nep-cfn New Economics Papers
on Corporate Finance
Issue of 2014‒03‒08
three papers chosen by
Zelia Serrasqueiro
University of the Beira Interior

  1. The cost of firms’ debt financing and the global financial crisis By Daniele Pianeselli; Andrea Zaghini
  2. Anatomy of Public-Private Partnerships: Their Creation, Financing, and Renegotiations By Miranda Sarmento, J.; Renneboog, L.D.R.
  3. Stock Market Reactions to Sovereign Credit Rating Changes: Evidence from Four European Countries By Ibrahim Fatnassi; Zied Ftiti; Habib Hasnaoui

  1. By: Daniele Pianeselli (Bank of Italy); Andrea Zaghini (Bank of Italy)
    Abstract: We provide an assessment of the determinants of the risk premium paid by non-financial corporations on long-term bonds. By looking at 5,500 issues in the period 2005-2012, we find that the turbulence in the sovereign debt market has been a major driver of corporate risk in recent years. Compared with 2005-07, the three years preceding the global financial crisis, in 2010-12 Italian, Spanish and Portuguese firms paid an additional premium of between 70 and 120 basis points on average due to the negative spillovers from the sovereign debt crisis, while German firms received a discount of 40 basis points.
    Keywords: corporate bonds, risk-premium, too-big-to-fail, sovereign debt crisis
    JEL: G38 G32
    Date: 2014–02
  2. By: Miranda Sarmento, J.; Renneboog, L.D.R. (Tilburg University, Center for Economic Research)
    Abstract: Abstract: This paper presents the main reasons why public-private partnerships (PPPs) are adopted as well as the possible disadvantages for the public and private sectors. By means of two case studies on bridge construction and railway infrastructure (Fertagus and Lusoponte), we elucidate how a PPP is structured and financed. Furthermore, the two case studies illustrate how the renegotiation processes are conducted when the public-private contracts have to be altered and what determines (un)successful renegotiations.
    Keywords: Public–Private Partnerships;Concessions;Renegotiations;Public Procurement;Project Risk
    JEL: G32 H54 L91
    Date: 2014
  3. By: Ibrahim Fatnassi; Zied Ftiti; Habib Hasnaoui
    Abstract: We analyze the reactions of the returns of four European stock markets to sovereign credit rating changes by Fitch, Moody’s, and Standard and Poor’s (S&P) during the period from June 2008 to June 2012 using panel regression equations. We find that (i) upgrades and downgrades affect both own country returns and other countries’ returns, (ii) market reactions to foreign downgrades are stronger during the sovereign debt crisis period, and (iii) negative news from rating agencies are more informative than positive news.
    Keywords: Sovereign credit rating, Stock Markets, reaction, upgrades, downgrades
    JEL: F3 G14 G15
    Date: 2014–02–25

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