggressiveness using a difference-in-differences analysis with a matched sample. We find that firms experiencing cyberattacks are more likely to have lower cash effective tax rates and greater discretionary book-tax differences. We further show that cyberattacks have a greater impact on corporate tax aggressiveness when firms are more exposed to financial distress. Additional analyses show tax aggressiveness increases less when firms are in states with enactments of notification laws and firms with ex ante higher cybersecurity investment. Our aggregate results suggest that firms take more tax risky positions in response to greater financial distress and information asymmetry, which are attributed to the consequences of cyberattacks.

What is the effect of an expansion of eligible collateral on different lending technologies? We show that expanding eligible collateral (i) increases transactional (T) banks’ interest income and decreases relationship (R) banks’ interest income, (ii) increases average loan volume more for T- than for R-banks, (iii) decreases average loan risk and (iv) decreases T-banks’ non-interest income while it increases R-banks’ non-interest income. (v) In sum, T-banks’ profitability increases and R-bank’s profitability remains unaffected. Expanding the set of collateral from immovable to movable assets typically benefits SMEs because it allows them to obtain secured loans instead of unsecured ones. A-priori, it is unclear whether SMEs will continue borrowing from R-banks or switch to T-banks. R-banks benefit from customer relationships and T-banks have the collateral screening technology in place. We show that competition between T- and R-banks gives T-banks a comparative advantage, but R-banks can substitute lost interest income with non-interest income.

We provide the first study of underwriter-affiliated analysts' pre-IPO research coverage and its impact on stock prices. Using proprietary data on a sample of Chinese IPOs, we document that affiliated analysts make highly overoptimistic forecasts about IPO clients. Analyst hype inflates both the offer price and the aftermarket price. Consistent with the sentiment theory, IPO investors inadequately adjust to analyst hype because the offer price is set sufficiently lower than the aftermarket price. The results hold when we instrument analyst hype with a variable that affects their hyping incentive. We also utilize a regulatory change as a quasi-experiment. Our analysis contributes to the debate about regulations on pre-IPO information provision.

This paper identifies an externality of a firm’s unionization that affects the financing decisions of non-unionized firms within a local labor market. We find that non-unionized firms increase their leverage ratios and hold less cash reserves following a union victory at other firms. This “shadow union” effect manifests through the heightened threat of unionization following shadow union organizing. Specifically, the effect is more pronounced when the probability of unionization rises by a larger margin and non-union firms face higher union rents conditional on being unionized. The threat appears credible enough to shape corporate financing decisions: shadow unions raise employees’ wages and the likelihood of subsequent union victories in the local labor market. Additional results indicate that the shadow union effect is distinct from leverage-mimicking behavior. Overall, our findings suggest that shadow labor market institutions create a strategic incentive for non-unionized firms to adopt less conservative financial policies to combat the union threat.

There are hundreds of scientific articles on experimental asset markets. Almost all of them use a short and definite horizon. This may be one of the starkest differences between experimental settings and real-world financial markets, which usually have indefinite and comparatively long horizons. We analyze the implications of different end time assumptions in an asset market experiment in which we vary the length of the horizon and whether the end time is definite or indefinite. We find very similar price dynamics with recurring bubbles in all treatments.

The paper exploits the deregulation of interstate bank branching laws to examine whether improved access to bank credit for customer firms affects the probability of their suppliers' financial distress. The study provides robust evidence that suppliers' financial distress risk is lower when the states of their major customer firms experience bank branching deregulation. Furthermore, the study shows that customers establish new bank relationships and improve liquidity conditions, while suppliers offer less trade credit to customers, reduce leverage, and increase capital expenditures following customer state's bank branching deregulation. The effect of customers' improved access to credit on suppliers' distress risk is more pronounced for supplier firms with stronger customer-supplier relationships, for financially constrained suppliers, and for suppliers whose customers are financially unconstrained. Overall, the findings highlight the importance of customers' access to credit on the financial distress risk of their suppliers.

We examine how the size of the labor market for corporate directors impacts board appointments in Italian private firms. Using the high-speed railway expansion as an exogenous shock to costs of serving on boards, we find that an increase in the supply of non-local directors leads to a higher degree of positive assortative matching between firms and directors. High-quality firms improve their board quality at the expense of low-quality firms. The director–firm matching effects are muted among companies with owners acting as board directors. This finding highlights the importance of director entrenchment in the corporate governance of private firms.

This paper examines the spillover effect of environmental regulatory pressure on firms' green technological innovation, from the perspective of supply chain relationships. Analyzing data from Chinese listed companies, we find that the average environmental regulatory pressure faced by the customer firms of a supplier firm enhances the green patent applications filed by the supplier firm. When the industry of the supplier is more competitive or the proportion of the supplier's sales from its largest customer is higher, the supplier feels more pressured to pursue green innovation, resulting in more green patent filings. Thus, via their negotiation power, customer firms can prompt the supplier firm to innovate to meet their demand for green technologies. Finally, we show that this effect is particularly pronounced when the supplier firm has a strong financial position, is located in a highly marketized region, receives low R&D government subsidies, or enjoys a high ESG rating.

This paper explores the interplay between politics and law enforcement in China and its effects on firm financing decisions. By examining a sample of corporate lawsuits involving listed firms in China, we find that politically connected firms are less likely to be defendants, have higher win rates, and experience shorter litigation durations than non-connected firms. Additionally, we observe that firms with higher legal risk extend more accounts receivable and receive less accounts payable, but this relationship holds only for non-connected firms. Our findings support the financing advantage theory for politically connected firms and the legal risk compensation view for non-connected firms. Moreover, reforms in China's judicial system do not appear to mitigate the disadvantages faced by non-connected firms in terms of lawsuit outcomes and trade credit provision. Our findings suggest that well-functioned judicial independence might be still lacking in China, and that political connections continue to negatively impact law enforcement and corporate policies.