nep-cfn New Economics Papers
on Corporate Finance
Issue of 2008‒12‒21
six papers chosen by
Zelia Serrasqueiro
University of the Beira Interior

  1. Determinants of board members’ financial expertise – Empirical evidence from France By Stolowy, Hervé; Jeanjean, Thomas
  2. International Taxation and Multinational Firm Location Decisions By Salvador Barrios; Harry Huizinga; Luc Laeven; Gaëtan Nicodème
  3. The Evolution of Corporate Ownership After IPO: The Impact of Investor Protection By C. Fritz Foley; Robin Greenwood
  4. Dynamic Stock Market Interactions between the Canadian, Mexican, and the United States Markets: The NAFTA Experience By Giorgio Canarella; Stephen M. Miller; Stephen K. Pollard
  5. Why do you speak English (in your annual report)? By Jeanjean, Thomas; Stolowy, Hervé; Lesage, Cédric
  6. Financial structure, financial development and banking fragility: International evidence By Ruiz-Porras, Antonio

  1. By: Stolowy, Hervé; Jeanjean, Thomas
    Abstract: This article investigates the determinants of boards’ financial expertise using a sample of 95 non-financial French listed firms.
    Keywords: Financial expertise; board of directors; supervisory board; corporate governance
    JEL: D21 D53
    Date: 2008–10–13
  2. By: Salvador Barrios (European Commission.); Harry Huizinga (Tilburg University and CEPR.); Luc Laeven (International Monetary Fund and CEPR.); Gaëtan Nicodème (Centre Emile Bernheim, Solvay Business School, Université Libre de Bruxelles, Brussels, European Commission, CESifo and ECARES.)
    Abstract: Using a large international firm-level data set, we estimate separate effects of host and parent country taxation on the location decisions of multinational firms. Both types of taxation are estimated to have a negative impact on the location of new foreign subsidiaries. In fact, the impact of parent country taxation is estimated to be relatively large, possibly reflecting its international discriminatory nature. For the cross-section of multinational firms, we find that parent firms tend to be located in countries with a relatively low taxation of foreign-source income. Overall, our results show that parent-country taxation – despite the general possibility of deferral of taxation until income repatriation – is instrumental in shaping the structure of multinational enterprise.
    Keywords: corporate taxation, dividend withholding taxation, location decisions
    JEL: F23 G32 H25 R38
    Date: 2008–12
  3. By: C. Fritz Foley; Robin Greenwood
    Abstract: Recent research documents that ownership concentration is higher in countries with weak investor protection. However, drawing on panel data on corporate ownership in 34 countries between 1995 and 2006, we show this pattern does not hold for newly public firms, which tend to have concentrated ownership regardless of the level of investor protection. We show that firms in countries with strong investor protection are more likely to experience decreases in ownership concentration after listing, that these decreases appear in response to growth opportunities, and that they are associated with new share issuance. We consider the implications of these findings for financing choices and patterns in firm growth and analyze alternative explanations for the diffusion of ownership that could distort our interpretations. We conclude that ownership concentration falls as firms age following their IPO in countries with strong investor protection because firms in these countries raise capital and grow, diluting blockholders in the process.
    JEL: G3 K22
    Date: 2008–12
  4. By: Giorgio Canarella (California State University, Los Angeles, and University of Nevada, Las Vegas); Stephen M. Miller (University of Nevada, Las Vegas, and University of Connecticut); Stephen K. Pollard (California State University, Los Angeles)
    Abstract: This paper explores the dynamic linkages that portray different facets of the joint probability distribution of stock market returns in NAFTA (i.e., Canada, Mexico, and the US). Our examination of interactions of the NAFTA stock markets considers three issues. First, we examine the long-run relationship between the three markets, using cointegration techniques. Second, we evaluate the dynamic relationships between the three markets, using impulse-response analysis. Finally, we explore the volatility transmission process between the three markets, using a variety of multivariate GARCH models. Our results also exhibit significant volatility transmission between the second moments of the NAFTA stock markets, albeit not homogenous. The magnitude and trend of the conditional correlations indicate that in the last few years, the Mexican stock market exhibited a tendency toward increased integration with the US market. Finally, we do note that evidence exists that the Peso and Asian financial crises as well as the stock-market crash in the US affect the return and volatility time-series relationships.
    Keywords: NAFTA stock markets, cointegration, impulse response, volatility transmission
    JEL: G10 C30 C50
    Date: 2008–12
  5. By: Jeanjean, Thomas; Stolowy, Hervé; Lesage, Cédric
    Abstract: In this study the authors analyze the factors associated with the publication of an English-language annual report in non-English-speaking countries. Using a sample of 3,994 firms from 27 countries in 2003, they find that about 50% of the sample firms issue annual reports in English. Our findings suggest that the decision to publish an English annual report is related to the internationalization process (via foreign sales), language barriers (via language distance and language importance), governance (via ownership structure) and financial concerns (via the need for external financing, capital market size and cross-listing).
    Keywords: International financial reporting; annual report; language; cost-benefit analysis; logistic regression
    JEL: G39
    Date: 2008–09–01
  6. By: Ruiz-Porras, Antonio
    Abstract: We study the effects of financial structure and financial development on banking fragility. We develop our study by using fixed-effects panel-data regressions and by controlling the effects of certain banking indicators. We use individual and principal-components indicators of the activity, size and efficiency of intermediaries and markets. The indicators include data for 211 countries between 1990 and 2003. Our main findings suggest that banking stability is enhanced in market-based financial systems. Financial development reduces it. However this fragility-enhancing effect can be unveiled only when we account for financial structure. Thus, financial structure and development jointly matter to assess banking fragility.
    Keywords: Banks; fragility; financial structure; financial development
    JEL: N20 E44 G21
    Date: 2008–12–12

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