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on Corporate Finance |
| By: | Ibrahim Yarba; Zehra Nuray Guner |
| Abstract: | This study analyses leverage dynamics of Turkish non-financial firms over the last 20 years using a confidential and unique firm-level dataset. Results of dynamic panel estimations reveal that financial development fosters corporate leverage while government indebtedness inhibits it. Both impacts are more pronounced for private firms rather than public firms. Besides, even though improvements in financial development foster long-term debt usage for both SMEs and large firms, this impact seems stronger for SMEs. Conspicuously, results reveal that SMEs suffer much more than large firms in crowding-out periods of government leverage while both SMEs and large firms benefit in crowding-in periods. Moreover, higher business risk hinders corporate leverage of private firms and SMEs, which is not the case for either large firms or public firms. Results are robust to alternative firm size classification schemes and alternative model specifications. |
| Keywords: | Leverage dynamics, Financial development, Government leverage, Capital structure, Dynamic panel regression |
| JEL: | G31 G38 H32 O16 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:tcb:wpaper:1915&r=all |
| By: | Hyunduk Suh (Department of Economics, Inha University); Jin Young Yang (Department of Finance, Zayed University) |
| Abstract: | Using firm-level data from 36 countries, we estimate the effect of global uncertainty on corporate investment and financial decisions. Eleven global uncertainty measures that encompass macro, micro, and higher-order dimensions of uncertainty are employed. We find that while Economic Policy Uncertainty (EPU) measures negatively affect investment, non-EPU measures have positive effects. In 2010s, EPU and non-EPU measures exhibit notably different behaviors which appear to considerably influence our results. We also explore how firm- and country-specific characteristics affect the relationship between uncertainty and investment. The negative effects of EPU measures on investment are stronger for firms with high investment irreversibility and high leverage, but no such effect is observed from non-EPU measures. In countries with deeper credit markets, investment decisions are less sensitive to uncertainty. Regarding financial decisions, (1) increased EPU measures lead to increased cash holdings, while an increase in most other uncertainty measures reduces them and (2) except for Global EPU, most uncertainty measures are negatively associated with dividend payouts. Overall, our results reveal that contrary to a substantial body of recent scholarly work, the uncertainty-investment relation is sensitive to uncertainty measures and sample periods and different uncertainty measures have differential effects on cash holdings and dividend payouts. |
| Keywords: | Uncertainty, Investment, Cash holdings, Dividends |
| JEL: | F44 G31 G35 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:inh:wpaper:2019-1&r=all |
| By: | Simplice A. Asongu (Yaoundé/Cameroon); Joseph Nnanna (The Development Bank of Nigeria, Abuja, Nigeria) |
| Abstract: | In this study, we examine the role of information and communication technology in complementing information sharing bureaus (or private credit bureaus and public credit registries) for financial sector competition. Hitherto unexplored dimensions of financial sector competition are employed, namely: financial sector dynamics of formalization, informalization and non-formalization. The empirical evidence is based on 53 African countries for the period 2004-2011 and the Generalised Method of Moments (GMM) with forward orthogonal deviations. The findings differ across financial sectors in terms of marginal, net and threshold effects. By introducing the concept of financialization, the study unites two streams of research by: improving the macroeconomic literature on measuring financial development and responding to an evolving field of development literature by means of informal finance. Moreover, a practical method by which to disentangle the effects of reducing information asymmetry on various financial sectors is suggested. Policy implications are discussed. |
| Keywords: | Information sharing; Banking competition; Africa |
| JEL: | G20 G29 L96 O40 O55 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:abh:wpaper:18/035&r=all |
| By: | Simplice A. Asongu (Yaoundé/Cameroon); Nicholas M. Odhiambo (Pretoria, South Africa) |
| Abstract: | This study investigates whether information sharing channels that are meant to reduce information asymmetry have led to an increase in financial access. The study employs a Generalised Method of Moments technique using data from 53 African countries during the period from 2004-2011 to examine this linkage. Information sharing channels are theoretically designed to promote the formal financial sector and discourage the informal financial sector. The study uses two information sharing channels: private credit bureaus and public credit registries. The study found that both information sharing channels have a positive and significant impact on financial access. The study also found that public credit registries complement the formal financial sector to promote financial access. The policy implications are discussed. |
| Keywords: | Information asymmetry; Financialisation; Financial Access; Africa |
| JEL: | G20 G29 L96 O40 O55 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:abh:wpaper:18/019&r=all |
| By: | Raddant, Matthias; Takahashi, Hiroshi |
| Abstract: | We analyze the dynamics of the Japanese board network from 2004 until 2013. We find that the network exhibits some clustering with visible firm conglomerates. Ties between firms are rather persistent, despite noticeable churning among directors. Ownership relations explain only a small fraction of board links. Besides densely connected conglomerates, some tendency of within-sector linkages and linkages to financial institutions can be confirmed. We further investigate the increase in the number of outside directors and find that sectoral differences as well as shareholder characteristics explain to large extend the variation in board composition. The connectivity of firms in the ownership and board network is sometimes related to firm profitability. Firms that are linked to peers with above average profitability are likely also more profitable than firms in other ownership relationships. |
| Keywords: | corporate board interlock,corporate governance,board composition |
| JEL: | L14 M12 G32 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifwkwp:2130&r=all |
| By: | Dimitrios Anastasiou (Athens University of Economics and Business and Alpha Bank); Zacharias Bragoudakis (Bank of Greece); Ioannis Malandrakis (Athens University of Economics and Business) |
| Abstract: | In this study we propose a new determinant of non-performing loans for the case of the Greek banking sector. We employ aggregate yearly data for the period 1996-2016 and we conduct a Principal Component Analysis for all the Worldwide Governance Indicators (WGI) for Greece, aiming to isolate the common component and thus to create the GOVERNANCE indicator. We find that the GOVERNANCE indicator is a significant determinant of Greek banks’ non-performing loans indicating that both political and governance factors impact on the level of the Greek non-performing loans. An additional variable that also has a statistically significant impact on the level of Greek non-performing loans, when combined with WGI in the dynamic specification of our model, is systemic liquidity risk. Our results could be of interest to policy makers and regulators as a macro prudential policy tool. |
| Keywords: | Credit risk; Greek banking sector; Non-performing loans; Systemic liquidity risk; Worldwide Governance Indicators. |
| JEL: | C51 G21 G2 G38 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:bog:wpaper:260&r=all |