nep-cfn New Economics Papers
on Corporate Finance
Issue of 2010‒01‒30
three papers chosen by
Zelia Serrasqueiro
University of the Beira Interior

  1. Family Control and Financing Decisions By Ettore Crocia; John A. Doukas; Halit Gonenc
  2. Determinants of Buyouts in Private Equity Firms By Nordström, Louise; Wiberg, Daniel
  3. Determinants of bank interest margins in Russia: Does bank ownership matter? By Fungacova , Zuzana; Poghosyan, Tigran

  1. By: Ettore Crocia; John A. Doukas; Halit Gonenc (University of Groningen)
    Abstract: Empirical studies examining the financing decisions of the firm focus exclusively on publicly held firms, not family-controlled firms despite their economic importance. This study investigates the external financing behavior of family-controlled firms, using a comprehensive sample of 777 large European firms during the period 1998 to 2008. We document that, unlike nonfamily-controlled firms, the external financing decisions of family-controlled firms are influenced by control incentives and information asymmetry considerations. We find that family firms have a strong preference for debt financing, a noncontrol diluting security, while they are more reluctant to raise capital through equity offerings in comparison to nonfamily firms. We also find that credit markets, view family firms as more risk-averse and that family firms invest more in low-risk (fixed-asset capital expenditures (CAPEX)), than in high-risk investments (R&D expenditures) confirming their non-risk seeking behavior.
    Keywords: Family firms, financing decisions, equity issues, debt issues, capital structure.
    JEL: G32
    Date: 2010–01
  2. By: Nordström, Louise (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Wiberg, Daniel (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: Private equity companies have become a major force in the economic landscape. Financial- and operational-engineering are innovative characteristics of this emerging method of finance. The existing empirical data provide strong evidence that private equity activity contribute positively to the rapid growth of companies. In this paper probability of private equity funded buyouts in the Nordic market is investigated. Operationally this is done by applying a logit model on a number of firm specific accounting measures. The main finding is that it is the dynamics of these variables in the target firms that are important for potential buyouts. That is, the growth measured as change in employees, change in the debt equity level, and the change in EBITDA margin, all have a significant effect on the probability of being bought by a private equity firm.
    Keywords: private equity; buyouts; performance
    JEL: G32 G34
    Date: 2009–12–18
  3. By: Fungacova , Zuzana (BOFIT); Poghosyan, Tigran (BOFIT)
    Abstract: This paper analyzes interest margin determinants in the Russian banking sector with a particular emphasis on the bank ownership structure. Using a unique bank-level data covering Russia’s entire banking sector for the 19992007 period, we find that the impact of a number of commonly used determinants such as market structure, credit risk, liquidity risk and size of operations differs across state-controlled, domestic-private and foreign-owned banks. At the same time, the influence of operational costs and bank risk aversion is homogeneous across ownership groups. The results overall suggest the form of bank ownership needs to be considered when analyzing interest margin determinants.
    Keywords: bank interest margins; financial intermediation; Russia
    JEL: G21 P34
    Date: 2010–01–21

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