nep-cfn New Economics Papers
on Corporate Finance
Issue of 2019‒12‒09
nine papers chosen by
Zelia Serrasqueiro
Universidade da Beira Interior

  1. The impact of macroeconomic factors on collateral value within the framework of expected credit loss calculation By Yurchenko, Yurii
  2. Effect of profitability and dividend policy on corporate governance and firm value: Evidence from the Indonesian manufacturing Sectors By Tamrin, Muhammad; Mus, H. Rahman; , Sudirman; Arfah, Aryati; Sjahruddin, Herman
  3. The Effect of Higher Capital Requirements on Bank Lending: The Capital Surplus Matters By Dominika Kolcunová; Simona Malovaná
  4. Product Market Strategy and Corporate Policies By Jakub Hajda
  5. Assessment of Financial Potential as a Determinant of Enterprise Development By Zherlitsyn, Dmytro; Levytskyi, Stanislav; Mykhailyk, Denys; Ogloblina, Victoriia
  6. Market-Based Financing for Small Corporations during Early Industrialisation: The Case of Salt Corporations in Japan, 1880s-1910s By Kiyotaka Maeda
  7. Financial Performance Analysis of Distressed Banks in Ghana: Exploration of Financial Ratios and Z-score By Matey, Juabin
  8. Capital Structure Adjustments and Asymmetric Information By Ripamonti, Alexandre
  9. The Impact of the Brexit Vote on UK Financial Markets: A Synthetic Control Method Approach By Matej Opatrny

  1. By: Yurchenko, Yurii
    Abstract: The study examines the impact of macroeconomic factors on the expected credit losses of a financial instrument related to changes in the value of collateral. The author has developed a method of calculating this impact on the basis of econometric models, as well as simulated the effect on expected credit losses and reserves on a financial instrument. Based on the proposed approach, appropriate models have been constructed based on the data of the US and Ukrainian economies for the maximum period available, taking into account the adequacy of the data. In particular, it has been shown that applying the methodology of adjusting collateral value to macroeconomic factors can lead to a reduction of the reserve according to the requirements of the regulator, i.e. from the financial institution's point of view it is possible to release some of the funds additionally.
    Keywords: LGD, Collateral value, OLS, Credit risk, valuation, GLM
    JEL: C22 G21 G32
    Date: 2019–11
  2. By: Tamrin, Muhammad; Mus, H. Rahman; , Sudirman; Arfah, Aryati; Sjahruddin, Herman
    Abstract: This study aims to analyze the effect of Profitability and Corporate Governance Structure on dividend policy and its impact on the firm value. The population in this research is manufacturing companies listed in Indonesia Stock Exchange as many as 146 companies. The research sample as many as 58 companies, the period of 2013 to 2015. Sampling technique used is purposive sampling. The data analysis technique used is WrapPLS. The results showed that profitability have a negative and significant effect on dividend policy. Profitability has a negative and significant effect on firm value. Profitability is a negative and insignificant effect on firm value as a mediated dividend policy. The structure of corporate governance is positive and significant effect on dividend policy. Corporate governance structure has a positive and significant effect on firm value. Corporate governance structure has a positive and insignificant effect on firm value as a mediated dividend policy. Dividend policy is a positive and insignificant effect on firm value
    Date: 2018–09–06
  3. By: Dominika Kolcunová (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Opletalova 26, 110 00, Prague, Czech Republic; Czech National Bank, Na Prikope 28, 115 03 Prague 1, Czech Republic); Simona Malovaná (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Opletalova 26, 110 00, Prague, Czech Republic; Czech National Bank, Na Prikope 28, 115 03 Prague 1, Czech Republic)
    Abstract: This paper studies the impact of higher additional capital requirements on loan growth to private sector of banks in the Czech Republic. The empirical results indicate that there is a negative effect of higher additional capital requirements on loan growth of banks with relatively low capital surplus. In addition, the results confirm that the relationship between capital surplus and loan growth is important also in the period of stable capital requirements, i.e. it does not serve only as an intermediate channel of higher additional capital requirements.
    Keywords: Bank lending, banks’ capital surplus, regulatory capital requirements
    JEL: C22 E32 G21 G28
    Date: 2019–04
  4. By: Jakub Hajda
    Abstract: Corporate finance has related corporate policies to cash flow risk. I show that corporate valuation and policies are better understood when taking into account the dynamics of products, which microfound firms' cash flows. I demonstrate empirically that product portfolio age is negatively related to firm value, investment and leverage, consistent with the product life cycle channel. I quantify its importance by estimating a model of financing, investment, and product portfolio decisions. The model rationalizes the stylized facts by showing that capital investment and product introductions act as complements and that product dynamics induce stronger precautionary savings motives. The results indicate that product dynamics are important, as they explain 25% of variation in investment and leverage. The estimates imply that product life cycle effects are large and stronger among firms supplying fewer products and competing more intensely. Alleviating these effects can increase firm value by up to 4.5%.
    JEL: G32 G31
    Date: 2019–11–25
  5. By: Zherlitsyn, Dmytro; Levytskyi, Stanislav; Mykhailyk, Denys; Ogloblina, Victoriia
    Abstract: Financial potential is an important part of enterprise activities. The technique of the enterprise’s financial potential assessment is offered in the paper. It is presented by particular stages, where each stage is related to a certain task. The characteristics of the company’s financial potential, based on the analysis of the related literature, are determined. The implementation of each task is carried out. Thus, the study proposes a mechanism for managing the financial potential of enterprises, which allows to emphasize the elements that can be useful for economic development. It is based on the general strategic principles of the enterprise management. The study results can be used to assess enterprise purposes and develop the formation goals of its financial potential. It can also help to forecast and separate main directions of accumulation, formation, and distribution of financial resources. It should be noted, that analysis and control over the financial potential formation strategy, as well as the use of analysis results for specifying the strategic directions of the enterprise development, are of high importance. Therefore, the management of the financial potential is a system of rational management of business financing, which includes the formation of financial relations, emerging as a result of finance resources flow.
    Keywords: assessment, financial potential, development, determinant, enterprise
    JEL: G39 O16
    Date: 2019–09
  6. By: Kiyotaka Maeda (Department of Japanese History, Faculty of Letters, Keio University)
    Abstract: This study investigates how small corporations in rural areas arranged funds and reassesses the role of market-based financing for Japanese small and medium-sized enterprises from the 1880s through the 1910s. Whereas previous studies have focused on the financing of large corporations in urban areas, this paper argues that corporations of various sizes, including small ones in rural areas, arranged their funds from the stock market during Japan's industrialisation. By applying this style of financial arrangement, these corporations expanded their production scales, accelerating the local formation of specialised producing regions and boosting the regional economy.
    Keywords: market-based financing, industrialisation, small and medium-sized enterprises (SMEs), over-the-counter market, salt industry
    JEL: N15 N25 N85
    Date: 2019–10–29
  7. By: Matey, Juabin
    Abstract: A robust bank industry is a major player in the stability of an economy. By way of financial ratios and Z-score, the study analysed UT Bank’s financial performance prior to the recent bank sector reforms. Annual financials over a four year period were used. Debt management practices of UT Bank per the results obtained were quite on the hind side. Leverage and risk variables were poorly handled. UT Bank would have been unable to meet creditors’ claims considering the mean average values of debt-to-assets and debt-to equity ratios of 0.76 and 0.90 respectively. The entire bank sector will be put on sound footing on if credit management practices of individual banks are refreshed. The bank industry regulator should tighten its supervisory and monitoring role over banks to help detect early signs of non-performing banks. The study further recommends that statutory lending limits of banks be re-enforced to uphold the threshold of 10 percent for unsecured loans and 25 percentage for secured loans of net owned funds of the bank.
    Keywords: Bank, Debt, Distress, Performance, Credit Management Practice, Z-score
    JEL: G2 G21 G28
    Date: 2019–09–17
  8. By: Ripamonti, Alexandre
    Abstract: The findings of this paper suggest another reason for capital structure adjustments besides the Trade-Off and Pecking Order theories propositions because asymmetric information impacts capital structure changes and deviations o nly for a quarter whilst stationarity impacts them for 4 quarters, even when controlled. Asymmetric information has been measured by Corwin-Schultz bid ask spread estimator and capital structure target as the mean of debt to equity ratio of 262 Nyse non-financial and non-regulated companies and their industries during 91 quarters. The data were analyzed with Johansen-Fisher panel cointegration. The capital structure deviations last from 2 to 4 quarters and move toward a target.
    Keywords: capital structure adjustments; Corwin-Schultz bid ask spread estimator; asymmetric information; Johansen-Fisher panel cointegration; dynamic trade-off theory; market microstructure
    JEL: C33 D82 G32
    Date: 2019–11–05
  9. By: Matej Opatrny (aInstitute of Economic Studies, Faculty of Social Sciences, Charles University,nOpletalova 26, 110 00, Prague, Czech Republic)
    Abstract: We estimate how the UK _nancial markets would have evolved if the Remain camp had won the referendum. To construct thecounterfactual, we use the synthetic control method. Our results suggest that there would not have been any significant change in the development of the FTSE 100 Index in the medium to long term if there had not been a referendum. On the other hand, we find a significantly negative effect of 1.2 percentage points on the 10-year bond yield. Given the geopolitical circumstances in mid 2016, financial agents investing in the pound could have sought safer investment options represented by longer-term government bonds, which consequently could result in lower bond yields.
    Keywords: Brexit, financial markets, macroeconomic indicators, synthetic control method
    JEL: C10 Q10 Q18
    Date: 2019–09

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