nep-cfn New Economics Papers
on Corporate Finance
Issue of 2008‒07‒30
four papers chosen by
Zelia Serrasqueiro
University of the Beira Interior

  1. Family Succession and Firm Performance: Evidence from Italian Family Firms By Marco Cucculelli; Giacinto Micucci
  2. Determinants of European banks‘ engagement in loan securitization By Bannier, Christina E.; Hänsel, Dennis N.
  3. The performance of socially responsible mutual funds: the role of fees and management companies By Javier Gil-Bazo; Pablo Ruiz-Verdu; Andre A. P. Santos
  4. Earnings Management and Contest to the Control: An Analysis of European Family Firms By Jara-Bertin, Mauricio; López-Iturriaga, Félix J.

  1. By: Marco Cucculelli (Faculty of Economics ‘Giorgio Fuà’, Marche Polytechnic University); Giacinto Micucci (Bank of Italy, Ancona Branch, Economic Research Unit)
    Abstract: This article contributes to the growing empirical literature on family firms by studying the impact of the founder–chief executive officer (CEO) succession in a sample of Italian firms. We contrast firms that continue to be managed within the family by the heirs to the founders with firms in which the management is passed on to outsiders. Family successions, that is, successions by the founder’s heirs, are further analyzed by assessing the impact of the sectoral intensity of competition on the post-succession performance. This analysis also addresses the endogeneity in the timing of the CEO succession by controlling for a pure mean-reversion effect in the firm’s performance. We find that the maintenance of management within the family has a negative impact on the firm’s performance, and this effect is largely borne by the good performers, especially in the more competitive sectors. These results indicate that there is no inherent superiority of the family-firm structure and emphasize the importance of conducting an analysis of governance in a variety of institutional settings.
    Keywords: Family successions; Family firms; Founder-run firms
    JEL: G3 G32
    Date: 2008–06
  2. By: Bannier, Christina E.; Hänsel, Dennis N.
    Abstract: We analyze collateralized loan obligation (CLO) transactions by European banks (1997 - 2004), trying to identify firm-specific and macroeconomic factors influencing an institution’s securitization decision. CLO issuance seems to be an appropriate funding tool for large banks with high risk and low liquidity. However, risk transfer turns out to be limited in the extremes. Controlling for fixed effects, we find that fixed costs of securitization are surmountable also for smaller institutions. Interestingly, commercial banks seem to use loan securitization to access capital-market based businesses and the associated fee income. Regulatory capital arbitrage does not appear to have driven the market. Trotz des rasanten Wachstums des Marktes für Kreditrisikotransfer sind die Motive der Banken für die Verbriefung von Kreditportfolios noch nicht vollständig geklärt. Kreditverbriefungen führen zwar zu höherer Liquidität, einer Reduktion von Kredit- und Zinsrisiken, einer Steigerung von Provisionseinkommen, möglicherweise auch einer Verbesserung der Kapitalstruktur, jedoch entscheiden sich einige Banken trotzdem gegen eine Strukturierung und Weiterreichung ihrer Kreditportfolios. Unter den Nachteilen der Verbriefung werden unter anderem die relativ hohen fixen Kosten der erstmaligen Errichtung einer Verbriefungsstruktur sowie eventuelle Steuernachteile von nicht auf der Bilanz gehaltenen Krediten genannt. Weiterhin ermöglicht das neue Basel-II Regelwerk keine „Arbitrage regulatorischen Eigenkapitals“ via Kreditverbriefung mehr, anders als die weniger risikosensitive Eigenkapitalunterlegung unter den alten Basel-Richtlinien. Unsere Studie analysiert „Collateralized Loan Obligation“ (CLO) Transaktionen von Europäischen Banken in den Jahren 1997-2004. Ziel ist es, Faktoren zu isolieren, die die Entscheidung einer Bank, Kredite zu verbriefen, beeinflusst haben. Während wir einen Einfluss regulatorischer Arbitrage nicht vollkommen ausschließen können, zeigt unsere Studie, dass die wesentlichen Bestimmungsfaktoren vielmehr individuelle Faktoren der Banken sind. So ist die Wahrscheinlichkeit, dass eine Bank Kredite verbrieft, umso höher, je größer die Bank, je geringer ihre Liquidität und je höher ihr erwartetes Kreditrisiko ist. Kreditverbriefungen werden offensichtlich als Möglichkeit des Kreditrisikotransfers genutzt. Allerdings zeigt sich, dass Banken mit dem höchsten Kreditrisiko ihre Verbriefungsaktivitäten mit zunehmendem Risiko einstellen, so dass die Risikotransferfunktion nur begrenzt zu nutzen zu sein scheint. Für am Aktienmarkt notierte Banken treffen obige Aussagen noch stärker zu. Interessanterweise zeigt sich hier sogar ein „negativer“ regulatorischer Arbitrageeffekt : Banken mit niedrigem regulatorischem Eigenkapital verbriefen weniger Kredite als Banken mit höherem Eigenkapital. Die neuen Eigenkapitalrichtlinien nach Basel II sollten daher das zukünftige Wachstum des Kreditrisikotransfermarktes nicht beeinträchtigen. Bemerkenswerterweise scheint auch die Bankengröße eine weniger wichtige Rolle zu spielen als zunächst gedacht. Auch kleinere Banken sind somit in der Lage, die mit einer Kreditverbriefung verbundenen Fixkosten zu tragen. Es ist zu vermuten, dass gerade traditionelle Kreditbanken die Verbriefung von Kreditportfolios unter anderem auch nutzen, um indirekt dem „investment-banking“ verwandte Geschäftsbereiche und die entsprechenden Provisionseinkommen zu erschließen.
    Keywords: Securitization, credit risk transfer, collateralized loan obligations
    JEL: G21
    Date: 2008
  3. By: Javier Gil-Bazo; Pablo Ruiz-Verdu; Andre A. P. Santos
    Abstract: In this paper, we shed light on the debate about the financial performance of socially responsible investment (SRI) mutual funds by separately analyzing the contributions of before-fee performance and fees to SRI funds' performance and by investigating the role played by fund management companies in the determination of those variables. We apply the matching estimator methodology to obtain our results and find that in the period 1997-2005, US SRI funds had significantly higher fees and better before- and after-fee performance than conventional funds with similar characteristics. Differences, however, were driven exclusively by SRI funds run by management companies specialized in socially responsible investment.
    Keywords: Socially responsible investment, Mutual fund fees, Mutual fund performance, Matching estimators
    JEL: G12 G20 G23 A13
    Date: 2008–06
  4. By: Jara-Bertin, Mauricio; López-Iturriaga, Félix J.
    Abstract: This paper analyzes the influence of large shareholders on earnings management in family-owned firms using a sample of firms from 11 European countries. We consider how the contest to the control of the largest shareholder and the existence of a controlling coalition in family-owned firms affect earnings management in these firms. We find that increased contestability of the control of the largest shareholder reduces earnings management in family-owned firms. Our results also show that in firms in which the largest shareholder is a family, a second or third family shareholder increases discretionary accruals.
    Keywords: corporate control; discretionary accruals; earnings management; family firms
    JEL: M41 G32
    Date: 2008–07–11

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