nep-cfn New Economics Papers
on Corporate Finance
Issue of 2016‒06‒18
six papers chosen by
Zelia Serrasqueiro
Universidade da Beira Interior

  1. The Impact of Merger Legislation on Bank Mergers By Siedlarek, Jan-Peter; Carletti, Elena; Ongena, Steven; Spagnolo, Giancarlo
  2. The heterogeneous response of domestic sales and exports to bank credit shocks By Ines Buono; Sara Formai
  3. Political Regimes and Stock Market Performance in Africa By Simplice Asongu; Jacinta C. Nwachukwu
  4. SME Stock Exchanges – Should They Have a Greater Role? By Aljosa Sestanovic
  5. Dynamic R&D Choice and the Impact of the Firm's Financial Strength By Peters, Bettina; Roberts, Mark J.; Vuong, Van Anh
  6. A framework for modelling financial risk in Southern Australia: the intensive farming (IF) model By Hutchings, Timothy; Nordblom, Tom; Hayes, Richard; Li, Guangdi; Finlayson, John

  1. By: Siedlarek, Jan-Peter (Federal Reserve Bank of Cleveland); Carletti, Elena (Bocconi University, IGIER, and CEPR); Ongena, Steven (University of Zurich, the Swiss Finance Institute, and CEPR); Spagnolo, Giancarlo (Site-Stockholm School of Economics, the University of Rome Tor Vergata, EIEF, and CEPR)
    Abstract: We find that stricter merger control legislation increases abnormal announcement returns of targets in bank mergers by 7 percentage points. Analyzing potential explanations for this result, we document an increase in the pre-merger profitability of targets, a decrease in the size of acquirers, and a decreasing share of transactions in which banks are acquired by other banks. Other merger properties, including the size and risk profile of targets, the geographic overlap of merging banks, and the stock market response of rivals appear unaffected. The evidence suggests that the strengthening of merger control leads to more efficient and more competitive transactions.
    Keywords: banks; mergers and acquisitions; merger control; antitrust;
    JEL: G21 G34 K21 L40
    Date: 2016–06–01
  2. By: Ines Buono (Bank of Italy); Sara Formai (Bank of Italy)
    Abstract: This paper analyzes the role of bank credit in firms' export performance. We use Italian bank-firm matched data and contribute to the existing literature by focusing on the link between bank-credit and exports in ‘normal times’ (1997-2008) and measuring access to credit with hard data on the credit actually extended to firms by the banking system. We also establish the causal link that goes from bank credit to exports, exploiting bank mergers and acquisitions as a source of bank credit supply shocks. We find that short-run shocks to the supply of bank credit induce exporters to decrease their export flows, without affecting their domestic sales. On the other hand, non-exporters react by reducing their domestic sales.
    Keywords: export, bank lending channel, credit shocks, mergers and acquisitions
    JEL: F14 G21 G34
    Date: 2016–06
  3. By: Simplice Asongu (Yaoundé/Cameroun); Jacinta C. Nwachukwu (Coventry University)
    Abstract: This paper assesses the effect of political institutions on stock market performance in 14 African countries for which stock market data is available for the period 1990-2010. The estimation technique used is a Two-Stage-Least Squares Instrumental Variable methodology. Political regime channels of democracy, polity and autocracy are instrumented with legal-origins, religious-legacies, income-levels and press-freedom qualities to account for stock market performance dynamics of capitalization, value traded, turnover and number of listed companies. The findings show that countries with democratic regimes enjoy higher levels of financial market development compared to their counterparts with autocratic inclinations. As a policy implication, the role of sound political institutions has important effects on both the degree of competition for public office and the quality of public offices that favour stock market development on the African continent.
    Keywords: Financial Markets; Government Policy; Development
    JEL: G10 G18 G28 P16 P43
    Date: 2016–01
  4. By: Aljosa Sestanovic (Effectus - University Collage for Law and Finance)
    Abstract: Access to finance is widely recognized as one of the main impediments for growth and development of the small and medium enterprises. This article presents certain aspects of development of stock exchanges oriented towards small and medium-size enterprises. It aims to contribute towards the growing debate on funding of small and medium enterprises through dedicated stock exchanges and serve as a useful contribution to stakeholders to undertake certain steps toward implementation of effective policies for design of exchanges dedicated to financing of small and medium enterprises.
    Keywords: tržište Small and medium enterprises, stock exchanges, SME exchanges, alternative markets, multilateral trade facilities (MTFs), Zagreb Stock Exchange
    JEL: D53 G15 P34
    Date: 2015–06
  5. By: Peters, Bettina (Centre for European Economic Research (ZEW)); Roberts, Mark J. (Pennsylvania State University and NBER); Vuong, Van Anh (University of Cologne and Institute of Energy Economics)
    Abstract: This article investigates how a firm's financial strength affects its dynamic decision to invest in R&D. We estimate a dynamic model of R&D choice using data for German firms in high-tech manufacturing industries. The model incorporates a measure of the firm's financial strength, derived from its credit rating, which is shown to lead to substantial differences in estimates of the costs and expected long-run benefits from R&D investment. Financially strong firms have a higher probability of generating innovations from their R&D investment, and the innovations have a larger impact on productivity and profits. Averaging across all firms, the long run benefit of investing in R&D equals 6.6 percent of firm value. It ranges from 11.6 percent for firms in a strong financial position to 2.3 percent for firms in a weaker financial position.
    Keywords: R&D choice; financial strength; innovation; productivity; dynamic structural model
    JEL: G30 O31 O32
    Date: 2016–06–02
  6. By: Hutchings, Timothy; Nordblom, Tom; Hayes, Richard; Li, Guangdi; Finlayson, John
    Keywords: Farm Management, Risk and Uncertainty,
    Date: 2016–02

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