Cash Conversion Cycle (CCC) is a crucial tool that influences the firms’ short-term requirements. CCC affects the liquidity requirements of every company, every nature of the business, and every size of the business. In this setting, the present research explores the different aspects of CCC and its influence on profitability related to non-financial companies of the S&P BSE (Bombay Stock Exchange) SENSEX Index in India during 2006-2020. Investigating the factors that affect the CCC and statistically significant impact on firms' profitability across the nature of the business and size of the business is the main focus of this research. The results of this research that significant negative relation observed between CCC and profitability of the firm in more classifications (Teruel & Solano 2007, Garcia 2011, and Nobance et al. 2011) and shorter length of cash conversion cycle increase the profitability of the firm (Manyo 2013 and Ajanthan & Kumara 2017). It is also concluded that this research that results would differ in different nature of the business (Padachi 2006) and different size of the business.
{"title":"The Impact of Cash Conversion Cycle on Profitability of the Firms with Respect to S&P BSE SENSEX India","authors":"Nagendra Marisetty, Pardhasaradhi Madasu","doi":"10.2139/ssrn.3704300","DOIUrl":"https://doi.org/10.2139/ssrn.3704300","url":null,"abstract":"Cash Conversion Cycle (CCC) is a crucial tool that influences the firms’ short-term requirements. CCC affects the liquidity requirements of every company, every nature of the business, and every size of the business. In this setting, the present research explores the different aspects of CCC and its influence on profitability related to non-financial companies of the S&P BSE (Bombay Stock Exchange) SENSEX Index in India during 2006-2020. Investigating the factors that affect the CCC and statistically significant impact on firms' profitability across the nature of the business and size of the business is the main focus of this research. The results of this research that significant negative relation observed between CCC and profitability of the firm in more classifications (Teruel & Solano 2007, Garcia 2011, and Nobance et al. 2011) and shorter length of cash conversion cycle increase the profitability of the firm (Manyo 2013 and Ajanthan & Kumara 2017). It is also concluded that this research that results would differ in different nature of the business (Padachi 2006) and different size of the business.","PeriodicalId":236717,"journal":{"name":"ERN: Other Microeconomics: Intertemporal Firm Choice & Growth","volume":"30 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-07-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129597627","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
I study broker intermediation in entrepreneurial financing. Brokers intermediate 15% of startup offerings, but 20% of these brokers are unregistered "finders." Issuers using finders are 30% and 20% less likely to have successful post-funding outcomes than issuers in registered-broker and direct offerings. These outcome gaps are larger when state-level regulatory oversight, which only applies to registered brokers, is stronger and when finders are expelled brokers. These findings are consistent with adverse selection in finder-intermediated offerings. I also show that finder-intermediated offerings more often place with retail (non-accredited) investors and rarely involve VC participation, also amplifying the gap in post-funding performance.
{"title":"Brokered Startup Financing","authors":"Emmanuel Yimfor","doi":"10.2139/ssrn.3511164","DOIUrl":"https://doi.org/10.2139/ssrn.3511164","url":null,"abstract":"I study broker intermediation in entrepreneurial financing. Brokers intermediate 15% of startup offerings, but 20% of these brokers are unregistered \"finders.\" Issuers using finders are 30% and 20% less likely to have successful post-funding outcomes than issuers in registered-broker and direct offerings. These outcome gaps are larger when state-level regulatory oversight, which only applies to registered brokers, is stronger and when finders are expelled brokers. These findings are consistent with adverse selection in finder-intermediated offerings. I also show that finder-intermediated offerings more often place with retail (non-accredited) investors and rarely involve VC participation, also amplifying the gap in post-funding performance.","PeriodicalId":236717,"journal":{"name":"ERN: Other Microeconomics: Intertemporal Firm Choice & Growth","volume":"43 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125450802","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Matthew J. Higgins, Mathias Kronlund, Ji Min Park, Joshua Pollet
We utilize a novel identification strategy to analyze the impact of assets in place on firms' decisions for future projects. We exploit the context in the pharmaceutical industry, where the loss of market exclusivity for a branded drug can be used to separate the impact of cash flows generated by a firm's current assets in place from the characteristics of its future investment opportunities. We first show that around the exclusivity losses in our sample of large drugs, the affected firms' profitability drops significantly. The timing of this profitability decrease was predetermined many years ago, and therefore, arguably independent of current investment opportunities. Nevertheless, we find that R&D spending drops by approximately 25% over two years following the loss of exclusivity of these pre-existing drugs. We also find that stock repurchases and cash balances decline significantly. Our findings do not support the predictions of traditional capital budgeting, but are more consistent with the pecking order theory. These results further point to a lack of long-term lifecycle management that could mitigate the effect of predictable negative shocks to cash flows.
{"title":"The Role of Assets In Place: Loss of Market Exclusivity and Investment","authors":"Matthew J. Higgins, Mathias Kronlund, Ji Min Park, Joshua Pollet","doi":"10.2139/ssrn.3666611","DOIUrl":"https://doi.org/10.2139/ssrn.3666611","url":null,"abstract":"We utilize a novel identification strategy to analyze the impact of assets in place on firms' decisions for future projects. We exploit the context in the pharmaceutical industry, where the loss of market exclusivity for a branded drug can be used to separate the impact of cash flows generated by a firm's current assets in place from the characteristics of its future investment opportunities. We first show that around the exclusivity losses in our sample of large drugs, the affected firms' profitability drops significantly. The timing of this profitability decrease was predetermined many years ago, and therefore, arguably independent of current investment opportunities. Nevertheless, we find that R&D spending drops by approximately 25% over two years following the loss of exclusivity of these pre-existing drugs. We also find that stock repurchases and cash balances decline significantly. Our findings do not support the predictions of traditional capital budgeting, but are more consistent with the pecking order theory. These results further point to a lack of long-term lifecycle management that could mitigate the effect of predictable negative shocks to cash flows.","PeriodicalId":236717,"journal":{"name":"ERN: Other Microeconomics: Intertemporal Firm Choice & Growth","volume":"64 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133056642","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In the world of investment, making a good decision could be equated to making good profit, and this has led to the issue around dividend policy which has attracted the attentions of investors and researchers over the years. This study investigated the impact of dividend policy on investors’ preferences on Nigeria's capital market. Specifically, the study investigated the relationship between dividend per share, dividend yield, earnings per share and share price as measures for dividend policy, with equity ratio as a measure for investors preferences. Using quasi experimental design, secondary data were sourced from NSE closure of register and the financial reports of 12 firms listed on the Nigerian Stock Exchange for the period 2009-2019. Four hypotheses on the relationship between dividend per share, dividend yield, earnings per share and share price with equity ratio, were tested using the OLS regression analysis. The study found that all the independent variables except share price are negatively and insignificantly related to equity ratio. Nevertheless, the independent variables have combined positive and significant relationship with equity ratio. Therefore, it is concluded that dividend policy impacts on investor’s preferences but not without some other external effects. It is therefore recommended that firms should pay attention to their dividend policy especially share price; give detailed information on their dividend policy through their annual report; and investors should look beyond share price to observe other dividend policy variables that may give them information on the future of the stock of interest.
{"title":"The Impact of Dividend Policy on Investors’ Preferences on Nigeria’s Capital Market","authors":"Morrison Jostus Turakpe","doi":"10.2139/ssrn.3637446","DOIUrl":"https://doi.org/10.2139/ssrn.3637446","url":null,"abstract":"In the world of investment, making a good decision could be equated to making good profit, and this has led to the issue around dividend policy which has attracted the attentions of investors and researchers over the years. This study investigated the impact of dividend policy on investors’ preferences on Nigeria's capital market. Specifically, the study investigated the relationship between dividend per share, dividend yield, earnings per share and share price as measures for dividend policy, with equity ratio as a measure for investors preferences. Using quasi experimental design, secondary data were sourced from NSE closure of register and the financial reports of 12 firms listed on the Nigerian Stock Exchange for the period 2009-2019. Four hypotheses on the relationship between dividend per share, dividend yield, earnings per share and share price with equity ratio, were tested using the OLS regression analysis. The study found that all the independent variables except share price are negatively and insignificantly related to equity ratio. Nevertheless, the independent variables have combined positive and significant relationship with equity ratio. Therefore, it is concluded that dividend policy impacts on investor’s preferences but not without some other external effects. It is therefore recommended that firms should pay attention to their dividend policy especially share price; give detailed information on their dividend policy through their annual report; and investors should look beyond share price to observe other dividend policy variables that may give them information on the future of the stock of interest.","PeriodicalId":236717,"journal":{"name":"ERN: Other Microeconomics: Intertemporal Firm Choice & Growth","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-06-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130394587","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
I. Hasan, Suk-Joong Kim, Panagiotis N. Politsidis, Eliza Wu
This paper investigates how lenders react to borrowers’ rating changes under heterogeneous conditions and different regulatory regimes. Our findings suggest that corporate downgrades that increase capital requirements for lending banks under the Basel II framework are associated with increased loan spreads and deteriorating non-price loan terms relative to downgrades that do not affect capital requirements. Ratings exert an asymmetric impact on loan spreads, as these remain unresponsive to rating upgrades, even when the latter are associated with a reduction in risk weights for corporate loans. The increase in firm borrowing costs is mitigated in the presence of previous bank-firm lending relationships and for borrowers with relatively strong performance, high cash flows and low leverage.
{"title":"Loan syndication under Basel II: How do firm credit ratings affect the cost of credit?","authors":"I. Hasan, Suk-Joong Kim, Panagiotis N. Politsidis, Eliza Wu","doi":"10.2139/ssrn.3693122","DOIUrl":"https://doi.org/10.2139/ssrn.3693122","url":null,"abstract":"This paper investigates how lenders react to borrowers’ rating changes under heterogeneous conditions and different regulatory regimes. Our findings suggest that corporate downgrades that increase capital requirements for lending banks under the Basel II framework are associated with increased loan spreads and deteriorating non-price loan terms relative to downgrades that do not affect capital requirements. Ratings exert an asymmetric impact on loan spreads, as these remain unresponsive to rating upgrades, even when the latter are associated with a reduction in risk weights for corporate loans. The increase in firm borrowing costs is mitigated in the presence of previous bank-firm lending relationships and for borrowers with relatively strong performance, high cash flows and low leverage.","PeriodicalId":236717,"journal":{"name":"ERN: Other Microeconomics: Intertemporal Firm Choice & Growth","volume":"66 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-06-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132335625","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper documents a new source of myopic investments -- greater reporting credibility. Greater reporting credibility increases investors' response to short-term earnings news, and managers, who are motivated to increase the stock price, have greater incentives to cut intangible investments to improve earnings, even though doing so can damage firms' long-run value. Using a difference-in-differences design, we document that greater reporting credibility can reduce the level and efficiency of intangible investments.
{"title":"The Dark Side of Reporting Credibility: Evidence from Intangible Investments","authors":"Heng Geng, Cheng Zhang, Frank S. Zhou","doi":"10.2139/ssrn.3650784","DOIUrl":"https://doi.org/10.2139/ssrn.3650784","url":null,"abstract":"This paper documents a new source of myopic investments -- greater reporting credibility. Greater reporting credibility increases investors' response to short-term earnings news, and managers, who are motivated to increase the stock price, have greater incentives to cut intangible investments to improve earnings, even though doing so can damage firms' long-run value. Using a difference-in-differences design, we document that greater reporting credibility can reduce the level and efficiency of intangible investments.","PeriodicalId":236717,"journal":{"name":"ERN: Other Microeconomics: Intertemporal Firm Choice & Growth","volume":"29 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114771640","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2020-06-01DOI: 10.5709/ce.1897-9254.401
S. Tomczak
Since 2007, the operating conditions of companies have changed significantly and can be described as more unpredictable. Insolvency of one company may, by the domino effect, have negative impacts on other operators. In extreme cases, these impacts can lead to their bankruptcy. Therefore, it is important to constantly monitor both the financial condition of a company and the financial condition of its business partners. In order to evaluate the financial standing of a company different types of methods can be employed. The aim of the paper was to build two models that specify more than two states of financial standing of manufacturing businesses. The use of the models enables recognition of the deteriorating financial condition of manufacturing companies a few years before insolvency is declared. The traditional discriminant model and Bayesian model were constructed. Cluster analysis was used to select classes of financial standing of the analyzed companies. The models were tested on two sets of samples. A small sample consisted of 224 (112 + 112) companies and a large sample consisted of more than 10,600 companies. The results showed that the traditional discriminant model performs better than the Bayesian model for classifying companies.
{"title":"Multi-class Models for Assessing the Financial Condition of Manufacturing Enterprises","authors":"S. Tomczak","doi":"10.5709/ce.1897-9254.401","DOIUrl":"https://doi.org/10.5709/ce.1897-9254.401","url":null,"abstract":"Since 2007, the operating conditions of companies have changed significantly and can be described as more unpredictable. Insolvency of one company may, by the domino effect, have negative impacts on other operators. In extreme cases, these impacts can lead to their bankruptcy. Therefore, it is important to constantly monitor both the financial condition of a company and the financial condition of its business partners. In order to evaluate the financial standing of a company different types of methods can be employed. The aim of the paper was to build two models that specify more than two states of financial standing of manufacturing businesses. The use of the models enables recognition of the deteriorating financial condition of manufacturing companies a few years before insolvency is declared. The traditional discriminant model and Bayesian model were constructed. Cluster analysis was used to select classes of financial standing of the analyzed companies. The models were tested on two sets of samples. A small sample consisted of 224 (112 + 112) companies and a large sample consisted of more than 10,600 companies. The results showed that the traditional discriminant model performs better than the Bayesian model for classifying companies.","PeriodicalId":236717,"journal":{"name":"ERN: Other Microeconomics: Intertemporal Firm Choice & Growth","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"120939699","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This study investigates the association between ownership concentration and firm innovation using a large data sample of small and medium-sized enterprises (SMEs) spanning 93 countries from 2011 to 2018. We find that higher ownership concentration is associated with a lower likelihood of introducing innovative activities. Further, we aim to validate the possible mechanisms through which concentrated ownership is detrimental to corporate innovation. The results reveal that concentrated ownership has detrimental impacts on innovation for firms with higher degree of asymmetric information, and firms lead by less experienced managers. In addition, we show that the negative association between ownership concentration and innovation only exists for financially constrained firms, which are younger enterprises and SMEs with higher financing obstacles.
{"title":"The Ownership Concentration - Innovation Nexus: Evidence from SMEs around The World","authors":"Duc Nguyen Nguyen, Quynha Tran, Q. Truong","doi":"10.2139/ssrn.3606319","DOIUrl":"https://doi.org/10.2139/ssrn.3606319","url":null,"abstract":"This study investigates the association between ownership concentration and firm innovation using a large data sample of small and medium-sized enterprises (SMEs) spanning 93 countries from 2011 to 2018. We find that higher ownership concentration is associated with a lower likelihood of introducing innovative activities. Further, we aim to validate the possible mechanisms through which concentrated ownership is detrimental to corporate innovation. The results reveal that concentrated ownership has detrimental impacts on innovation for firms with higher degree of asymmetric information, and firms lead by less experienced managers. In addition, we show that the negative association between ownership concentration and innovation only exists for financially constrained firms, which are younger enterprises and SMEs with higher financing obstacles.","PeriodicalId":236717,"journal":{"name":"ERN: Other Microeconomics: Intertemporal Firm Choice & Growth","volume":"16 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-05-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133907253","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Maximilian A. Müller, Caspar David Peter, F. Urzúa I.
We study whether firms avoid financial disclosures to preserve their owners' financial privacy. We find that firms named after their owner, for whom firm disclosure would more directly expose owner information, are more opaque. Eponymous owners prefer firm opacity when disclosure exposes sensitive owner information with social stigma, in rural and anticapitalist areas, and in insider-oriented settings with high secrecy and distrust. When firms are forced to disclose, eponymous owners more frequently change their firms' names, and new firms are less frequently named after their founding owners. These findings indicate that owner-level privacy concerns dampen firm-level disclosure incentives. Data Availability: The data used in this study are available from public sources listed in the paper. JEL Classifications: D82; L51; M41.
{"title":"Owner Exposure Through Firm Disclosure","authors":"Maximilian A. Müller, Caspar David Peter, F. Urzúa I.","doi":"10.2139/ssrn.3565224","DOIUrl":"https://doi.org/10.2139/ssrn.3565224","url":null,"abstract":"\u0000 We study whether firms avoid financial disclosures to preserve their owners' financial privacy. We find that firms named after their owner, for whom firm disclosure would more directly expose owner information, are more opaque. Eponymous owners prefer firm opacity when disclosure exposes sensitive owner information with social stigma, in rural and anticapitalist areas, and in insider-oriented settings with high secrecy and distrust. When firms are forced to disclose, eponymous owners more frequently change their firms' names, and new firms are less frequently named after their founding owners. These findings indicate that owner-level privacy concerns dampen firm-level disclosure incentives.\u0000 Data Availability: The data used in this study are available from public sources listed in the paper.\u0000 JEL Classifications: D82; L51; M41.","PeriodicalId":236717,"journal":{"name":"ERN: Other Microeconomics: Intertemporal Firm Choice & Growth","volume":"99 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-04-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122290487","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
[enter Abstract Body]Constructing a simple general equilibrium model, I examine the effect of local and international political uncertainty on financial flexibility and firm value. The model predicts that political uncertainty will have a negative effect on both. I then empirically examine the effects of political uncertainty on firms in the BRICs countries. I find that local political uncertainty has negative effects on financial flexibility, but not on firm value, while international political uncertainty has negative and larger effects on both. Part of the reason for this is that financial flexibility and long-term debt acts as a partial hedge to political uncertainty.
{"title":"The Effect of Political Uncertainty on Financial Flexibility and Firm Value","authors":"R. Gregory","doi":"10.2139/ssrn.3585726","DOIUrl":"https://doi.org/10.2139/ssrn.3585726","url":null,"abstract":"[enter Abstract Body]Constructing a simple general equilibrium model, I examine the effect of local and international political uncertainty on financial flexibility and firm value. The model predicts that political uncertainty will have a negative effect on both. I then empirically examine the effects of political uncertainty on firms in the BRICs countries. I find that local political uncertainty has negative effects on financial flexibility, but not on firm value, while international political uncertainty has negative and larger effects on both. Part of the reason for this is that financial flexibility and long-term debt acts as a partial hedge to political uncertainty.","PeriodicalId":236717,"journal":{"name":"ERN: Other Microeconomics: Intertemporal Firm Choice & Growth","volume":"9 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-04-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"123757273","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
京公网安备 11010802042870号
京ICP备2023020795号-1
扫码关注我们
求助内容：
应助结果提醒方式：