nep-cfn New Economics Papers
on Corporate Finance
Issue of 2013‒09‒26
four papers chosen by
Zelia Serrasqueiro
University of the Beira Interior

  1. On the fortunes of stock exchanges and their reversals: evidence from foreign listings By Fernandes, Nuno; Giannetti, Mariassunta
  2. Productivity Growth and Stock Returns: Firm- and Aggregate-Level Analyses By Hyunbae Chun; Jung-Wook Kim; Randall Morck
  3. The Value of Social Networks in Financial Markets By Michela Rancan
  4. On the existence of credit rationing and screening with loan size in competitive markets with imperfect information By Kraus, Daniel

  1. By: Fernandes, Nuno; Giannetti, Mariassunta
    Abstract: Using a sample that provides unprecedented detail on foreign listings, new listings, and delistings for 29 exchanges in 24 countries starting from the early 1980s, we document a growing tendency of listings to concentrate in the U.S. and the U.K., and large changes in all exchanges’ ability to attract foreign companies. We highlight the following determinants of these patterns. First, during the sample period, investor protection improved in many countries. As investor protection improves in the country of origin, firms become less likely to list in countries with weak investor protection, but more likely to list in countries with strong investor protection, especially in the U.K. and the U.S. Second, we show that foreign listings are related to the exchange’s market valuation in the same way that domestic equity issues are and that firms that are more difficult to evaluate are more inclined to list in foreign exchanges with high valuations. JEL Classification: G15, G38, M41, M45, F40
    Keywords: Cross-listings, investor protection, market timing, SOX
    Date: 2013–09
  2. By: Hyunbae Chun; Jung-Wook Kim; Randall Morck
    Abstract: Technological innovation is not a blessing for all firms, or for investors holding the market. In the late 20th century US, individual firms’ stock returns correlate positively with their own productivity growth, yet the market return correlates negatively with aggregate productivity growth, yet. This seeming fallacy of composition reflects Schumpeterian creative destruction: a few technology winners’ stocks rise with their rising productivity while many technology losers’ stocks fall with their declining productivity. Thus, most individual firms’ stock returns correlate negatively with aggregate productivity growth. Analogous reasoning explains prior findings that the market return correlates negatively with aggregate earnings.
    JEL: G14 G31 O33
    Date: 2013–09
  3. By: Michela Rancan
    Abstract: Social contacts influence decisions and economic outputs in a variety of contexts. Does social network matter also in financial markets? In this paper I investigate the effect of social networks on mutual funds performance by exploiting data on the education of U.S. fund managers. The results show that performance is better for fund managers with many social connections. Furthermore, positional advantages in the social network generate superior performance. This evidence suggests that social interaction and information spillovers have a positive and meaningful value for mutual funds.
    Keywords: Social Network, Mutual Fund, Performance
    JEL: G23 L14
    Date: 2013–03
  4. By: Kraus, Daniel
    Abstract: Although credit rationing has been a stylized fact since the groundbreaking papers by Stiglitz and Weiss (1981, hereinafter S-W) and Besanko and Thakor (1987a, hereinafter B-T), Arnold and Riley (2009) note that credit rationing is unlikely in the S-W model, and Clemenz (1993) shows that it does not exist in the B-T model. In this chapter, I explain why credit rationing, more specifically rationing of loan applicants, does exist in a competitive market with imperfect information, and occurs only for low-risk loan applicants. In cases of indivisible investment technologies, low-risk applicants are rationed. In cases of divisible investment technologies, rationing of loan size is restricted to rationing of loan applicants. In the event that the difference in the marginal return between the investment technologies is sufficiently small relative to the difference in their riskiness, rationing of loan size alone yields high opportunity costs; in addition, low-risk loan applicants are rationed in this case. --
    Keywords: Asymmetric Information,Financial Intermediation,Credit Rationing
    JEL: G21 D82
    Date: 2013

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