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on Corporate Finance |
| By: | Nico Alexander (Trisakti School of Management, Jakarta, Indonesia Author-2-Name: Theresia Author-2-Workplace-Name: Trisakti School of Management, Jakarta, Indonesia Author-3-Name: Dewi Kurnia Indrastuti Author-3-Workplace-Name: Trisakti School of Management, 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 obtain empirical research on the effect of corporate governance on earnings management in distressed and non-distressed companies. Corporate governance in this research is measured by independent board, audit committee, board of commissioners, institutional ownership and number of board commissioner meetings. The research predicts that corporate governance has a negative effect on earnings management either both in distressed and non-distressed companies. Methodology/Technique - This research uses 309 manufacturing companies listed on the Indonesian Stock Exchange and the data was obtained using purposive sampling method during 2016 until 2018. Of the 309 respondents in the sample, 287 are distressed companies and 22 are non-distressed companies. The data was analyzed using a multiple regression method. Findings - The empirical results show that commissioner board and institutional ownership have a negative effect on earnings management in non-distressed companies but in distressed companies, corporate governance does not have an effect on earnings management. This research shows that distressed companies, corporate governance cannot minimize earnings management practices because to maintain the company as a going concern, management will do earnings management to ensure stakeholders' trust to encourage further investment in the company. In non-distressed companies, corporate governance can minimize earnings management practices because the company is in a good financial condition, so they don't need to do earnings management. Additionally, in order to ensure stakeholders' trust, the company will strengthen its' corporate governance mechanisms. Type of Paper - Empirical. |
| Keywords: | Financial Distress; Earnings Management; Non-Financial Distress; Indonesia Stock Exchange. |
| JEL: | M41 G34 J33 K22 |
| Date: | 2021–03–31 |
| URL: | http://d.repec.org/n?u=RePEc:gtr:gatrjs:afr195&r=all |
| By: | Paul Mizen; Frank Packer; Eli Remolona; Serafeim Tsoukas |
| Abstract: | In this paper, we focus on the surprising phenomenon in which firms face difficulty issuing in domestic currency even in the home market, especially in emerging markets. Could this be due to "original sin" which has been familiar to sovereign bond issuance? In its new incarnation, original sin refers to the difficulty firms in many emerging markets have in borrowing domestically long-term, even in the local currency. We infer the nature of original sin from 5,901 financing decisions by firms in seven Asian emerging markets over a period of 20 years. Our sample period covers an episode when bond issuers had a choice between a less developed but growing onshore market, which varied across countries in the level of development, and a deep and liquid offshore market. We find that even in countries with onshore markets, it is often easier for unseasoned firms to issue offshore (in foreign currency) than to issue onshore, but changes in market development reverses this effect. In addition, once such a firm becomes a seasoned issuer, it is absolved from domestic original sin and is then able to act opportunistically and go to the market favored by interest differentials. |
| Keywords: | bond financing, offshore markets, emerging markets, market depth, global credit |
| JEL: | C23 E44 F32 F34 G32 O16 |
| Date: | 2021–03 |
| URL: | http://d.repec.org/n?u=RePEc:gla:glaewp:2021_03&r=all |
| By: | Mattia Colombo; Laura Grigolon; Emanuele Tarantino |
| Abstract: | We investigate how common ownership between lenders affects the terms of syndicated loans. We provide a novel view on common ownership as a mechanism to mitigate the effects of information asymmetry on borrowers' quality. As the lead bank does not need to signal the quality of the borrower by means of dissipative signals, high common ownership should have a negative impact on loan rates, the share of the loan retained by the lead bank, and the dispersion in loan returns. We empirically verify all three predictions, leveraging on differences in the level of common ownership across lenders and facilities within a loan. Common ownership affects the terms of the loan more strongly in presence of opaque or new borrowers, when the lead arranger is more likely to hold an information advantage over the syndicate members. As information flows from the lead arranger to syndicate members, we show that member-to-lead and member-to-member common ownership does not affect the terms of syndicated loans. |
| Keywords: | common ownership, ownership, control, syndicated loans, loans, banking |
| JEL: | L10 L11 G14 G21 |
| Date: | 2021–03 |
| URL: | http://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2021_279&r=all |
| By: | Raffaello Bronzini (Bank of Italy, Rome Branch); Alessio D’Ignazio (Bank of Italy, Directorate General for Economics, Statistics and Research); Davide Revelli (Bank of Italy, Genoa Branch) |
| Abstract: | This paper examines the financial structure and the bank relationships of Italian multinational firms. We show that multinationals are on average more leveraged than non-internationalized firms. Moreover, they have a larger share of financial and bank debt out of total debt, maintain more bank relationships, are less dependent on the main bank for the firm, and benefit from lower interest rates. Lastly, multinationals take greater advantage of intra-group financing than non-internationalized firms. These results are robust to estimation methods that tackle the potential endogeneity of the choice to go international, such as matching and instrumental variables estimation. |
| Keywords: | multinational companies, foreign direct investment, financial structure, bank-firm relationships |
| JEL: | D22 F21 F23 G30 L25 |
| Date: | 2021–03 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_1326_21&r=all |
| By: | Giorgio Barba Navaretti (University of Milan); Anna Rosso (University of Milan) |
| Abstract: | We examine the geography of productivity leaders and laggards in the population of Italian joint stock manufacturing companies between 2007 and 2017 and analyse how far such patterns can be related to their financial structure and the provision of financial services in the Italian provinces. To do so we exploit the reform of the Italian banking system in the mid-Nineties as an exogenous shock on the structure of local banking markets and examine whether this shock affects productivity patterns at the firm level. We find a robust descriptive evidence of a widening of the leader-laggard gaps, with a very sizeable productivity divide between the North and the South of the country. Leaders are concentrated in the North. Leaders, especially in the North are also more likely to have access to capital markets. Firms in the South, instead, also those at the frontier, are more reliant on bank lending. The liberalization of the banking market in the mid 90s and the growth of joint stock banks at the provincial level positively affected firms’ productivity outcomes, possibly through an improvement of firms’ financial structure. We also use a firm specific measure of core-periphery based on distance from airport hubs and find that the likelihood of activating a virtuous capital market productivity link declines with distance from core areas. |
| Keywords: | Productivity, Bank Liberalization, Core-periphery Dynamics |
| JEL: | R1 O4 G21 |
| Date: | 2021–03–19 |
| URL: | http://d.repec.org/n?u=RePEc:csl:devewp:469&r=all |
| By: | Zainab Aman (Department of Accounting and Finance Kolej Universiti Islam Antarabangsa Selangor 43000 Kajang Selangor Malaysia Author-2-Name: Norman Saleh Author-2-Workplace-Name: Faculty of Economic and Management Universiti Kebangsaan Malaysia 43600 Bangi Selangor Malaysia Author-3-Name: Zaleha Abdul Shukur Author-3-Workplace-Name: Faculty of Economic and Management Universiti Kebangsaan Malaysia 43600 Bangi Selangor Malaysia Author-4-Name: Romlah Jaafar Author-4-Workplace-Name: Faculty of Economic and Management Universiti Kebangsaan Malaysia 43600 Bangi Selangor Malaysia 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 objective of this paper is to investigate the relationship between family ownership and corporate sustainability reporting to determine how the role of board independence affects the relationship between those variables within Malaysian listed companies. Methodology/Technique - The annual reports of 771 listed companies from 2014 to 2016 were analyzed using content analysis methods. The study uses agency theory to develop the hypotheses. Findings - The study found that family ownership is negatively related to corporate sustainability reporting. The finding shows that independent directors are unable to influence the relationship between family ownership and corporate sustainability reporting. The findings of this study are expected to provide insight to authorities in relation to the factors that could enhance corporate sustainability reporting primarily in family-owned companies. Novelty - Previous studies have only focused on environmental and social dimensions of corporate sustainability, whilst this study addresses all the 3 dimensions of sustainability (economic, environmental, and social). This paper is one of the first attempts to investigate the roles of board independence on the relationship between family ownership and corporate sustainability reporting in Malaysia. Type of Paper - Empirical. |
| Keywords: | Sustainability Reporting; Family Ownership; Corporate Governance; Independent Director |
| JEL: | M14 M41 |
| Date: | 2021–03–31 |
| URL: | http://d.repec.org/n?u=RePEc:gtr:gatrjs:afr196&r=all |
| By: | Ahmad; Issam Abdo; Fakih, Ali |
| Abstract: | This paper attempts to study the relationship between firm legal form and firm performance in the Middle East and North Africa Region (MENA) using the World Bank Enterprise Survey (WBES) database. Our analysis shows that open shareholding, closed shareholding, partnership, and limited partnership companies demonstrate an advantage in terms of annual sales and annual productivity growth rates over sole proprietorship firms, and that medium-sized and large-sized firms also demonstrate an advantage over small ones. Our analysis also shows that foreign ownership, exporting activities, the usage of the web in communication with clients and suppliers, and the presence of full-time workers positively affect firm performance. These findings are robust when running the analysis for firms with female participation in ownership. This paper provides directions for strategists targeting at improving the performance of firms. |
| Keywords: | Legal form,Firm performance,MENA region |
| JEL: | C10 G30 L25 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:801&r=all |