Since the 2007 financial crisis the use of collateral has again come back into the focus of academics and practitioners. However, the existing literature on the determinants of collateral has concentrated mostly on developed markets, especially the U.S. and the U.K., although collateral is even more important due to the opaque information that exists in developing markets. This thesis conducted useful tests of whether the theories that have been established and applied to explain the determinants of collateral in developed markets are applicable to the world’s largest emerging market, China. Since China introduced economic reforms in the late 1970s, it has been growing at high speed, with the banking sector being the primary source of finance for its growing economy (Bailey et al., 2011). With this pronounced economic expansion and increasing competition for funds, the investigation of collateral requirements in bank loans has been an extrusive issue in China. Firstly, this research examined the effect of ownership structure on collateral requirements using a sample of China’s listed firms. I found that compared to non-stateowned enterprises (non-SOEs), state-owned enterprises (SOEs) were less likely to be required to pledge collateral. The empirical results also showed that banks were more willing to offer unsecured loans to companies with more foreign ownership or with more bank loans guaranteed by third parties, and the aforementioned effect of state ownership on reducing collateral requirements became weaker in those companies. This research also found that the aforementioned effect of state ownership on reducing collateral requirements became more pronounced for firms operating in regions with more government intervention. Secondly, this research examined the effect of ownership structure on the lending relationships in China’s listed firms. The findings indicated that SOEs were more likely to receive bank loans from state-owned banks than non-SOEs. The empirical results also showed that firms with more foreign ownership were more likely to receive bank loans from foreign banks. There was no significant difference between SOEs and non- SOEs in the probability of obtaining loans from joint stock commercial banks, while firms with more foreign ownership were more likely to obtain loans from this type of banks. Moreover, both SOEs and firms with more foreign ownership were more likely to maintain multiple banking relationships. It was also found that firms that operated in regions with a better institutional environment had more concentrated ownership in bank loans rather than multiple banking relationships. My findings also implied that joint stock commercial banks have a comparative advantage in processing private information and delivering relationship lending rather than collateral based lending, while concentrated banking relationships were also helpful for gathering information and reducing collateral requirements. Moreover, the role of c
自2007年金融危机以来，抵押品的使用再次成为学术界和实践者关注的焦点。然而，关于抵押品决定因素的现有文献主要集中在发达市场，特别是美国和英国，尽管由于发展中市场存在不透明的信息，抵押品更为重要。本文对发达市场中已经建立并应用于解释抵押品决定因素的理论是否适用于全球最大的新兴市场中国进行了有益的检验。自20世纪70年代末中国实施经济改革以来，中国经济一直高速增长，银行业是其经济增长的主要融资来源(Bailey et al.， 2011)。随着经济的显著扩张和资金竞争的加剧，对银行贷款抵押品要求的调查在中国一直是一个棘手的问题。首先，本研究以中国上市公司为样本，考察了股权结构对抵押品要求的影响。我发现，与非国有企业(non-国企)相比，国有企业(soe)被要求抵押的可能性更小。实证结果还表明，银行更愿意向外资持股比例更高或第三方担保银行贷款比例更高的公司提供无担保贷款，上述国有企业降低抵押品要求的效果在这些公司中变得更弱。本研究还发现，在政府干预较多的地区经营的公司，上述国有制对降低抵押品要求的影响更为明显。其次，本研究考察了股权结构对中国上市公司借贷关系的影响。调查结果表明，国有企业比非国有企业更有可能从国有银行获得银行贷款。实证结果还表明，外资持股越多的企业更有可能从外资银行获得银行贷款。国有企业和非国有企业从股份制商业银行获得贷款的概率没有显著差异，而外资持股较多的企业更有可能从股份制商业银行获得贷款。此外，国有企业和外资持股较多的企业更有可能与多家银行保持关系。研究还发现，在制度环境较好的地区经营的企业，其对银行贷款的所有权更集中，而不是与多家银行有关系。我的研究结果还表明，股份制商业银行在处理私人信息和提供关系贷款(而不是基于抵押品的贷款)方面具有比较优势，而集中的银行关系也有助于收集信息和降低抵押品要求。此外，集中化的银行关系在减少……
{"title":"Corporate Governance and Collateral Requirements: Evidence from China's Listed Firms","authors":"Can An, G. Tian, Xiaofei Pan","doi":"10.2139/ssrn.2388484","DOIUrl":"https://doi.org/10.2139/ssrn.2388484","url":null,"abstract":"Since the 2007 financial crisis the use of collateral has again come back into the focus of academics and practitioners. However, the existing literature on the determinants of collateral has concentrated mostly on developed markets, especially the U.S. and the U.K., although collateral is even more important due to the opaque information that exists in developing markets. This thesis conducted useful tests of whether the theories that have been established and applied to explain the determinants of collateral in developed markets are applicable to the world’s largest emerging market, China. Since China introduced economic reforms in the late 1970s, it has been growing at high speed, with the banking sector being the primary source of finance for its growing economy (Bailey et al., 2011). With this pronounced economic expansion and increasing competition for funds, the investigation of collateral requirements in bank loans has been an extrusive issue in China. Firstly, this research examined the effect of ownership structure on collateral requirements using a sample of China’s listed firms. I found that compared to non-stateowned enterprises (non-SOEs), state-owned enterprises (SOEs) were less likely to be required to pledge collateral. The empirical results also showed that banks were more willing to offer unsecured loans to companies with more foreign ownership or with more bank loans guaranteed by third parties, and the aforementioned effect of state ownership on reducing collateral requirements became weaker in those companies. This research also found that the aforementioned effect of state ownership on reducing collateral requirements became more pronounced for firms operating in regions with more government intervention. Secondly, this research examined the effect of ownership structure on the lending relationships in China’s listed firms. The findings indicated that SOEs were more likely to receive bank loans from state-owned banks than non-SOEs. The empirical results also showed that firms with more foreign ownership were more likely to receive bank loans from foreign banks. There was no significant difference between SOEs and non- SOEs in the probability of obtaining loans from joint stock commercial banks, while firms with more foreign ownership were more likely to obtain loans from this type of banks. Moreover, both SOEs and firms with more foreign ownership were more likely to maintain multiple banking relationships. It was also found that firms that operated in regions with a better institutional environment had more concentrated ownership in bank loans rather than multiple banking relationships. My findings also implied that joint stock commercial banks have a comparative advantage in processing private information and delivering relationship lending rather than collateral based lending, while concentrated banking relationships were also helpful for gathering information and reducing collateral requirements. Moreover, the role of c","PeriodicalId":309802,"journal":{"name":"2014 Financial Markets & Corporate Governance Conference (Archive)","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2014-01-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131217392","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 research investigates the association between discretionary disaggregation in mandatory risk disclosures, audit conservatism and the implied cost of capital (ICOE). Based on a sample of 141 financial firms from six GCC countries over the 2007-2011 period, we find that the ICOE is significantly negatively associated with discretionary disaggregation in mandatory market risk disclosures after controlling for firm-specific characteristics and country-specific institutional factors. Further, our interaction term between audit conservatism and firms’ disaggregation in mandatory risk disclosures is negatively associated with the ICOE, particularly for small to medium size firms. These findings are robust to a series of sensitivity tests. Collectively, these results demonstrate that more discretionary disaggregation in risk disclosure provides more private information to investors.
{"title":"Disaggregation in Mandatory Risk Disclosure, Audit Conservatism and Implied Cost of Equity Capital","authors":"Ahmed Al-Hadi, Grantley Taylor, Mahmud Hossain","doi":"10.2139/ssrn.2385166","DOIUrl":"https://doi.org/10.2139/ssrn.2385166","url":null,"abstract":"This research investigates the association between discretionary disaggregation in mandatory risk disclosures, audit conservatism and the implied cost of capital (ICOE). Based on a sample of 141 financial firms from six GCC countries over the 2007-2011 period, we find that the ICOE is significantly negatively associated with discretionary disaggregation in mandatory market risk disclosures after controlling for firm-specific characteristics and country-specific institutional factors. Further, our interaction term between audit conservatism and firms’ disaggregation in mandatory risk disclosures is negatively associated with the ICOE, particularly for small to medium size firms. These findings are robust to a series of sensitivity tests. Collectively, these results demonstrate that more discretionary disaggregation in risk disclosure provides more private information to investors.","PeriodicalId":309802,"journal":{"name":"2014 Financial Markets & Corporate Governance Conference (Archive)","volume":"43 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2014-01-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127812314","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}
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