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on Corporate Finance |
| By: | Marc Levy; Ariane Szafarz |
| Abstract: | Cross-ownership breaks the traditional rule of one-sided corporate control. Using a novel approach based on stochastic voting processes, this paper proposes a general method to determine control stakes in the presence of cross-ownership. It offers a generalization of the Banzhaf index, which allows coping with cross-ownership-inclusive ownership graphs. The original feature of this approach is its absolute sequentiality. We also operationalize this new approach by building an algorithm, which determines the shareholders’ respective control powers in any corporate structure. From a governance viewpoint, we emphasize that cross-ownership may act as a powerful device for shareholders’ expropriation. To make this point, we revisit the leading example of the German Allianz Group. |
| Keywords: | ownership and control; cross-ownership; tunneling; Banzhaf index; Allianz group |
| JEL: | G32 G34 C71 D72 D74 |
| Date: | 2011–11 |
| URL: | http://d.repec.org/n?u=RePEc:sol:wpaper:2013/101958&r=cfn |
| By: | Isabel Busom; Beatriz Corchuelo; Ester Martínez-Ros |
| Abstract: | The measurement of the effects that public support to private R&D has on R&D investment and output has attracted substantial empirical research in the last decade. The focus of this research has mostly focused on testing for possible crowding out effects. There is virtually no study aiming at understanding how and why these effects may or may not be occurring. In addition, the effects of the two most common tools of public support, direct funding through grants and loans, and tax incentives, have been studied separately. We contribute to existing work by focusing on the determinants of the use by firms of these two mechanisms and their potential link to sources of market failures. We think this is an important step to assess impact estimates. Using firm-level data from the Spanish Community Innovation Survey (CIS), we find that firms that face financial constraints, as well as newly created firms, are less likely to use R&D tax credits and more likely to apply for and obtain direct public funding. We also find that large firms that care about knowledge protection are more likely to apply for and obtain direct funding, while SMEs are more likely to use tax incentives. Our results show that direct funding and tax credits, as currently designed, are not perfect substitutes because firms are heterogeneous, and suggest that from a social perspective, and provided that crowding out effects can be ruled out for both instruments, some combination of both may be preferable to relying on only one |
| Keywords: | R&D subsidies, R&D tax credits, R&D, CIS, Policy evaluation |
| JEL: | H25 L60 O38 O31 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:cte:idrepe:id-11-03&r=cfn |
| By: | Michi Nishihara (Graduate School of Economics, Osaka University); Takashi Sshibata (Graduate School of Social Sciences, Tokyo Metropolitan University) |
| Abstract: | We develop a dynamic model in which a firm exercises an option to expand production with cash balance and costly external funds. While related papers explain their results only by numerical examples, we analytically prove the following results. In the presence of only a proportional cost of external financing, the firm with more cash balance invests earlier; however, the presence of both proportional and fixed costs leads to a non-monotonic relation between the investment time and cash balance. The firm with more cash balance invests later to save a fixed cost, particularly when the cash balance is close to the investment cost. Our results can potentially account for a variety of empirical results concerning the relation between investment volume and financing constraints. |
| Keywords: | Real options; investment timing; costly external financing; growth option; optimal stopping. |
| JEL: | G13 G31 G32 |
| Date: | 2011–11 |
| URL: | http://d.repec.org/n?u=RePEc:osk:wpaper:1129&r=cfn |