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on Accounting and Auditing |
| By: | Hanan Morsy; Akiko Terada-Hagiwara; Maria Pia Iannariello |
| Abstract: | This paper studies the detrimental effect of sudden stops on the growth of Thai firms' fixed assets. We focus on the fixed assets adjustment that firms undertake at times of financial constraints. We derive our results from balance sheet data for 284 nonfinancial Thai listed firms. Our data demonstrate that Thai firms faced severe declines in the growth of their fixed assets starting in 1996. Regression results demonstrate, after controlling for firms' characteristics and lagged dependent variables, that holding longer-term debt maturity structure is the factor that works in the firms' favor during sudden stop episodes, while it is their profitability that matters during tranquil periods. |
| Keywords: | Financial crisis , Thailand , Private sector , Capital , Debt burden , Debt management , Asia , |
| Date: | 2007–01–23 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:07/11&r=acc |
| By: | Joseph A. McCAHERY; Erik P.M. VERMEULEN; HISATAKE Masato; SAITO Jun |
| Abstract: | In this paper, we have distinguished three different positions along the reform strategy spectrum of company law. The first position is located on the left side of the spectrum and closest to stasis - where virtually no effective legal changes can occur and where only the idea of reform clashes with legal tradition and standardization pressures. An example of a jurisdiction that takes this position is Germany. Along or near the mid-point of the spectrum, company law changes are less impeded by tradition and standardization factors, but more influenced by interest group pressures. We see England occupying this position. Japan can be seen as a more adaptable jurisdiction located toward the right end of the spectrum and therefore better able to create and introduce more functional legal rules and institutions that turn the traditional view of company law around. It is submitted that Singapore is located on the right side of the spectrum as its legislature is aware of the need to adapt the legal system to international business practices in order to develop a distinct jurisprudence, acclaimed for its efficiency and integrity, which is set apart from the English legal system. |
| Date: | 2007–05 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:07033&r=acc |
| By: | Mihir A. Desai; Dhammika Dharmapala |
| Abstract: | Investors can access foreign diversification opportunities through either foreign portfolio investment (FPI) or foreign direct investment (FDI). By combining data on US outbound FPI and FDI, this paper analyzes whether the composition of US outbound capital flows reflect efforts to bypass home country tax regimes and weak host country investor protections. The cross-country analysis indicates that a 10% decrease in a foreign country's corporate tax rate increases US investors' equity FPI holdings by 21%, controlling for effects on FDI. This suggests that the residual tax on foreign multinational firm earnings biases capital flows to low corporate tax countries toward FPI. A one standard deviation increase in a foreign country's investor protections is shown to be associated with a 24% increase in US investors' equity FPI holdings. These results are robust to various controls, are not evident for debt capital flows, and are confirmed using an instrumental variables analysis. The use of FPI to bypass home country taxation of multinational firms is also apparent using only portfolio investment responses to within-country corporate tax rate changes in a panel from 1994 to 2005. Investors appear to alter their portfolio choices to circumvent home and host country institutional regimes. |
| JEL: | F21 F23 G11 G30 H25 |
| Date: | 2007–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13132&r=acc |
| By: | Jean-Pierre Danthine (University of Lausanne, Swiss Finance Institute and CEPR); Xiangrong JIN (Hong Kong Monetary Authority) |
| Abstract: | Recent studies have found unmeasured intangible capital to be large and important. In this paper we observe that by nature intangible capital is also very different from physical capital. We find it plausible to argue that the accumulation process for intangible capital differs significantly from the process by which physical capital accumulates. We study the implications of this hypothesis for rational firm valuation and asset pricing using a two-sector general equilibrium model. Our main finding is that the properties of firm valuation and stock prices are very dependent on the assumed accumulation process for intangible capital. If one entertains the possibility that intangible investments translates into capital stochastically, we find that plausible levels of macroeconomic volatility are compatible with highly variable corporate valuations, P/E ratios and stock returns. |
| Keywords: | Intangible capital, corporate valuation, stock return volatility |
| JEL: | D24 D50 G12 |
| Date: | 2006–09 |
| URL: | http://d.repec.org/n?u=RePEc:chf:rpseri:rp18&r=acc |