nep-cfn New Economics Papers
on Corporate Finance
Issue of 2020‒03‒16
five papers chosen by
Zelia Serrasqueiro
Universidade da Beira Interior

  1. Academic Scholarship in Light of the 2008 Financial Crisis: Textual Analysis of NBER Working Papers By Levy, Daniel; Mayer, Tamir; Raviv, Alon
  2. Corporate Acquisitions and Firm-Level Uncertainty: Domestic Versus Cross-Border Deals By Ye Bai; Sourafel Girma; Alejandro Riaño
  3. Marketplace Lending of SMEs By Doulas J. Cumming; Lars Hornuf
  4. The Stock Market Reaction to Mergers and Acquisitions: Evidence from the Banking Industry By Juan M. Lozada; Lina M. Cortés; Daniel Velasquez Gaviria
  5. Do Cash Windfalls Affect Wages? Evidence from R&D Grants to Small Firms By Howell, Sabrina T.; Brown, J. David

  1. By: Levy, Daniel; Mayer, Tamir; Raviv, Alon
    Abstract: Textual analysis of the NBER Working Papers published during 1999–2016 is done to assess the effects of the 2007–2009 crisis on the academic literature. The volume of crisis-related WPs is counter-cyclical, lagging the financial-instability-index. WPs by the Monetary-Economics, Asset-Pricing, and Corporate-Finance program members, hardly refer to “crisis/crises” in the pre-crisis period. As the crisis develops, however, their study-efforts of crisis-related issues increase rapidly, focusing on the links between ‘Repo-and-Securitization’ and the crisis. In contrast, WPs in macroeconomics-related programs refer extensively to “crisis/crises” in the pre-crisis period. These WPs abandon topics of ‘Sudden-Stop’ and ‘Emerging-Markets’ as the crisis developed.
    Keywords: 2008 Financial Crisis, Financial Crises, Textual Analysis, LDA Topic Modeling, Securitization, Repo, Sudden Stop
    JEL: A10 A23 C55 E0 E20 E30 E44 E58 E60 F33 F34 F40 F44 F45 F62 F65 G01 G12 G13 G14 G15 G18 G20 G21 G22 G23 G24 G28 G32 G38 K22 L51 M0 N20 Z13
    Date: 2020–02–23
  2. By: Ye Bai; Sourafel Girma; Alejandro Riaño
    Abstract: This paper studies the impact of corporate acquisitions - both domestic and cross-border - on the uncertainty faced by acquiring firms. We use data for UK publicly-listed firms from 2004 to 2017 and employ a matching estimator combined with difference-in-differences to control for the endogenous selection of firms into buying other companies. We find that acquisitions exert a large and persistent effect on the volatility of stock returns of acquirers and that this response is crucially determined by the geographic scope of the acquisitions firms undertake. We find that the impact of acquisitions on firm-level uncertainty is characterized by a pecking order: the announcement of a domestic takeover leads to a reduction in the uncertainty faced by the acquirer, while cross-border acquisitions - particularly those involving target firms in emerging markets - engender a positive response in acquirers’ volatility. Our results suggest that acquisitions affect uncertainty because they change firms’ exposure to shocks - as they expand their operation in new markets - and also because they are large and risky investments whose returns take time to materialize.
    Keywords: mergers and acquisitions, uncertainty, volatility, globalization, stock returns, UK
    JEL: G32 G34 F23 F36
    Date: 2020
  3. By: Doulas J. Cumming; Lars Hornuf
    Abstract: Peer-to-business lending refers to online platforms facilitating loans from individuals to smalland medium-sized enterprises (SMEs). We conjecture that easy-to-understand risk ratings conveyed by the platform play a pronounced role in influencing the borrowing success of SMEs and that more sophisticated financial information and adverse selection are largely absent in these markets. We introduce a dataset of 414 SME marketplace loans and 8,236 online loan days to test these propositions. The data examined provide strong support for the importance of simple platform ratings in influencing investor behavior, while the effect of more detailed financial information is less pronounced.
    Keywords: debt crowdfunding, entrepreneurial finance, digital platforms
    JEL: G21 G24 G32
    Date: 2020
  4. By: Juan M. Lozada; Lina M. Cortés; Daniel Velasquez Gaviria
    JEL: C32 G14 G21 G34
    Date: 2020–02–19
  5. By: Howell, Sabrina T. (New York University); Brown, J. David (U.S. Census Bureau)
    Abstract: This paper examines how employee earnings at small firms respond to a cash flow shock in the form of a government R&D grant. We use ranking data on applicant firms, which we link to IRS W2 earnings and other U.S. Census Bureau datasets. In a regression discontinuity design, we find that the grant increases average earnings with a rent-sharing elasticity of 0.07 (0.21) at the employee (firm) level. The beneficiaries are incumbent employees who were present at the firm before the award. Among incumbent employees, the effect increases with worker tenure. The grant also leads to higher employment and revenue, but productivity growth cannot fully explain the immediate effect on earnings. Instead, the data and a grantee survey are consistent with a backloaded wage contract channel, in which employees of financially constrained firms initially accept relatively low wages and are paid more when cash is available.
    Keywords: earnings inequality, rent sharing, R&D grants, regression discontinuity design
    JEL: G32 G35 J31 J41
    Date: 2020–01

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