|
on Corporate Finance |
| By: | Quan-Hoang Vuong (Centre Emile Bernheim, Solvay Brussels School of Economics and Management, Université Libre de Bruxelles, Brussels.); Tran Tri Dung (Dan Houtte, Vuong & Partners, Economic Research, Hanoi, Vietnam.) |
| Abstract: | Corporate bond appeared early in 1992-1994 in Vietnamese capital markets. However, it is still not popular to both business sector and academic circle. This paper explores different dimensions of Vietnamese corporate bond market using a unique, and perhaps, most complete dataset. State not only intervenes in the bond markets with its powerful budget and policies but also competes directly with enterprises. The dominance of SOEs and large corporations also prevents SMEs from this debt financing vehicle. Whenever a convertible term is available, bondholders are more willing to accept lower fixed income payoff. But they would not likely stick to it. On one hand, prospective bondholders could value the holdings of equity when realized favorably ex ante. On the other hand, the applicable coupon rate for such bond could turn out negative inflationadjusted payoff when tight monetary policy is exercised and the corresponding equity holding turns out valueless, ex post. Given the weak primary market and virtually nonexistent secondary market, the corporate bond market in Vietnam reflects our perception of the relationship-based and rent-seeking behavior in the financial markets. For the corporate bonds to really work, they critically need a higher level of liquidity to become truly tradable financial assets. |
| Keywords: | Vietnam; Corporate Bond; Interest Rate; Transition Economy; Debt Market |
| JEL: | G32 G38 O16 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:sol:wpaper:10-001&r=cfn |
| By: | Hall, Bronwyn H. (University of California-Berkeley) |
| Abstract: | To what extent are new and/or innovative firms fundamentally different from established firms, and therefore require a different form of financing? The theoretical background for this proposition is presented, and the empirical evidence on its importance is reviewed. Owing to the intangible nature of their investment, asymmetric-information and moral-hazard, these firms are more likely to be financed by equity than debt and behave in some cases as though they are cash-constrained, especially if they are small. Recognising the role for public policy in this area, many countries have implemented specific policies to bring the cost of financing innovation more in line with the level that would prevail in the absence of market failures. |
| Keywords: | R&D; innovation; financing; liquidity constraints; venture capital |
| JEL: | G24 G32 O32 O38 |
| Date: | 2009–12–23 |
| URL: | http://d.repec.org/n?u=RePEc:ris:eibpap:2009_008&r=cfn |
| By: | Cécile Carpentier; Douglas Cumming; Jean-Marc Suret |
| Abstract: | This paper examines the impact of securities regulation and exchange listing standards on the valuation of venture capital-backed IPOs in Canada and the United States. We use a sample of IPOs in both countries matched by size and sector over the 1986-2007 period. The data strongly indicate Canadian IPO valuations are 48% to 66% lower than their matched American counterparts, depending on the matched sample and control variables. We carefully control for several alternative explanations that might account for this difference, including issuer and VC quality, mispricing and liquidity effects. The data highlight the costs associated with low listing standards in Canada. <P>Ce papier examine l’impact de la réglementation des valeurs mobilières et des normes minimales d’inscription en bourse sur la valorisation des premiers appels publics à l’épargne (PAPEs) effectués au Canada et aux États-Unis par des émetteurs financés par des investisseurs en capital de risque. Nous utilisons un échantillon de PAPEs dans chacun des pays sur la période 1986 à 2007. Chaque émission canadienne est pairée avec une émission américaine de taille et de secteur similaires. Nous montrons que les valorisations des émissions canadiennes sont de 48 % à 66 % plus basses que celles des émissions correspondantes américaines, en fonction de l’échantillon retenu et des variables de contrôle. Cette différence subsiste à la prise en compte de plusieurs variables de contrôle, notamment la qualité des émetteurs et des investisseurs en capital de risque, ainsi que la liquidité. Les résultats montrent que les normes réglementaires permissives appliquées aux entreprises émergentes au Canada ont un effet perceptible sur la valeur que leur attribuent les investisseurs. |
| Keywords: | Securities Regulation, Listing Standards, Valuation, Initial Public Offerings, réglementation des valeurs mobilières, normes minimales d’inscription en bourse, valorisation, introduction en bourse |
| JEL: | G24 G32 G14 G15 |
| Date: | 2010–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:cir:cirwor:2010s-01&r=cfn |
| By: | Christian Keuschnigg; Evelyn Ribi |
| Abstract: | Credit constraints are more frequent among growth companies with large investment opportunities. For the same reason, profit taxes may harm innovative firms more than standard ones. This paper develops a model of heterogeneous firms where an endogenous share opts for innovation and faces credit constraints in the subsequent expansion phase. We emphasize four results: (i) R&D subsidies not only encourage innovation but also relax finance constraints and help innovative firms to exploit investment opportunities to a larger extent. (ii) Taxes which are neutral in a neoclassical world, still restrict expansion investment of constrained firms by reducing free cash-flow and thereby discourage innovation. (iii) A revenue neutral increase in profit taxes to finance larger R&D subsidies redistributes towards innovative firms and boosts aggregate productivity and welfare. (iv) A revenue neutral tax cut cum base broadening policy similarly boosts innovation and welfare |
| Keywords: | Profit taxes, R&D subsidies, innovation, investment, credit constraints |
| JEL: | G32 G38 H25 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:usg:dp2010:2010-01&r=cfn |
| By: | Muravyev, Alexander (IZA) |
| Abstract: | This paper uses a quasi-experimental framework provided by recent changes in Russian corporate law to study the effect of investor protection on the value of shares. The legal change analyzed involves the empowerment of preferred (non-voting) shareholders to veto unfavorable changes in their class rights. Based on a novel hand-collected dataset of dual class stock companies in Russia and using the difference-in-difference estimator, the study finds a statistically and economically significant effect of improved protection of preferred shareholders on the value of their shares. The result is robust to several changes in the empirical specification. |
| Keywords: | investor protection, company law, dual class stock, class rights, Russia |
| JEL: | G30 G38 K22 |
| Date: | 2009–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4669&r=cfn |
| By: | Vlad Manole; Mariana Spatareanu |
| Abstract: | Many firms cite financial constraints as some of the most important impediments to their investment and growth. Using a unique data set from the Czech Republic this paper investigates the importance of financing constraints in the context of exporters. It finds that exporters are less financially constrained than non-exporters. However, after carefully correcting for possible endogeneity and selection issues, the evidence points to less constrained firms self-selecting into exporting rather than exporting alleviating firms' financial constraints. The analysis suggests that easing firms' credit constraints may play an important role in facilitating exporting and that welldeveloped financial markets that would decrease firms' cost of external finance may be needed in order to benefit from selling in foreign markets. |
| Keywords: | exporting, cash flow, financial constraints |
| JEL: | F21 F23 F36 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:lic:licosd:25209&r=cfn |
| By: | Bastien Drut (Centre Emile Bernheim, Solvay Brussels School of Economics and Management, Université Libre de Bruxelles, Brussels, Credit Agricole Asset Management SGR and EconomiX-CNRS, Paris Ouest Nanterre La Défense University, Paris.) |
| Abstract: | In theory, investors choosing to invest only in socially responsible entities restrict their investment universe and should thus be penalized in a mean-variance framework. When computed, this penalty is usually viewed as valid for all socially responsible investors. This paper shows however that the additional cost for responsible investing depends essentially on the investors’ risk aversion. Social ratings are introduced in mean-variance optimization through linear constraints to explore the implications of considering a social responsibility (SR) threshold in the traditional Markowitz (1952) portfolio selection setting. We consider optimal portfolios both with and without a risk-free asset. The SR-efficient frontier may take four different forms depending on the level of the SR threshold: a) identical to the non-SR frontier (i.e. no cost), b) only the left portion is penalized (i.e. a cost for high-risk-aversion investors only), c) only the right portion is penalized (i.e. a cost for low-risk aversion investors only) and d) the whole frontier is penalized (i.e. a positive cost for all the investors). By precisely delineating under which circumstances SRI is costly, those results help elucidate the apparent contradiction found in the literature about whether or not SRI harms diversification. |
| Keywords: | Socially Responsible Investment, Portfolio Selection, Mean-variance Optimization, Linear Constraint, Socially Responsible Ratings. |
| JEL: | G11 G14 G20 |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:sol:wpaper:10-002&r=cfn |