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on Corporate Finance |
| By: | Connelly, Thomas; Wolff, Christian C |
| Abstract: | In this paper we examine the relationship between ownership concentration and dividend policy for Thai publicly listed companies. High family ownership firms have higher dividend payouts than low family ownership firms, which we interpret to mean high family ownership firms follow a more rational dividend policy. This finding is consistent with the prediction that agency conflicts between the managers and shareholders are lower at firms with a controlling shareholder. The evidence is robust through different econometric specifications, robust when the level used to determine the extent of family ownership (family control) is lowered to 10 percent of the outstanding shares, and robust to the inclusion of the ownership wedge as a proxy for the severity of agency conflicts. |
| Keywords: | agency conflicts; control; Family ownership; Payout policy |
| JEL: | G30 G35 |
| Date: | 2019–07 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13854&r=all |
| By: | Friska Firnanti (Accounting, Trisakti School of Management, Indonesia Author-2-Name: Kashan Pirzada Author-2-Workplace-Name: Tunku Puteri Intan Safinaz School of Accountancy, Universiti Utara Malaysia, Kedah, Malaysia Author-3-Name: Budiman Author-3-Workplace-Name: Trisakti School of Management, Kyai Tapa No. 20, 11440, Jakarta, Indonesia Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:) |
| Abstract: | Objective - The purpose of this research is to empirically examine how company characteristics, corporate governance and audit quality affect earnings management. Methodology/Technique - The population used for this research is manufacturing companies listed on the Indonesian Stock Exchange between 2013 and 2015. The sampling method used in this research is purposive sampling. 64 companies are examined, with 192 items of data being obtained. Finding - This research also uses statistical testing through a multiple regression. The results show that return on assets, financial leverage, free cash flow, and sales growth all have an influence on earnings management. Meanwhile, other variables such as managerial ownership, institutional ownership, board size, the presence of an audit committee, firm size, and audit quality have no significant effect on earnings management. Novelty - In this research, company characteristics are proxied with the return on assets, financial leverage, firm size, free cash flow, and sales growth, while corporate governance is proxied with managerial ownership, institutional ownership, board size, and the presence of an audit committee. Type of Paper - Empirical. |
| Keywords: | Company Characteristics; Corporate Governance; Audit Quality; Earnings Management; Agency Theory. |
| JEL: | M40 M41 M49 |
| Date: | 2019–07–12 |
| URL: | http://d.repec.org/n?u=RePEc:gtr:gatrjs:afr173&r=all |
| By: | Farida Titik Kristanti (Faculty of Economics and Business, Telkom University, Indonesia Author-2-Name: Sri Rahayu Author-2-Workplace-Name: Telkom University, Jl Telekomunikasi, Terusan Buah Batu, Bandung, 40257, West Java, Indonesia Author-3-Name: Deannes Isynuwardhana Author-3-Workplace-Name: Telkom University, Jl Telekomunikasi, Terusan Buah Batu, Bandung, 40257, West Java, Indonesia Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:) |
| Abstract: | Objective - The growth of SMEs in Indonesia is rising from year to year. As an anticipation of bankruptcy, predictions can be made in an integrated means from the perspective of capital structure, financial, and non-financial performance. Methodology/Technique - A sample of 39 companies were selected using purposive sampling during the research period of 2013-2017. The results of the statistical logistic regression show that profitability is an important factor in predicting financial distress of the SMEs in Indonesia. Finding - The operating income to total assets has a negative and significant effect on SMEs financial distress. Meanwhile, retained earnings to total assets have a positive impact. Indonesian SMEs must be efficient in their operational costs to avoid financial distress. Novelty - In addition, sales are also important. If the company's sales are high, and the operational cost efficiency is maintained, the retained earnings will increase. This means that the company will be safe and able to avoid financial distress. Type of Paper - Empirical. |
| Keywords: | Capital Structure; Financial; Distress; Non-Financial; Performance. |
| JEL: | G32 G33 G34 |
| Date: | 2019–07–15 |
| URL: | http://d.repec.org/n?u=RePEc:gtr:gatrjs:afr175&r=all |
| By: | Wei-Fong Pan (Department of Economics, University of Reading) |
| Abstract: | Although most empirical studies conclude that uncertainty delays firms' investments based on real options theory, empirical evidence regarding the impact of uncertainty on innovation is mixed. This study examines the impact of geopolitical risk (GPR) on corporate research and development (R&D) investment using newly developed indices. We find a negative relationship between GPR and R&D investment. The R&D investment rapidly drops and rebounds several quarters after high GPR. The impact of GPR is most significant for high-tech firms, small firms, and firms with high growth options. However, when GPRs are realised, these significant and negative effects disappear. These results are shown to be robust after controlling for firm characteristics, macroeconomic environment, other uncertainty measures, time, and alternative GPR and R&D measures, as well as considering the simultaneity and endogeneity issues. Overall, our study suggests that GPR plays a key role in determining R&D investment. |
| Keywords: | R&D, Political uncertainty, Geopolitical risk, Innovation |
| JEL: | D80 H56 O31 |
| Date: | 2019–07 |
| URL: | http://d.repec.org/n?u=RePEc:rdg:emxxdp:em-dp2019-11&r=all |
| By: | Arna Suryani (Batanghari University, Jl. Slamet Riyadi, Broni, 36121, Jambi, Indonesia Author-2-Name: Atikah Author-2-Workplace-Name: Batanghari University, Jl. Slamet Riyadi, Broni, 36121, Jambi, Indonesia Author-3-Name: Hana Tamara Putri Author-3-Workplace-Name: Batanghari University, Jl. Slamet Riyadi, Broni, 36121, Jambi, Indonesia Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:) |
| Abstract: | Objective - This research aims to determine and analyze related party transactions to increase firm value through opportunistic behaviour management by conducting earnings management on manufacturing companies listed on the Indonesian Stock Exchange between 2015 and 2018. Methodology/Technique – There are 34 companies that fulfill the requirements to become the sample of this study. The method applied in analyzing the data is verification using path analysis. Findings – The results of the research show that related party transactions do not have any significant effect on firm value however it indicates a positive impact. Moreover, related party transactions do not have any significant impact on earning management yet it gives a negative impact on earning management. Novelty – The influence of earnings management shows a positive impact on firm value while it shows no signs of positive impact on firm value. The analysis shows that the value of the indirect impact of related party transactions through earnings management towards firm value is negative being 0.022 smaller than the direct impact of related party transaction toward firm value which is 0.053. This indicates that related party transactions through earnings management have no significant impact on firm value. |
| Keywords: | Related Party Transactions; Earnings Management; Firm Value. |
| JEL: | G02 G30 G32 G39 |
| Date: | 2019–07–10 |
| URL: | http://d.repec.org/n?u=RePEc:gtr:gatrjs:jfbr158&r=all |
| By: | Karolis Liaudinskas (Universitat Pompeu Fabra); Kristina Grigaite (Bank of Lithuania) |
| Abstract: | We use loan-level data and a novel identification setting – closures of banks – to study how forced break-ups of lending relationships affect firms’ borrowing costs. We find that after a financially distressed bank closed and its best borrowers were exogenously forced to switch, their borrowing costs dropped steeply and converged to the market’s average. We document no such effect when a healthy bank closed. This suggests that distressed banks can use informational monopoly power to hold up and exploit their best borrowers. Apparently, closures of such banks can release the best-quality firms from the hold-up and allow borrowing cheaper elsewhere. |
| Keywords: | relationship lending, hold-up, asymmetric information, bank closures, financial distress, switching costs |
| JEL: | D82 E51 G20 G21 G30 G33 L14 |
| Date: | 2019–07–10 |
| URL: | http://d.repec.org/n?u=RePEc:lie:wpaper:64&r=all |
| By: | Michael Ewens; Alexander S. Gorbenko; Arthur Korteweg |
| Abstract: | We estimate the impact of venture capital (VC) contract terms on startup outcomes and the split of value between the entrepreneur and investor, accounting for endogenous selection via a novel dynamic search and matching model. The estimation uses a new, large data set of first financing rounds of startup companies. Consistent with efficient contracting theories, there is an optimal equity split between agents that maximizes the probability of success. However, VCs use their bargaining power to receive more investor-friendly terms compared to the contract that maximizes startup values. Better VCs still benefit the startup and the entrepreneur, due to their positive value creation. Counterfactual exercises show that eliminating certain contract terms benefits entrepreneurs and enables low-quality entrepreneurs to finance their startups more quickly, increasing the number of deals in the market. Lowering search frictions shifts the bargaining power to VCs and benefits them at the expense of entrepreneurs. The results show that selection of agents into deals is a first-order factor to take into account in studies of contracting. |
| JEL: | C78 D86 G24 |
| Date: | 2019–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:26115&r=all |
| By: | Kraemer-Eis, Helmut; Botsari, Antonia; Gvetadze, Salome; Lang, Frank; Torfs, Wouter |
| Abstract: | This analysis provides an overview of the main markets relevant to the EIF. It starts by discussing the general market environment, then looks at the main aspects of equity finance and the guarantee and SME securitisation markets. It also highlights important aspects of microfinance in Europe. Finally, the analysis includes a chapter dedicated to Fintech. |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:eifwps:201957&r=all |
| By: | Pöschel, Carla |
| Abstract: | Despite the growing literature on the effectiveness of R&D tax incentives, little is known about differing design aspects of the underlying R&D tax policies. In this paper, I apply sophisticated meta-regression methodology to separate the distinct provisions through which various R&D tax policies affect firms' R&D expenditure. My results indicate on average larger input additionality effects of hybrid tax regimes compared to volume-based schemes, while incremental tax measures seem to provide the lowest incentives for firms. My findings are particularly important for policy makers optimizing the design of an R&D tax policy. |
| Keywords: | R&D Tax Policy,Design Aspects,Input Additionality Effects,Meta-Regression Analysis |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:arqudp:243&r=all |