nep-cfn New Economics Papers
on Corporate Finance
Issue of 2012‒01‒10
six papers chosen by
Zelia Serrasqueiro
University of the Beira Interior

  1. Director Characteristics and Firm Performance By Pascal Gantenbein; Christophe Volonté
  2. Boards: Independent and Committed Directors? By Pascal Gantenbein; Christophe Volonté
  3. Are Forced Turnovers Good or Bad News? By Axel Kind; Alain Schlaepfer
  4. The Interdependence of R&D Activity and Debt Financing of Young Firms By Fryges, Helmut; Kohn, Karsten; Ullrich, Katrin
  5. Do investors care about noise trader risk? By Francisca Beer; Mohamad Watfa; Mohamed Zouaoui

  1. By: Pascal Gantenbein; Christophe Volonté (University of Basel)
    Keywords: Corporate governance: Board of directors; Director characteristics, Education and business experience
    JEL: G30 G34 G38
    Date: 2011
  2. By: Pascal Gantenbein; Christophe Volonté (University of Basel)
    Keywords: Corporate governance: Board of directors; Board independence; Board busyness; External commitments
    JEL: G30 G34 K22
    Date: 2011
  3. By: Axel Kind; Alain Schlaepfer (University of Basel)
    Keywords: CEO turnover; Corporate governance; Firm performance
    JEL: G14 G30 G34
    Date: 2011
  4. By: Fryges, Helmut (ZEW Mannheim); Kohn, Karsten (KfW Bankengruppe); Ullrich, Katrin (KfW Bankengruppe)
    Abstract: We investigate the interdependence of debt financing and R&D activities of young firms. Using micro-level data of the KfW/ZEW Start-up Panel, our estimation results show that firm characteristics are more important than personal characteristics of the founders for explaining young firms' leverage, whereas firm characteristics and human capital of both founders and employees heavily influence R&D intensity. Applying a bivariate Tobit model, we find that there is a positive interdependent relationship between the share of loan financing and R&D intensity. A higher share of loan financing allows for more R&D in young firms and, at the same time, a higher R&D intensity allows for a higher loan share. This relationship cannot be detected by merely estimating single-equation models for R&D intensity and debt financing.
    Keywords: innovation financing, capital structure, business start-ups, KfW/ZEW Start-up Panel, Germany
    JEL: G32 O32 L26
    Date: 2011–12
  5. By: Francisca Beer (California State University of San Bernardino); Mohamad Watfa (ITIC Paris); Mohamed Zouaoui (University of Franche-Comté and LEG-UMR 5118)
    Abstract: The link between investor sentiment and asset valuation is at the centre of a long-running debate in behavioral finance. Using a new composite sentiment indicator, we show that the conventional risk does not explain the abnormal returns of portfolios most sensitive to the sentiment factor. Our result supports the existence of a sentiment risk valued by financial markets. We also find that the firms more impacted by the sentiment risk correspond to difficult to arbitrage and hard to value stocks, e.g. small stocks, growth stocks, young stocks, unprofitable stocks, lower dividend-paying stocks, intangible stocks and high volatility stocks.
    Keywords: investor sentiment;asset valuation;behavioral finance;abnormal returns of portfolios.
    JEL: G11 G12
    Date: 2011–10
  6. By: Vinod Mishra; Rajabrata Banerjee; Tania Dey
    Abstract: This paper analyzes how influence activities in the form of signal jamming affect the capital budgeting process of corporate organizations in Australia. First, the relationship between investment in the smallest division and its past performances is tested. The relationship is defined as investment sensitivity. Second, how the investment sensitivity varies as influence problems become more severe is examined. Finally, the relationship between compensation incentives for the large division manager and the investment sensitivity is reviewed. The findings suggest that investment sensitivity is positive for Australian firms. Mixed evidence is obtained between investment sensitivity and increase in the severity of influence problems when measures such as, relatedness and number of divisions are used. With increase in number of divisions, influence activity becomes more severe and headquarters relies more on public signal. However, with the increase in relatedness across divisions, influence problem increases and headquarters relies more on private information from manager of the large division. Evidence suggest that Australian firms provide high short term incentive payments to managers of large divisions to mitigate the influence activity problems and thus rely more on managerial recommendations for investing in smallest division as compared to noisy accounting measures.
    Keywords: Influence activity, capital budgeting, compensation incentives
    JEL: G31 M52 J33 D82
    Date: 2011–12

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