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on Corporate Finance |
| By: | Hegadekatti, Kartik |
| Abstract: | A Company's Brand image is an intangible asset. Though Initial Public Offerings (IPOs) try to capture Brand Value, a company's share value is a result of several factors like performance, initial capital, investor identity etc. Moreover, time needed for a company to be listed runs into several months. Therefore, immediate capitalization of Brand Value is not possible. Initial Coin Offerings on the other hand deliver a wide range of possibilities not provided by IPOs. Most important among them is Brand Tokenization and Monetization. This paper explores Brand Tokenization and Monetization through ICOs (Initial Coin Offerings). Firstly, the concept of Brands and cryptocurrencies are explained. Then the concept of ICOs is discussed. I envisage a scenario where a company tokenizes its Brand and attempts to monetize it. We then evaluate the advantages that can accrue from such a venture. The paper concludes as to how Brand Tokenization and monetization can be realized through cryptocurrencies and its impact on future businesses. |
| Keywords: | ICO, IPO, Bitcoin, Blockchain, Ethereum, Ether, Brand |
| JEL: | D86 F23 G32 L10 O16 O33 |
| Date: | 2017–10–18 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:82833&r=cfn |
| By: | Chia-Lin Chang (National Chung Hsing University, Taiwan); Michael McAleer (Asia University, Taiwan; University of Sydney Business School, Australia; Erasmus University Rotterdam, The Netherlands); Wing-Keung Wong (Asia University, Taiwan; Hang Seng Management College, China; Lingnan University, China) |
| Abstract: | The paper provides a brief review of the connecting literature in management information, decision sciences, and financial economics, and discusses some research that is related to the three cognate disciplines. Academics could develop theoretical models and subsequent econometric models to estimate the parameters in the associated models, and analyze some interesting issues in the three related disciplines. |
| Keywords: | Management information; decision sciences; financial economics; theoretical models; econometric models. |
| JEL: | A10 G00 G31 O32 |
| Date: | 2018–01–17 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20180004&r=cfn |
| By: | Gersbach, Hans; Rochet, Jean-Charles; Scheffel, Martin |
| Abstract: | This paper integrates banks into a two-sector neoclassical growth model to account for the fact that a fraction of firms relies on banks to finance their investments. There are four major contributions to the literature: First, although banks’ leverage amplifies shocks, the endogenous response of leverage to shocks is an automatic stabilizer that improves the resilience of the economy. In particular, financial and labor market institutions are essential factors that determine the strength of this automatic stabilization. Second, there is a mix of publicly financed bank re-capitalization, dividend payout restrictions, and consumption taxes that stimulates a Pareto-improving rapid build-up of bank equity and accelerates economic recovery after a slump in the banking sector. Third, the model replicates typical patterns of financing over the business cycle: procyclical bank leverage, procyclical bank lending, and countercyclical bond financing. Fourth, the framework preserves its analytical tractability wherefore it can serve as a macro-banking module that can be easily integrated into more complex economic environments. |
| Keywords: | Financial intermediation; capital accumulation; banking crisis; macroeconomic shocks; business cycles; bust-boom cycles; managing recoveries |
| JEL: | E21 E32 G21 G28 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:ide:wpaper:32398&r=cfn |
| By: | Hackbarth, Dirk; Rivera, Alejandro; Wong, Tak-Yuen |
| Abstract: | This paper studies incentives in a dynamic contracting framework of a levered firm. In particular, the manager selects long-term and short-term efforts, while shareholders choose initially optimal leverage and ex-post optimal default policies. There are three results. First, shareholders trade off the benefits of short-termism (current cash flows) against the benefits of higher growth from long-term effort (future cash flows), but because shareholders only split the latter with bondholders, they find short-termism ex-post optimal. Second, bright (grim) growth prospects imply lower (higher) optimal levels of short-termism. Third, the endogenous default threshold rises with the substitutability of tasks and, for a positive correlation of shocks, the endogenous default threshold is hump-shaped in the volatility of permanent shocks, but increases monotonically with the volatility of transitory shocks. Finally, we quantify agency costs of short-term and long-term effort, cost of short-termism, effects of investor time horizons, credit spreads, and risk-shifting. |
| Keywords: | Capital Structure; Contracting; Multi-tasking |
| JEL: | D86 G13 G32 G33 J33 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:12588&r=cfn |
| By: | Renata Karkowska (University of Warsaw); Małgorzata Pawłowska (Warsaw School of Economics; Narodowy Bank Polski;) |
| Abstract: | The aim of this paper is to discuss changes in the banking sectors in Central and Eastern European countries, with particular emphasis on the change in market structure, the concentration and the share of foreign capital, in an attempt to determine the relationship between market structure and stability in the period 1999-2015. Using the methodology of panel regression, GMM estimator, we examine the implications of banks’ concentration that manifest themselves as spreading and growing instability. The study contributes to the literature by focusing on a group of countries from Central and Eastern Europe, which are not explain in previous research and they are playing the role of a host country for banks from a number of countries in Europe. Finally, our results reveal that the persistence of risk is affected by the level of bank concentration and this effect is exacerbated during the downturn. |
| Keywords: | banking, concentration, foreign ownership, stability, CEE countries |
| JEL: | F36 G2 G21 G34 L1 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:nbp:nbpmis:272&r=cfn |
| By: | Alves, Paulo; Morais, Francisco |
| Abstract: | The goal of this paper is to study the determinants of firms’ cash holdings and how cash holdings were affected by the financial crisis of 2008. Using data from the period of 1995 to 2014 of non-financial firms, we present almost 265,000 firm-year observations. Our results suggest that cash holdings have a positive relationship with investment set and a negative relationship with liquidity and firm size. Our results also show that cash holdings are influenced by capital market development and banking sector, as well as by inflation. Agency theory determinants demonstrate that firms in common law countries and countries with higher law enforcement still hold higher amounts of cash holdings. Cash holdings post-crisis are higher than pre-crisis and there is a spike in cash holdings during 2009. Our hypothesis for these results are explained by the precautionary motive. |
| Keywords: | Free cash flow theory, Pecking order theory; trade-off theory; Precautionary motive; Financial crisis. |
| JEL: | G31 G38 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:83799&r=cfn |
| By: | Jieun Lee (Economic Research Institute, The Bank of Korea); KeeH.Chung (Department of Finance, School of Management, University at Buffalo, The State University of New York) |
| Abstract: | This study analyzes the effect of market volatility on stock returns using data from the Korean stock market from January 1, 2004 to December 31, 2014. We show that unexpected increases in market volatility accompany decreases in both stock returns and liquidity and the effect of volatility shock on stock returns is greater for stocks with more domestic or foreign institutional trading. Individual investors mitigate the negative effect of volatility shock on stock returns. The interaction effect of market volatility and liquidity on stock returns is stronger for stocks with more foreign institutional trading. We also document some evidence of asymmetric effects of market volatility on stock returns that are related to whether trades are buyer or seller-initiated. |
| Keywords: | Market volatility, VIX, Price impact, Bid-ask spread, Liquidity, Stock returns, Investor type, Financial crisis |
| JEL: | G10 G32 G34 |
| Date: | 2017–06–20 |
| URL: | http://d.repec.org/n?u=RePEc:bok:wpaper:1718&r=cfn |
| By: | David Cornille; François Rycx; Ilan Tojerow |
| Abstract: | This paper takes advantage of access to detailed matched bank-firm data to investigate whether and how employment decisions of SMEs have been affected by credit constraints in the wake of the Great Recession. Variability in banks’ financial health following the 2008 crisis is used as an exogenous determinant of firms’ access to credit. Findings, relative to the Belgian economy, clearly highlight that credit matters. They show that SMEs borrowing money from precrisis financially less healthy banks were significantly more likely to be affected by a credit constraint and, in turn, to adjust their labour input downwards than pre-crisis clients of more healthy banks. These results are robust across types of loan applications that were denied credit, i.e. applications to finance working capital, debt or new investments. Yet, estimates also show that credit constraints have been essentially detrimental for employment among SMEs experiencing a negative demand shock or facing strong product market competition. In terms of human resources management, credit constraints are not only found to foster employment adjustment at the extensive margin but also to increase the use of temporary layoff allowances for economic reasons. This outcome supports the hypothesis that short-time compensation programmes contribute to save jobs during recessions. |
| Keywords: | SMEs; banks’ financial health; credit constraints; employment; shorttime compensation programmes; Great Recession; matched bank-firm data |
| JEL: | C35 G21 J21 J23 C39 G00 |
| Date: | 2018–01–11 |
| URL: | http://d.repec.org/n?u=RePEc:sol:wpaper:2013/263592&r=cfn |
| By: | Cornille, David (National Bank of Belgium); Rycx, Francois (Free University of Brussels); Tojerow, Ilan (Free University of Brussels) |
| Abstract: | This paper takes advantage of access to detailed matched bank-firm data to investigate whether and how employment decisions of SMEs have been affected by credit constraints in the wake of the Great Recession. Variability in banks' financial health following the 2008 crisis is used as an exogenous determinant of firms' access to credit. Findings, relative to the Belgian economy, clearly highlight that credit matters. They show that SMEs borrowing money from pre-crisis financially less healthy banks were significantly more likely to be affected by a credit constraint and, in turn, to adjust their labour input downwards than pre-crisis clients of more healthy banks. These results are robust across types of loan applications that were denied credit, i.e. applications to finance working capital, debt or new investments. Yet, estimates also show that credit constraints have been essentially detrimental for employment among SMEs experiencing a negative demand shock or facing strong product market competition. In terms of human resources management, credit constraints are not only found to foster employment adjustment at the extensive margin but also to increase the use of temporary layoff allowances for economic reasons. This outcome supports the hypothesis that short-time compensation programmes contribute to save jobs during recessions. |
| Keywords: | SMEs, banks' financial health, credit constraints, employment, short-time compensation programmes, Great Recession, matched bank-firm data |
| JEL: | C35 C36 D22 G01 G21 J21 J23 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11257&r=cfn |
| By: | Viet-Dung Tran; M. Kabir Hassan; Reza Houston |
| Abstract: | Earnings management can be either opportunistic, adding noise to reported earnings, or informative about a firm’s underlying economic performance, adding valuable information to financial reports. This study examines earnings management in banks with differing levels of information asymmetry. Specifically, we compare earnings management between public and private banks by using discretionary loan-loss provisions (DLLPs) as proxies. Employing a large dataset of US public and private banks from 1986:Q1 to 2013:Q4, this study provides evidence of stronger earnings management behavior in public banks versus private banks. The evidence remains robust under a battery of sensitivity tests. Since incentives for earnings management are more relevant within a specific context, we identify the conditions that motivate different earnings management incentives, which allows us to better observe specific managerial motives. Greater DLLPs observed in public banks are utilized to send private information to investors, consistent with the signaling hypothesis. We also find evidence that capital requirements alter DLLPs, consistent with the capital management hypothesis. Banks with relatively low (high) earnings tend to decrease (increase) their earnings through manipulation of DLLPs, inconsistent with our income-smoothing hypothesis. The study extends to current debates on earnings management between public and private firms, and also provides a better understanding of the determinants of earnings management. |
| Keywords: | Bank listing status; Discretionary loan loss provisions; Earnings management |
| JEL: | G21 G28 G34 G38 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:nfi:nfiwps:2018-wp-01&r=cfn |