nep-cfn New Economics Papers
on Corporate Finance
Issue of 2007‒04‒14
three papers chosen by
Zelia Serrasqueiro
University of the Beira Interior

  1. Financialisation of strategies, risk transfer, liquidity, property and control (In French) By Tristan AUVRAY (LEREPS-GRES); Gabriel COLLETIS (coord.) - (LEREPS-GRES); Stéphanie LAVIGNE (ESC Toulouse - LEREPS-GRES); Matthieu MONTALBAN (GREThA-GRES); François MORIN (LEREPS-GRES); Geoffroy RADURIAU (LEREPS-GRES)
  2. Stale information, shocks and volatility By Gropp, Reint Eberhard; Kadareija, Arjan
  3. The Relationship between Corporate Governance Indicators and Firm Value: A Case Study of Karachi Stock Exchange By Attiya Y. Javed; Robina Iqbal

    Abstract: The financialisation of strategies, as mentioned in the introduction, may be correlated with the dominant link between investment and funding. The principle of selection no longer seems to focus essentially on investment funding methods, but on investments themselves, according to a financial profitability criterion. The first part of the text deals with the question of “risk transfer”. The second part examines financialisation from the point of view of the principle of liquidity by emphasizing the importance of the assessment which markets exercise on the firms’ financial performance, but also on their industrial. The question of the link between property and control is dealt with in the third part of the text. It is explored in two phases: the link between structure and property rights on the one hand; the link between governance structure and resource allocation on the other hand. The general conclusion suggests placing the financial capital issue between science and magic. The conclusion is organized in two phases: the first phase means to emphasize three transverse dimensions of the financialisation process; the second phase proposes to put that process into a sequence going from the production of representations to the production of norms, to the question of the financialised firm’s model.
    Keywords: Financialisation, risks, evaluation, liquidity, control, governance, external growth, representations, (business) models, (accounting) standards
    JEL: G34 L22 L23 L24 M14 M49 M55
    Date: 2007
  2. By: Gropp, Reint Eberhard; Kadareija, Arjan
    Abstract: We propose a new approach to measuring the effect of unobservable private information or beliefs on volatility. Using high-frequency intraday data, we estimate the volatility effect of a well identified shock on the volatility of the stock returns of large European banks as a function of the quality of available public information about the banks. We hypothesise that, as the publicly available information becomes stale, volatility effects and its persistance should increase, as the private information (beliefs) of investors become more important. We find strong support for this idea in the data. We argue that the results have implications for debate surrounding the opacity of banks and the transparency requirements that may be imposed on banks under Pillar III of the New Basel Accord
    Keywords: Realized volatility, public information, transparency
    JEL: G14 G21
    Date: 2007
  3. By: Attiya Y. Javed (Pakistan Institute of Development Economics, Islamabad); Robina Iqbal (Quaid-i-Azam University, Islamabad)
    Abstract: We investigated whether differences in quality of firm-level corporate governance can explain the firm-level performance in a cross-section of companies listed at Karachi Stock Exchange. Therefore, we analysed the relationship between firm-level value as measured by Tobin’s Q and total Corporate Governance Index (CGI) and three sub-indices: Board, Shareholdings and Ownership, and Disclosures and Transparency for a sample of 50 firms. The results indicate that corporate governance does matter in Pakistan. However, not all elements of governance are important. The board composition and ownership and shareholdings enhance firm performance, whereas disclosure and transparency has no significant effect on firm performance. We point out that those adequate firm-level governance standards can not replace the solidity of the firm. The low production and bad management practices
    Keywords: Corporate Governance, Firm Performance, Tobin’s Q, Agency Problem, Board Size, Shareholdings, Disclosures, Leverage, Code of Corporate Governance
    JEL: G12 G34 G38
    Date: 2007

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