In this paper we consider a moral hazard problem between a creditworthy firm which needs funding and a bank. We first study under which conditions the firm does not obtain the loan. We then determine whether and how the intervention of an external financial institution can facilitate the access to credit. In particular, we focus on the European Investment Bank Group (EIBG), which provides (i) specific credit lines to help banks that finance small and medium-sized enterprises (SMEs)and (ii) guarantees for portfolios of SMEs'loans. We show that only during crises the EIBG intervention allows to totally overcome the credit crunch.
{"title":"Credit Availability in the Crisis: Which Role for the European Investment Bank Group?","authors":"A. Fedele, A. Mantovani, F. Liucci","doi":"10.2139/ssrn.1681387","DOIUrl":"https://doi.org/10.2139/ssrn.1681387","url":null,"abstract":"In this paper we consider a moral hazard problem between a creditworthy firm which needs funding and a bank. We first study under which conditions the firm does not obtain the loan. We then determine whether and how the intervention of an external financial institution can facilitate the access to credit. In particular, we focus on the European Investment Bank Group (EIBG), which provides (i) specific credit lines to help banks that finance small and medium-sized enterprises (SMEs)and (ii) guarantees for portfolios of SMEs'loans. We show that only during crises the EIBG intervention allows to totally overcome the credit crunch.","PeriodicalId":340291,"journal":{"name":"ERN: Intertemporal Firm Choice & Growth","volume":"157 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2010-03-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130493436","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}
We provide evidence on the frequency and size of corporate payouts by Australian firms, and test whether the life cycle theory explains Australian payout policies. Regular dividends remain the most popular mechanism for distributing cash to shareholders, despite a slight decline in the proportion of dividend payers since the relaxation of buy-back regulations in 1998. Off-market share buy-backs return the largest amount of cash to shareholders. Dividend paying firms are larger, more profitable, and have less growth options that non-dividend paying firms. Consistent with the life cycle theory, we observe a highly significant relation between the decision to pay regular dividends and the proportion of shareholders’ equity that is earned rather than contributed.
{"title":"Corporate Payout Policy in Australia and a Test of the Life Cycle Theory","authors":"J. Coulton, Caitlin M. S. Ruddock","doi":"10.2139/ssrn.1567306","DOIUrl":"https://doi.org/10.2139/ssrn.1567306","url":null,"abstract":"We provide evidence on the frequency and size of corporate payouts by Australian firms, and test whether the life cycle theory explains Australian payout policies. Regular dividends remain the most popular mechanism for distributing cash to shareholders, despite a slight decline in the proportion of dividend payers since the relaxation of buy-back regulations in 1998. Off-market share buy-backs return the largest amount of cash to shareholders. Dividend paying firms are larger, more profitable, and have less growth options that non-dividend paying firms. Consistent with the life cycle theory, we observe a highly significant relation between the decision to pay regular dividends and the proportion of shareholders’ equity that is earned rather than contributed.","PeriodicalId":340291,"journal":{"name":"ERN: Intertemporal Firm Choice & Growth","volume":"17 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2010-03-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127954113","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}
Turnaround companies are defined as those which after reporting accounting loss consecutively for two or more quarters announces profit for the first time. Between 2004 and 2009 by analyzing the data of 49 such turnaround companies, we document about 9% cumulative average abnormal return (CAAR) during the week following earning announcement. The study reveals- accounting profit by turnaround companies acts as ‘earning surprise’ reflecting inability of analysts to predict quarterly result, weak form of market efficiency and short run post-earning announcement drift (PEAD) contrary to EMH which postulates instantaneous adjustment of price to new information. The study also attempts to provide some insight as to insiders trading and earning management in the light of empirical findings.
{"title":"EMH and Post-Earning Announcement Drift: An Insight from Event Study of Turnaround Companies in India","authors":"Santanu K. Ganguli","doi":"10.2139/SSRN.1545647","DOIUrl":"https://doi.org/10.2139/SSRN.1545647","url":null,"abstract":"Turnaround companies are defined as those which after reporting accounting loss consecutively for two or more quarters announces profit for the first time. Between 2004 and 2009 by analyzing the data of 49 such turnaround companies, we document about 9% cumulative average abnormal return (CAAR) during the week following earning announcement. The study reveals- accounting profit by turnaround companies acts as ‘earning surprise’ reflecting inability of analysts to predict quarterly result, weak form of market efficiency and short run post-earning announcement drift (PEAD) contrary to EMH which postulates instantaneous adjustment of price to new information. The study also attempts to provide some insight as to insiders trading and earning management in the light of empirical findings.","PeriodicalId":340291,"journal":{"name":"ERN: Intertemporal Firm Choice & Growth","volume":"18 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2010-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126743582","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}
The recent revival of Hyman P. Minsky's ideas among policymakers, economists, bankers, financial institutions, and the mass media, synchronized with the increasing gravity of the subprime financial crisis, demands a reappraisal of the meaning and scope of the "financial instability hypothesis" (FIH). We argue that we need a broader approach than that conventionally pursued, in order to understand not only financial crises but also the periods of financial calm between them and the transition from stability to instability. In this paper we aim to contribute to this challenging task by restating the strictly financial part of the FIH on the basis of a generalization of Minsky's taxonomy of economic units. In light of this restatement, we discuss a few methodological issues that have to be clarified in order to develop the FIH in the most promising direction.
最近海曼·明斯基(Hyman P. Minsky)的观点在政策制定者、经济学家、银行家、金融机构和大众媒体之间的复兴，与次贷金融危机的日益严重同步，要求对“金融不稳定假说”(FIH)的意义和范围进行重新评估。我们认为，我们需要一个比传统方法更广泛的方法，以便不仅理解金融危机，而且理解它们之间的金融平静时期以及从稳定到不稳定的过渡。在本文中，我们的目标是通过在明斯基经济单位分类法的概括基础上，重申FIH的严格金融部分，为这项具有挑战性的任务做出贡献。鉴于这一重述，我们讨论了一些必须澄清的方法问题，以便在最有希望的方向上发展FIH。
{"title":"Minsky Moments, Russell Chickens, and Gray Swans: The Methodological Puzzles of the Financial Instability Analysis","authors":"A. Vercelli","doi":"10.2139/ssrn.1512582","DOIUrl":"https://doi.org/10.2139/ssrn.1512582","url":null,"abstract":"The recent revival of Hyman P. Minsky's ideas among policymakers, economists, bankers, financial institutions, and the mass media, synchronized with the increasing gravity of the subprime financial crisis, demands a reappraisal of the meaning and scope of the \"financial instability hypothesis\" (FIH). We argue that we need a broader approach than that conventionally pursued, in order to understand not only financial crises but also the periods of financial calm between them and the transition from stability to instability. In this paper we aim to contribute to this challenging task by restating the strictly financial part of the FIH on the basis of a generalization of Minsky's taxonomy of economic units. In light of this restatement, we discuss a few methodological issues that have to be clarified in order to develop the FIH in the most promising direction.","PeriodicalId":340291,"journal":{"name":"ERN: Intertemporal Firm Choice & Growth","volume":"16 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2009-11-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114997032","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}
We analyze the life-cycle patterns of a firm's financing decisions and their interaction with future growth and development decisions. The framework derives three different financing sequences (debt-debt, equity-debt, equity-equity financing) which we link to existing empirical research. Furthermore, by adopting a life-cycle approach we are able to go one step beyond existing empirical research and derive testable hypotheses with respect to differences in the financing decisions of firms due to project, firm, market and country characteristics as well as the impact of a possible lack of start-up financing possibilities on firm dynamics.
{"title":"Financing Decisions Along a Firm's Life-Cycle: Debt as a Commitment Device","authors":"J. Hirsch, U. Walz","doi":"10.2139/ssrn.1501153","DOIUrl":"https://doi.org/10.2139/ssrn.1501153","url":null,"abstract":"We analyze the life-cycle patterns of a firm's financing decisions and their interaction with future growth and development decisions. The framework derives three different financing sequences (debt-debt, equity-debt, equity-equity financing) which we link to existing empirical research. Furthermore, by adopting a life-cycle approach we are able to go one step beyond existing empirical research and derive testable hypotheses with respect to differences in the financing decisions of firms due to project, firm, market and country characteristics as well as the impact of a possible lack of start-up financing possibilities on firm dynamics.","PeriodicalId":340291,"journal":{"name":"ERN: Intertemporal Firm Choice & Growth","volume":"22 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2009-11-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127774142","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}
What is the impact of real estate prices on corporate investment? In the presence of financing frictions, firms use pledgeable assets as collateral to finance new projects. Through this collateral channel, shocks to the value of real estate can have a large impact on aggregate investment. Over the 1993-2007 period, the representative U.S. corporation invests 6 cents out of each additional dollar of collateral. To compute this sensitivity, we use local variations in real estate prices as shocks to the collateral value of firms that own real estate. We address the endogeneity of local real estate prices using the interaction of interest rates and local constraints on land supply as an instrument. We address the endogeneity of the decision to own land (1) by controlling for observable determinants of ownership and (2) by looking at the investment behavior of firms before and after they acquire land. The sensitivity of investment to collateral value is stronger the more likely a firm is to be credit constrained.
{"title":"The Collateral Channel: How Real Estate Shocks Affect Corporate Investment","authors":"Thomas Chaney, D. Sraer, D. Thesmar","doi":"10.2139/ssrn.1746768","DOIUrl":"https://doi.org/10.2139/ssrn.1746768","url":null,"abstract":"What is the impact of real estate prices on corporate investment? In the presence of financing frictions, firms use pledgeable assets as collateral to finance new projects. Through this collateral channel, shocks to the value of real estate can have a large impact on aggregate investment. Over the 1993-2007 period, the representative U.S. corporation invests 6 cents out of each additional dollar of collateral. To compute this sensitivity, we use local variations in real estate prices as shocks to the collateral value of firms that own real estate. We address the endogeneity of local real estate prices using the interaction of interest rates and local constraints on land supply as an instrument. We address the endogeneity of the decision to own land (1) by controlling for observable determinants of ownership and (2) by looking at the investment behavior of firms before and after they acquire land. The sensitivity of investment to collateral value is stronger the more likely a firm is to be credit constrained.","PeriodicalId":340291,"journal":{"name":"ERN: Intertemporal Firm Choice & Growth","volume":"46 6 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2009-10-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130798781","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}
The choice of capital structure by firms is a fundamental issue in financial literature. According to a recent finding, the capital structure of firms remains almost unchanged during their lives meaning that leverage ratios are significantly stable over time. The stability of leverage ratios is mainly generated by an unobserved firm-specific effect that is liable for the majority of variation in capital structure (Lemmon, Roberts, and Zender 2008). However, the study focuses on the US economy, which is relatively stable. I study how substantial changes in the economy affect the stability of firms' capital structure in transition countries. Specifically, I concentrate on Central and Eastern European economies that passed through transition from central planning to a market economy and privatization, the Russian financial crisis, and EU membership. In addition, I investigate whether the ownership structure of firms is responsible for the part of the unexplained variation in leverage.
企业资本结构的选择是金融文献中的一个基本问题。根据最近的一项发现，公司的资本结构在其生命周期中几乎保持不变，这意味着杠杆率随着时间的推移显着稳定。杠杆率的稳定性主要是由一种未被观察到的企业特定效应产生的，这种效应导致了资本结构的大部分变化(Lemmon, Roberts, and Zender 2008)。然而，这项研究关注的是相对稳定的美国经济。我研究经济的重大变化如何影响转型国家企业资本结构的稳定性。具体来说，我关注的是中欧和东欧经济体，它们经历了从中央计划经济到市场经济和私有化的过渡，俄罗斯的金融危机，以及欧盟成员国的身份。此外，我研究了公司的所有权结构是否对杠杆的部分无法解释的变化负责。
{"title":"Is the Stability of Leverage Ratios Determined by the Stability of the Economy?","authors":"A. Shamshur","doi":"10.2139/ssrn.1502827","DOIUrl":"https://doi.org/10.2139/ssrn.1502827","url":null,"abstract":"The choice of capital structure by firms is a fundamental issue in financial literature. According to a recent finding, the capital structure of firms remains almost unchanged during their lives meaning that leverage ratios are significantly stable over time. The stability of leverage ratios is mainly generated by an unobserved firm-specific effect that is liable for the majority of variation in capital structure (Lemmon, Roberts, and Zender 2008). However, the study focuses on the US economy, which is relatively stable. I study how substantial changes in the economy affect the stability of firms' capital structure in transition countries. Specifically, I concentrate on Central and Eastern European economies that passed through transition from central planning to a market economy and privatization, the Russian financial crisis, and EU membership. In addition, I investigate whether the ownership structure of firms is responsible for the part of the unexplained variation in leverage.","PeriodicalId":340291,"journal":{"name":"ERN: Intertemporal Firm Choice & Growth","volume":"151 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2009-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132464757","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 : 2009-07-29DOI: 10.1111/j.1467-8551.2009.00667.x
L. Millward, T. Postmes
One ultimate test of the material value of identification in an organizational context is whether it relates to productivity. In this rare study of a business team in a global consumer goods company, we demonstrate a sales benefit of organizational identification when correcting for systematic between-unit differences in sales. Findings also question the theoretical and practical meaning of ‘proximity’ in accounting for salience variations in identification – the best predictor of sales was the degree of identification with the superordinate business unit. Findings shed light on the scientific as well as managerial and business utility of the organizational identity concept.
{"title":"Who We are Affects How We Do: The Financial Benefits of Organizational Identification","authors":"L. Millward, T. Postmes","doi":"10.1111/j.1467-8551.2009.00667.x","DOIUrl":"https://doi.org/10.1111/j.1467-8551.2009.00667.x","url":null,"abstract":"One ultimate test of the material value of identification in an organizational context is whether it relates to productivity. In this rare study of a business team in a global consumer goods company, we demonstrate a sales benefit of organizational identification when correcting for systematic between-unit differences in sales. Findings also question the theoretical and practical meaning of ‘proximity’ in accounting for salience variations in identification – the best predictor of sales was the degree of identification with the superordinate business unit. Findings shed light on the scientific as well as managerial and business utility of the organizational identity concept.","PeriodicalId":340291,"journal":{"name":"ERN: Intertemporal Firm Choice & Growth","volume":"10 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2009-07-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"119641674","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}
The objective of this article is to analyse the effects of the German interest ceiling rule by implementing a simulation model considering uncertainty. Aggregated empiric statistical data of companies in various branches, enterprise sizes and legal forms are entered into a Monte-Carlo simulation model to estimate the development of their individual company values. The model illustrates the significant influences of the interest ceiling rule. However the effects are not only negative, as a possible paradox positive effect was identified due to the combined impacts of a tax loss carry-forward and the interest ceiling rule.
{"title":"The Effects of the Interest Ceiling Rule on Different Industries, Sizes and Legal Forms of Enterprises (Die Auswirkungen Der Zinsschranke Auf Unterschiedliche Branchen, Unternehmensgrößen Und Rechtsformen)","authors":"G. Brähler, C. Scholz","doi":"10.2139/ssrn.1604092","DOIUrl":"https://doi.org/10.2139/ssrn.1604092","url":null,"abstract":"The objective of this article is to analyse the effects of the German interest ceiling rule by implementing a simulation model considering uncertainty. Aggregated empiric statistical data of companies in various branches, enterprise sizes and legal forms are entered into a Monte-Carlo simulation model to estimate the development of their individual company values. The model illustrates the significant influences of the interest ceiling rule. However the effects are not only negative, as a possible paradox positive effect was identified due to the combined impacts of a tax loss carry-forward and the interest ceiling rule.","PeriodicalId":340291,"journal":{"name":"ERN: Intertemporal Firm Choice & Growth","volume":"38 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2009-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129382419","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}
The question of whether more competition among banks increases relationship banking, which is predicted to improve credit availability for informationally opaque firms in theory, is a controversial issue in the banking literature. By using firm-level survey data in Japan, this paper provides evidence for the negative correlation between lending competition and the provision of relationship banking . This paper raises the question whether fierce interbank competition is always beneficial for small firms.
{"title":"Lending Competition and Relationship Banking: Evidence from Japanese Prefectural Level Data","authors":"Yoshiaki Ogura, Nobuyoshi Yamori","doi":"10.2139/ssrn.1488667","DOIUrl":"https://doi.org/10.2139/ssrn.1488667","url":null,"abstract":"The question of whether more competition among banks increases relationship banking, which is predicted to improve credit availability for informationally opaque firms in theory, is a controversial issue in the banking literature. By using firm-level survey data in Japan, this paper provides evidence for the negative correlation between lending competition and the provision of relationship banking . This paper raises the question whether fierce interbank competition is always beneficial for small firms.","PeriodicalId":340291,"journal":{"name":"ERN: Intertemporal Firm Choice & Growth","volume":"17 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2009-06-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"117213888","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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