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on Corporate Finance |
| By: | ARIKAWA Yasuhiro; KAWANISHI Takuya; MIYAJIMA Hideaki |
| Abstract: | Financial factors and ownership structure are both part of the determinants of corporate R&D investment. Considering listed firms in the R&D intensive industries during the 2000s, this paper examines whether financial factors and ownership structure explain R&D investment in Japan. Following the methodology of Brown et al. (2009), which extends the dynamic investment model of Bond and Maghir (1994) to R&D investment, we find that only small, young firms mainly listed on new emerging markets face financial constraints. We also find that large firms finance R&D investment partly from debt. For firms with relatively limited assets, however, higher leverage leads to lower R&D investment. Finally, we find no evidence that large shareholdings by foreign investors enforce myopic behavior on firms in R&D intensive industries. |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:11013&r=cfn |
| By: | Feng, Xunan (Shanghai Jiaotong University); Johansson, Anders C. (China Economic Research Center); Zhang, Tianyu (The Chinese University of Hong Kong) |
| Abstract: | This paper examines the value of political participation by private entrepreneurs in China. Using a unique sample of all initial public offerings by entrepreneurial firms during 1994-2007 and political participation by the controlling entrepreneurs, we test the hypothesis that firms with entrepreneurs who participate in politics are able to exploit rent-seeking opportunities that normal firms do not have access to. We document that the long-run stock performance after the IPO of firms controlled by entrepreneurs who participate in politics is superior to that of common entrepreneurial firms. Our results also show that political participation has a significant positive effect on change in operating performance and a negative effect on first-day returns. Moreover, we find that economic development and local institutions are important for this value effect. The difference in performance is even larger in regions characterized by more abundant rent-seeking opportunities, indicating that the value effect of political participation likely originates from rent seeking. This finding is consistent with the hypothesis that political participation facilitates entrepreneurs’ rent seeking. |
| Keywords: | Political participation; Entrepreneurial firms; Corporate governance; Initial public offerings; China |
| JEL: | G30 G32 G34 P48 |
| Date: | 2011–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:hacerc:2011-017&r=cfn |
| By: | Carlos Serrano-Cinca; Y. Fuertes-Callén; Begoña Gutiérrez-Nieto; B. Cuéllar-Fernández |
| Abstract: | This paper studies the bankruptcy of USA banks since 2009. It first analyzes the financial symptoms that precede bankruptcy, such as low profitability, insufficient revenue, or low solvency ratios. It also goes into the causes of these symptoms. It poses several hypotheses on causes of failure, such as loans growth (some of them risky), specialization (in this case concentration in real estate), and the pursuit of a turnover-driven strategy neglecting margin. It presents and tests a path modeling to bankruptcy based on structural equations, hypotheses tests and logistic regression. Results show that, five years before the crisis, failed banks had, compared to solvent banks, the following: higher loan growths, higher concentration on real estate loans, higher risk ratios, higher turnover, but lower margins. A relationship is found between symptoms and causes. Failed banks present a significant relationship between the percentage of real estate loans and risk. This relationship is negative in excellent banks, confirming that they allocated less real estate loans with higher quality. Non-failed banks compensated increases in risk by strengthening their core capital. |
| Keywords: | Bankruptcy; Financial ratios; banking crisis; solvency; PLS-Path |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:sol:wpaper:2013/78756&r=cfn |
| By: | G. Ecchia; M. Gelter; P. Pasotti |
| Abstract: | We set up a model to study how ownership structure, corporate law and employment law interact to set the incentives that influence the decision by the large shareholder or manager effectively controlling the firm to divert resources from minority shareholders and employees. We suggest that agency problems between the controller and other investors and holdup problems between shareholders and employees are connected if the controller bears private costs of “expropriating” these groups. Corporate law and employment law may therefore somethimes be substitutes; employees may benefit from better corporate law intended to protect minority shareholder, and viceversa. Our model has implications for the domestic and comparative study of corporate governance structure and addresses, among other things, the question whether large shareholders are better able to “bond” with employees than dispersed ones, or whether the separation of ownership facilitates longterm relationships with labor. |
| JEL: | G30 K22 |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:bol:bodewp:wp735&r=cfn |