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on Corporate Finance |
| By: | T.J. Wong (Department of Accounting, The Chinese University of Hong Kong); Mingyi Hung (Department of Accounting, Hong Kong University of Science and Technology; Institute for Emerging Market Studies, Hong Kong University of Science and Technology); Fang Zhang (Department of Accounting, Hong Kong Baptist University) |
| Abstract: | This paper compares the value of political ties and market credibility in China by examining the consequence of corporate scandals. We categorize Chinese corporate scandals by whether the scandal is primarily associated with the destruction of i) the firm’s political networks (political scandals), ii) the firm’s market credibility (market scandals), or iii) both (mixed scandals). Consistent with our hypothesis that scandals signaling the destruction of political ties are associated with greater losses in firm value than scandals signaling the destruction of market credibility, we find that the stock market reacts more negatively to political and mixed scandals than to market scandals. In addition, the greater negative market reactions associated with political and mixed scandals are primarily driven by firms that rely more on political networks. We also find that, compared to market scandals, political and mixed scandals lead to larger decreases in operating performance, greater reduction in loans from state-owned banks, and higher departure of political directors. |
| Keywords: | political economy, market credibility, corporate scandals, China |
| JEL: | G34 O17 P16 G32 G39 |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:hku:wpaper:201518&r=cfn |
| By: | Breen, Michael; Gillanders, Robert; McNulty, Gemma; Suzuki, Akisato |
| Abstract: | Are women less corrupt in business? We revisit this question using firm-level data from the World Bank’s Enterprise Surveys, which measure firms’ experience of corruption and the gender of their owners and top managers. We find that women in positions of influence are associated with less corruption: female-owned businesses pay less in bribes and corruption is seen as less of an obstacle in companies where women are represented in top management. By providing evidence that women are, ethically at least, good for business our research contributes to the literature on development, gender equality, and corruption more generally. |
| Keywords: | corruption; bribery; gender; firm ownership; top management; corporate governance |
| JEL: | D73 G32 J16 M14 |
| Date: | 2015–04 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:63850&r=cfn |
| By: | Matteo Accornero (Bank of Italy); Paolo Finaldi Russo (Bank of Italy); Giovanni Guazzarotti (Bank of Italy); Valentina Nigro (Bank of Italy) |
| Abstract: | The paper looks at the characteristics of Italian non-financial firms that accessed the bond market for the first time between 2002 and 2013. The results of logit estimations indicate that first-time bond issuers are significantly larger and more frequently listed on the stock exchange than firms not issuing bonds. We also find that their decision to enter the bond market stems from a need to finance growth, especially where internal resources are limited, and to rebalance maturity mismatches between assets and liabilities. Our estimates also suggest that the sharp drop in the number of small issuers during the economic crisis is partly due to increased risk aversion on the part of market investors. Based on the econometric results, we estimate that the non-issuers include some 450-650 firms whose characteristics are very similar to those of companies that have begun to issue bonds in the last decade. These estimates are surrounded by considerable uncertainty due to the evolution of the macroeconomic context as well as the effects of new rules on minibonds. |
| Keywords: | bond market, debt financing, corporate bonds |
| JEL: | G10 G23 G32 |
| Date: | 2015–04 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:opques:qef_269_15&r=cfn |
| By: | Giacomo Rodano; Nicolas Serrano-Velarde; Emanuele Tarantino |
| Abstract: | Exploiting the timing of the 2005-2006 Italian bankruptcy law reforms, we disentangle the effects of reorganization and liquidation in bankruptcy on bank financing nd firm investment. A 2005 reform introduces reorganization procedures facilitating loan renegotiation. The 2006 reform subsequently strengthens creditor rights in liquidation. The first reform increases interest rates and reduces investment. The second reform reduces interest rates and spurs investment. Our results highlight the importance of identifying the distinct effects of liquidation and reorganization, as these procedures differently address the tension in bankruptcy law between the continuation of viable businesses and the preservation of repayment incentives. JEL classification: G33, K22. Keywords: Financial Distress, Financial Contracting, Renegotiation, Multi-bank Borrowing, Bankruptcy Courts. |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:igi:igierp:547&r=cfn |
| By: | Xi Li (Department of Accounting, Hong Kong University of Science and Technology; Institute for Emerging Market Studies, Hong Kong University of Science and Technology); Mingyi Hung (Department of Accounting, Hong Kong University of Science and Technology; Institute for Emerging Market Studies, Hong Kong University of Science and Technology); Shiheng Wang (Department of Accounting, Hong Kong University of Science and Technology) |
| Abstract: | We investigate whether and how an exogenous and unprecedented improvement in non-U.S. firms’ financial reporting quality affects post-earnings-announcement drift (PEAD). We find that PEAD declines after the information shock, and this decrease is more pronounced for firms with fewer concurrent earnings announcements, greater institutional holdings, and lower limits to arbitrage. In addition, the decrease in PEAD is driven by firms with greater changes in financial reporting, an increase in analyst forecast accuracy and institutional ownership, and a decrease in limits to arbitrage. These findings support the mispricing explanation of PEAD, in particular the limited attention hypothesis, in an international setting. |
| Keywords: | information and market efficiency, information shock, global markets, post-earnings-announcement drift |
| JEL: | G14 G10 G30 |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:hku:wpaper:201517&r=cfn |
| By: | Miguel García-Posada (Banco de España); Marcos Marchetti (Banco de España) |
| Abstract: | We assess the impact on the credit supply to non-financial corporations of the two verylong-term refinancing operations (VLTROs) conducted by the Eurosystem in December 2011 and February 2012 for the case of Spain. To do so we use bank-firm level information from a sample of more than one million lending relationships over two years. Our methodology tackles the two main identification challenges: (i) how to disentangle credit supply from demand; and (ii) the endogeneity of VLTRO bids, as banks with more deteriorated funding conditions were more likely both to ask for a large amount of funds and to restrict credit supply. First, we exploit the fact that many firms simultaneously borrow from several banks to effectively control for firm-specific credit demand. Second, we exhaustively control for banks’ funding difficulties by constructing several measures of balance-sheet strength and by including bank fixed effects. Our findings suggest that the VLTROs had a positive moderately-sized effect on the supply of bank credit to firms, providing evidence of a bank lending channel in the context of unconventional monetary policy. We also find that the effect was greater for illiquid banks and that it was driven by credit to SMEs, as there was no impact on loans to large firms. |
| Keywords: | unconventional monetary policy, VLTRO, credit supply, bank lending channel. |
| JEL: | E52 E58 G21 |
| Date: | 2015–04 |
| URL: | http://d.repec.org/n?u=RePEc:bde:wpaper:1512&r=cfn |
| By: | Bertrand K Hassani (Grupo Santander et Centre d'Economie de la Sorbonne) |
| Abstract: | One of the main concern and regulatory topic financial institutions have to deal with is the model risk. Senior managers tend to consider more and more model risk as one of the highest exposure a financial institution has (as illustrated by the lastest EBA paper related to Advanced Measurement Approach (AMA) for Operational Risk Capital calculation). Though, while the concept seems relatively simple, the definition of the model risk (traditional and regulatory), the origins of this one (from dogmas to mis-use) and the way to manage it (from engineering conservatism into models to a proper governance process) are not necessarily well handled by practitioners, academics and regulators. Giving a clear definition and understanding the root cause of a model failure allows adopting the appropriate management style to deal with the potential issue that could lead to dramatic failures. In this paper we are proposing an analysis of the model risk trying to understand the main issues leading to the failure and the best way to address them |
| Keywords: | Model Risk; Operational Risk; Risk Management, Risk Measurement, Epistemology |
| JEL: | C60 H12 G32 |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:mse:cesdoc:15026&r=cfn |
| By: | Marianne, Ojo |
| Abstract: | Do jurisdictions with concentrated ownership structures require less reliance on audits as corporate governance mechanisms and devices? Why do concentrated ownership structures still prevail in certain jurisdictions which are considered to be “market based corporate governance systems”? More importantly, if failures and causes of recent financial crises are principally attributable to the fact that market based corporate governance mechanisms, such as financial regulators, are not optimally performing their functions, why is the role of audits still paramount in such jurisdictions? These are amongst some of the questions which this paper attempts to address. The ever increasing growth of institutional investors in jurisdictions – particularly those jurisdictions with predominantly concentrated ownership structures, with their increased stakes in corporate equity, also raises the issue of accountability and the question as regards whether increased accountability is fostered where institutional investors assume a greater role – as opposed to position which exists where increased stake of family holdings (family controlled structures) arises. |
| Keywords: | audit quality; corporate governance; concentrated ownership structures; capital market economies; institutional investors |
| JEL: | D8 E5 G3 K2 M4 |
| Date: | 2013–12–28 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:63884&r=cfn |
| By: | Vittorio Larocca (ETH Zurich, Switzerland) |
| Abstract: | This paper investigates competition among financial intermediaries in a finite-trader version of the Diamond and Dybvig (1983) economy under no aggregate uncertainty. The economy is populated by self-interested financial intermediaries that compete strategically over deposit contracts offered to consumers. Both exclusive and nonexclusive competition perspective are considered, in both cases multiple equilibria arise if banks do not have an initial endowment. When financial intermediaries have a sufficient level of endowment, regardless the competition perspective adopted, the first best allocation is the unique equilibrium allocation. |
| Keywords: | financial intermediation; deposit contracts. |
| JEL: | D82 G21 |
| Date: | 2015–04 |
| URL: | http://d.repec.org/n?u=RePEc:eth:wpswif:15-213&r=cfn |
| By: | Paolo Emilio Mistrulli (Bank of Italy); Valerio Vacca (Bank of Italy) |
| Abstract: | Social capital is a key factor affecting the functioning of financial markets (Guiso, Sapienza and Zingales, 2004). However, the estimation of the effect of social capital on credit markets is notoriously difficult. In this paper we exploit the recent Lehman Brothers crisis and a rich dataset to investigate whether social capital shields firms from the tightening of credit conditions. We mainly focus on lending to small Italian firms that rely almost exclusively on banks’ credit and we compare the level of loan interest rates before (June 2008) and after (June 2010) Lehman’s default for a balanced sample of bank-firm relationships. We find that for firms headquartered in provinces where social capital is higher, the rise in the loan spreads following Lehman’s default was milder compared to firms located in low-social capital communities. The benefits were larger for small firms borrowing from more than one bank and for uncollateralised credit but did not extend to larger firms. Moreover, different measures of social capital provide slightly different results, suggesting a more ambiguous role for particularistic networking (e.g. having a wide network of friends) than for altruistic behaviour rooted in universalistic ethics. Finally, the propensity of a community to cooperate in the credit market, a kind of credit-specific measure of networking, did not always have an impact comparable to that for more general measures of social capital. |
| Keywords: | social capital, trust, SME finance, credit cooperation, financial crises |
| JEL: | A13 G01 G2 |
| Date: | 2015–04 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_1009_15&r=cfn |
| By: | Allen, Franklin; Carletti, Elena; Goldstein, Itay; Leonello, Agnese |
| Abstract: | Government guarantees to financial institutions are intended to reduce the likelihood of runs and bank failures, but are also usually associated with distortions in banks’ risk taking decisions. We build a model to analyze these trade-offs based on the global-games literature and its application to bank runs. We derive several results, some of which against common wisdom. First, guarantees reduce the probability of a run, taking as given the amount of bank risk taking, but lead banks to take more risk, which in turn might lead to an increase in the probability of a run. Second, guarantees against fundamental-based failures and panic-based runs may lead to more efficiency than guarantees against panic-based runs alone. Finally, there are cases where following the introduction of guarantees banks take less risk than would be optimal. |
| Keywords: | bank moral hazard; fundamental runs; government guarantees; panic runs |
| JEL: | G21 G28 |
| Date: | 2015–04 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:10560&r=cfn |
| By: | Felix J. Lopez-Iturriaga (National Research University Higher School of Economics); Emilio Lopez-Millan (University of Valladolid) |
| Abstract: | We combine agency theory with the law and finance approach to analyze how the legal protection of investors and the corporate ownership structure affect the corporate investment in research and development (R&D). We use information from 1,091 firms from the five most R&D intensive industries in 19 developed countries. Our results show that the better protection of investors’ rights by the institutional environment has a positive influence on corporate R&D. We also find that corporate ownership concentration works as a substitute for legal protection. This finding means that the R&D investment of the firms in the countries with poor legal protection increases as long as the ownership becomes more concentrated. Our results also show that the identity of shareholders has a relevant effect: Whereas banks and nonfinancial institutions as shareholders result in lower R&D, institutional investors as shareholders increase the corporate investment in R&D. |
| Keywords: | Institutional setting, ownership structure, corporate R&D, legal protection |
| JEL: | G32 O32 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:hig:wpaper:36man2015&r=cfn |
| By: | Andrea Nobili (Bank of Italy); Andrea Orame (Bank of Italy) |
| Abstract: | In this paper we test for the potential bias in the estimated contribution of a supply restriction on lending to enterprises, as captured by the assessment of credit standards provided by the banks participating in the Eurosystem Bank Lending Survey (BLS banks). For Italy, we combine the information provided by the relatively small panel of large banking groups participating in the Eurosystem survey with the replies obtained from the non-overlapping and wider group of banks participating in the Regional Bank Lending Survey (non-BLS banks) carried out by the Bank of Italy. We find evidence of a limited upward bias in the estimated contribution of a tightening in credit standards from using the information for the BLS-only banks. This outcome mainly reflects a lower estimated sensitivity of lending growth to the considered indicators of a supply restriction for the non-BLS banks. The Eurosystem Bank Lending Survey, therefore, continues to be a timely and important source of information over the credit cycle for policymakers. |
| Keywords: | supply of credit, banks, Eurosystem BLS, Regional Bank Lending Survey |
| JEL: | G21 E51 E58 |
| Date: | 2015–04 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:opques:qef_266_15&r=cfn |
| By: | Andrea Bellucci (Institute for Applied Economic Research (IAW), University of Tubingen, Germany); Alexander Borisov (University of Cincinnati, USA); Germana Giombini (Universit… di Urbino); Alberto Zazzaro (Universit… Politecnica delle Marche, MoFiR - Ancona, Italy, CSEF, Naples, Italy) |
| Abstract: | In this paper we empirically test the recent lender-based theory for the use of collateral in bank lending. Based on a proprietary dataset of loan contracts written by a local bank in competitive credit markets, we use the physical proximity between borrowers and the lending branch of the bank to capture its information advantage and the magnitude of collateral-related transaction costs. Overall, our results seem more consistent with several classic borrower-based explanations rather than with the lender-based view. We show that, conditional on obtaining credit from the local bank, more distant borrowers experience higher collateral requirements and lower interest rates. Moreover, competitive pressure from transaction lenders does not magnify the importance of lender-to-borrower distance. Our findings are also obtained with estimation techniques that allow for endogenous loan contract terms and joint determination of collateral and interest rates. |
| Keywords: | Bank lending, Collateral, Distance, Interest Rate |
| JEL: | G21 G32 L11 |
| Date: | 2015–04 |
| URL: | http://d.repec.org/n?u=RePEc:anc:wmofir:106&r=cfn |
| By: | Vidakovic, Neven; Radošević, Dubravko |
| Abstract: | Over the course of the recession during the last six years, central bank officials in Croatia have on numerous occasions stated there is a strong need for structural reforms in Croatia and that there is no need for monetary policy reforms. This short paper investigates why the CNB is only demanding fiscal reforms (i.e. internal devaluation) and is not offering any monetary reforms (conventional or unconventional monetary policy responses). Over the course of the last 15 years CNB has caused several structural changes that lead to financial instability. This paper reviews three main structural changes initiated by the central bank, i.e. structural changes of: credit policy of the banking system, development in the external indebtedness and central bank independence. The modern monetary theories and new central bank strategies imposed new views on central bank policy measures. We suggest several financial sector and central banking reforms in Croatia, including accession of Croatia to SSM, the first pillar of EU banking union. |
| Keywords: | deposit interest rate, probability of default, banks, |
| JEL: | E43 G21 G32 |
| Date: | 2014–02 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:63955&r=cfn |
| By: | Gouriéroux, Christian; Héam, Jean-Cyprien |
| Abstract: | In the Basel regulation the required capital of a financial institution is based on conditional measures of the risk of its future equity value such as Value-at-Risk, or Expected Shortfall. In Basel 2 the uncertainty on this equity value is captured by means of changes in asset prices (market risk) and default of borrowers (credit risk), and mainly concerns the asset component of the balance-sheet. Our paper extends this analysis by taking also into account the funding and market liquidity risks. The latter risks are consequences of changes in customers or investors’ behaviors and usu- ally concern the liability component of the balance sheet. In this respect our analysis is in the spirit of the most recent Basel 3 and Solvency 2 regulations. Our analysis highlights the role of the different types of risks in the total required capital. Our analysis leads to clearly distinguish defaults due to liquidity shortage and defaults due to a lack of solvency and, in a regulatory perspective, to introduce two reserve accounts, one for liquidity risk, another one for solvency risk. We explain how to fix the associated required capitals. |
| Keywords: | Regulation; Funding Liquidity Risk; Liquidity Shortage; Solvency 2; Value-at-Risk; Asset/Liability Management; |
| JEL: | D81 G32 |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:dau:papers:123456789/14974&r=cfn |
| By: | Gouriéroux, Christian; Héam, Jean-Cyprien |
| Abstract: | In the Basel regulation the required capital of a financial institution is based on conditional measures of the risk of its future equity value such as Value-at-Risk, or Expected Shortfall. In Basel 2 the uncertainty on this equity value is captured by means of changes in asset prices (market risk) and default of borrowers (credit risk), and mainly concerns the asset component of the balance-sheet. Our paper extends this analysis by taking also into account the funding and market liquidity risks. The latter risks are consequences of changes in customers or investors’ behaviors and usually concern the liability component of the balance sheet. In this respect our analysis is in the spirit of the most recent Basel 3 and Solvency 2 regulations. Our analysis highlights the role of the different types of risks in the total required capital. Our analysis leads to clearly distinguish defaults due to liquidity shortage and defaults due to a lack of solvency and, in a regulatory perspective, to introduce two reserve accounts, one for liquidity risk, another one for solvency risk. We explain how to fix the associated required capitals. |
| Keywords: | Regulation; Funding Liquidity Risk; Liquidity Shortage; Solvency 2; Value-at-Risk; Asset/Liability Management; |
| JEL: | D81 G32 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:dau:papers:123456789/14986&r=cfn |
| By: | Binder, Jens-Hinrich |
| Abstract: | The creation of the Banking Union is likely to come with substantial implications for the governance of Eurozone banks. The European Central Bank, in its capacity as supervisory authority for systemically important banks, as well as the Single Resolution Board, under the EU Regulations establishing the Single Supervisory Mechanism and the Single Resolution Mechanism, have been provided with a broad mandate and corresponding powers that allow for far-reaching interference with the relevant institutions' organisational and business decisions. Starting with an overview of the relevant powers, the present paper explores how these could - and should - be exercised against the backdrop of the fundamental policy objectives of the Banking Union. The relevant aspects directly relate to a fundamental question associated with the reallocation of the supervisory landscape, namely: Will the centralisation of supervisory powers, over time, also lead to the streamlining of business models, corporate and group structures of banks across the Eurozone? |
| Keywords: | Banking Union,Single Supervisory Mechanism,Single Resolution Mechanism,Banking Regulation,Bank Corporate Governance |
| JEL: | G15 G21 G28 K22 K23 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:safewp:96&r=cfn |
| By: | Xi Li (Department of Accounting, Hong Kong University of Science and Technology; Institute for Emerging Market Studies, Hong Kong University of Science and Technology); Mingyi Hung (Department of Accounting, Hong Kong University of Science and Technology; Institute for Emerging Market Studies, Hong Kong University of Science and Technology); Larry Fauver (Department of Accounting, University of Tennessee); Alvaro Taboada (Department of Accounting, University of Tennessee) |
| Abstract: | We examine the impact of corporate board reforms on firm value in 41 countries. Using a difference-in-differences design, we find that firm value increases after enactment of the reforms. The valuation increase is associated with both the intensity and major components of the reform, including board independence, audit committee, and the separation of the roles of chief executive officer and chairman. We also find that the effect of these reforms primarily exists in countries with weak legal institutions. In addition, the effect of reforms is concentrated among comply-or-explain reforms, and the role of country-level institutions is less important for these reforms than for regulation reforms. Taken together, our findings suggest exogenously introduced governance changes benefit shareholders, mainly in countries with weak institutional quality and for reforms with a comply-or-explain approach. |
| Keywords: | cross-country study, firm value, governance reforms |
| JEL: | G15 G34 K22 |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:hku:wpaper:201520&r=cfn |
| By: | Swamy, Vighneswara |
| Abstract: | The determinants of default risk of banks in emerging economies have so far received inadequate attention in the literature. This paper seeks to study the determinants of bank asset quality and profitability using panel data techniques and robust data sets for the period between 1997 and 2009. The study findings reveal some interesting results that run contrary to established perceptions. Priority sector credit has been found to be not significant in affecting NPAs; this is contrary to the general perception. Similarly, with regard to rural bank branches, the results reveal that aversion to rural credit is a falsely founded perception. Bad debts are dependent more on the performance of industry than on other sectors of the economy. Public sector banks have shown significant performance in containing bad debts. Private banks have continued to be stable in containing bad debts, as they have better risk management procedures and technology, which definitely allows them to finish with lower levels of NPAs. Further, this study investigates the effect of determinants on profitability, and establishes that while capital adequacy and investment activity significantly affect the profitability of commercial banks, apart from other accepted determinants of profitability, asset size has no significant impact on profitability. |
| Keywords: | banks,risk management,ownership structure,financial markets,non-performing assets,lending policy,macro-economy,central banks,banking regulation,financial system stability |
| JEL: | G21 G28 G32 E44 E58 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifwedp:201527&r=cfn |
| By: | TSURUTA Daisuke |
| Abstract: | We investigate the determinants of the end of lending relationships with banks using small business data. We also investigate how small businesses without lending relationships financed credit demand during the global financial shock. First, we find that firms with high internal cash holdings, lower growth, and low working capital were more likely to end lending relationships with banks. Supply-side effects on the determinants of the end of relationships are insignificant. Second, when firms experienced credit demand during the financial shock, those with lending relationships increased bank borrowings while those without lending relationships reduced internal cash. However, if we examine cash-rich firms, both firms with and without relationships reduced cash holdings to finance working capital during the shock period. Third, firm performance (in terms of profitability) was neither lower nor higher for firms that did not have lending relationships with banks during the shock period. |
| Date: | 2015–04 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:15051&r=cfn |
| By: | Reddy, Kotapati Srinivasa |
| Abstract: | The purpose of this paper is to review and summarize earlier studies analyzing the determinants of cross-border mergers and acquisitions (M&As). We primarily describe the motives of cross-border acquisitions and present the market performance for corporate control transactions over the period 1994-2013. Then, we illustrate the factors affecting cross-border investments and acquisitions in various taxonomies, namely deal-specific factors, firm- and industry-specific attributes, organizational learning and prior-acquisition experience, and country-specific factors. We draw special attention to the country-specific taxonomy for various reasons include economic and financial markets environment, institutional and regulatory framework, political situation (including corruption), tax system, accounting and valuation matters, geographical factors and cultural issues. We also provide a synopsis of earlier studies addressing the diversification motive in M&A decision. We thus propose that a host-country’s institutional laws and regulatory system, accounting and tax provisions, economic performance, financial markets development, investor protection, geographical, political and cultural factors distinctly affect cross-border acquisition’s completion. Lastly, we outline contemporary issues in M&A research, and suggest promising areas for future exploration. |
| Keywords: | Literature review; Cross-border mergers and acquisitions; Internationalization; Foreign market entry strategies; International diversification; Foreign direct investment; International business research |
| JEL: | E6 F2 F23 F4 G3 G34 G38 K2 L2 M1 M16 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:63969&r=cfn |
| By: | Maurizio Iacopetta (OFCE and SKEMA Business School Auhor-Email :maurizio.iacopetta@sciencespo.fr); Raoul Minetti (Michigan State University); Pietro F. Peretto (Duke University) |
| Abstract: | We study the impact of corporate governance frictions in an economy where growth is driven both by the foundation of new firms and by the in-house investment of incumbent firms. Firms' managers engage in tunneling and empire building activities. Active shareholders monitor man- agers, but can shirk on their monitoring, to the detriment of minority (passive) shareholders. The analysis reveals that these confiicts among firms' stakeholders inhibit the entry of new firms, thereby increasing market concentration. Despite depressing investment returns in the short run, the frictions can however lead incumbents to invest more aggressively in the long run to exploit the concentrated market structure. By means of quantitative analysis, we characterize conditions under which corporate governance reforms boost or reduce welfare. |
| Keywords: | Endogenous Growth, Market Structure, Financial Frictions, Corporate Gover- nance.; Endogenous growth, Market Structure, Financial Frictions, Corporate Governance |
| JEL: | E44 O40 G30 |
| Date: | 2014–12 |
| URL: | http://d.repec.org/n?u=RePEc:fce:doctra:1422&r=cfn |
| By: | Peter Martey Addo (Centre d'Economie de la Sorbonne) |
| Abstract: | The turmoil in the sovereign debt markets in Europe has raised concerns on the usefulness of sovereign credit default swaps and government bond yields in periods of distress. In addressing this issue, we introduce a novel nonlinear approach for the analysis of non-stationary multivariate data based on complex networks and recurrence analysis. We show the relevance of the approach in studying joint risk connections, extracting hidden spatial information, time dependence, detection of regime changes and providing early warning indicators. The feasibility and relevance of the approach in studying systemic risk is discussed. Finally, we share more light on possible extensions and applications of the approach to systemic risk |
| Keywords: | Sovereign debt crisis; Economic growth; Recurrence networks; Financial stability; Systemic risk |
| JEL: | C40 E50 G01 G18 G21 |
| Date: | 2015–04 |
| URL: | http://d.repec.org/n?u=RePEc:mse:cesdoc:15035&r=cfn |