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on Corporate Finance |
| By: | Liew, Chee Yoong; Devi, S.Susela |
| Abstract: | This chapter analyses the relationship between related party transactions (RPT) and firm value and whether independent directors' tenure (IDT) strengthens or weakens this relationship. Further, it examines ownership concentration's role on this moderating effect of IDT in Malaysian family and non-family corporations. It is found that that IDT weakens the relationship between RPT and firm value. However, ownership concentration strengthens this moderating effect of IDT. Interestingly, family corporations are more likely to show a stronger impact of ownership concentration which we allude to concerns of maintaining reputation. The research results remain after controlling for technology corporations. The findings' have important implications for policy makers, practitioners and regulators, especially in emerging economies globally |
| Keywords: | Agency Conflict, Corporate Financial Valuation, Independent Directors' Term in the Office, Corporate Governance, Family Corporations, Emerging Markets |
| JEL: | G0 G00 G30 G32 G34 G39 |
| Date: | 2020–03–31 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:99705&r=all |
| By: | Pelizzon, Loriana; Riedel, Max; Simon, Zorka; Subrahmanyam, Marti G. |
| Abstract: | We study how the Eurosystem Collateral Framework for corporate bonds helps the European Central Bank (ECB) fulfill its policy mandate. Using the ECBs eligibility list, we identify the first inclusion date of both bonds and issuers. We find that due to the increased supply and demand for pledgeable collateral following eligibility, (i) securities lending market trading activity increases, (ii) eligible bonds have lower yields, and (iii) the liquidity of newly-issued bonds declines, whereas the liquidity of older bonds is una↵ected/improves. Corporate bond lending relaxes the constraint of limited collateral supply, thereby making the market more cohesive and complete. Following eligibility, bond-issuing firms reduce bank debt and expand corporate bond issuance, thus increasing overall debt size and extending maturity. |
| Keywords: | Collateral Policy,ECB,Corporate Bonds,Corporate Debt Structure,Eligibility premium |
| JEL: | G12 G14 G32 E58 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:safewp:275&r=all |
| By: | Liew, Chee Yoong; Ko, Young Kyung; Song, Bee Lian; Murthy, Saraniah Thechina |
| Abstract: | In emerging markets, the issue of directors’ remuneration being used as an expropriation channel by controlling shareholders is a significant problem to be investigated. In this study, using the fixed effect method, we examine the relationship between directors’ remuneration and firm performance, and tests whether independent directors’ tenure within the remuneration committee moderates this relationship in a sample of Malaysian public-listed firms. We find that directors’ remuneration is not significantly associated with firm performance and hence, not used as a channel of expropriation by controlling shareholders. Our results also show that longer tenure of the independent directors within the remuneration committee is negatively related with firm value. However, when directors’ remuneration increase simultaneously with the tenure of the independent directors within the remuneration committee, firm value increased. This increment is stronger in family firms compared to non-family firms. These findings may provide policy implications with respect to how the Securities Commission (SC) could design and implement proper rules and regulations to govern the tenure of the independent directors within the remuneration committee in East Asian emerging market firms where agency problem type II is prevalent and ownership is highly concentrated. |
| Keywords: | directors’ remuneration; family firms; agency problems; Malaysia; corporate governance. |
| JEL: | G30 G39 |
| Date: | 2019–01–31 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:99703&r=all |
| By: | Liew, Chee Yoong; Devi, S.Susela |
| Abstract: | This paper examines the relationship between the number of domestic banks that the firm engages with and firm value and how this relationship is moderated by ownership concentration at low and very high level on a sample of Malaysian family and non-family firms. We find that there is a significant negative relationship between the number of domestic banks engaged by family firms, operating in industries where these firms do not have absolute monopoly, and firm value. However, there is no evidence that this significant negative firm value effect is stronger in family firms compared to non-family firms. Furthermore, the significant positive moderating effect of ownership concentration on this relationship within family firms in such industries is evident only at low level of ownership concentration. Interestingly, at very high level of ownership concentration, this significant positive moderating effect becomes negative. There is no evidence that these significant moderating effects are stronger in family firms compared to non-family firms. An implication of this research is that there is a need for the capital market regulators to introduce appropriate policies to deter family firms from having a close relationship with domestic banks as well as monitor the number of domestic banks engaged by such firms. There may be policy implications for consideration by the Central Bank of Malaysia as well. |
| Keywords: | corporate governance, banks, family firms, agency problems |
| JEL: | G30 G32 G39 |
| Date: | 2020–02–22 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:99704&r=all |
| By: | Li, Xiang; Su, Dan |
| Abstract: | This paper investigates whether and how economic policy uncertainty affects corporate debt maturity. Using a cross-country firm-level dataset for France, Germany, Spain, and Italy from 1996 to 2010, we find that an increase in economic policy uncertainty is significantly associated with a shortened debt maturity. Specifically, a 1% increase in economic policy uncertainty is associated with a 0.22% decrease in the long-term debt-to-assets ratio and a 0.08% decrease in debt maturity. Moreover, the impacts of economic policy uncertainty are stronger for innovation-intensive firms. We use firms' flexibility in changing debt maturity and the deviation to leverage target to gauge the causal relationship, and identify the reduced investment and steepened term structure as transmission mechanisms. |
| Keywords: | economic policy uncertainty,debt maturity,capital structure,corporate investment |
| JEL: | D81 G32 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:iwhdps:62020&r=all |