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on Corporate Finance |
| By: | Abramov Alexander (RANEPA); Chernova Maria (RANEPA); Radygin Alexandr (Gaidar Institute for Economic Policy) |
| Abstract: | In 2020, after the sudden financial shock in March caused by sales of risky assets by investors against the backdrop of the rising coronavirus pandemic, stock markets in many countries recovered faster than did the economic indicators. The traditional hypothesis that the value of financial assets depends more strongly on future investor expectations than on past events has been confirmed. |
| Keywords: | Russian economy, stock market, bond market, corporate bond market, derivatives market, private investors |
| JEL: | G01 G12 G18 G21 G24 G28 G32 G33 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:gai:ppaper:ppaper-2021-1119&r= |
| By: | Roberto Blanco (Banco de España); Sergio Mayordomo (Banco de España); Álvaro Menéndez (Banco de España); Maristela Mulino (Banco de España) |
| Abstract: | This paper analyses the impact of the COVID-19 crisis on the financial vulnerability of the Spanish corporate sector. The simulations conducted show that the crisis significantly increased firms’ liquidity needs in 2020, although the measures adopted by national and international authorities eased access to credit under favourable conditions, which substantially mitigated the short-term liquidity risks. However, the sharp fall in profitability levels, coupled with debt growth, appears to have resulted in a marked increase in the proportion of vulnerable firms (i.e. those with negative equity or high debt levels), which would be more pronounced among SMEs and the sectors hardest hit by the pandemic. The projections for the period 2021-2023 indicate a gradual decline in these percentages, in keeping with the expected recovery in activity. The results also suggest that, as a result of the crisis, the proportion of firms at risk of becoming non-viable on account of persistent losses through to 2023 would rise by between 2 pp and 3 pp, while the proportion of those that will remain viable but struggle to repay their debts out of their expected future earnings (overindebted firms) would rise by between 3 pp and 4.7 pp. In addition, the simulations show that the unsustainable debt of firms that have become overindebted but remain viable would stand between €9 billion and €18.6 billion, depending on the scenario considered, with the bulk of this amount accounted for by SMEs. |
| Keywords: | COVID-19, liquidity needs, profitability, indebtedness, credit, solvency, viability |
| JEL: | E51 E52 G21 |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:bde:opaper:2119e&r= |
| By: | Manasa Gopal |
| Abstract: | I study the role of collateral on small business credit access in the aftermath of the 2008 financial crisis. I construct a novel, loan-level dataset covering all collateralized small business lending in Texas from 2002-2016 and link it to the U.S. Census of Establishments. Using textual analysis, I show that post-2008, lenders reduced credit supply to borrowers outside of the lender's collateral specialization. This result holds when comparing lending to the same borrower from different lenders, and when comparing lending by the same lender to different borrowers. A one standard deviation higher specialization in collateral increases lending to the same firm by 3.7%. Abstracting from general equilibrium effects, if firms switched to lenders with the highest specialization in their collateral, aggregate lending would increase by 14.8%. Furthermore, firms borrowing from lenders with greater specialization in the borrower's collateral see a larger growth in employment after 2008. Finally, I show that firms with collateral more frequently accepted by lenders in the economy find it easier to switch lenders. In sum, my paper shows that borrowing from specialized lenders increases access to credit and employment during a financial crisis. |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:21-22&r= |
| By: | Fernanda Ricotta (University of Calabria); Victoria Golikova (National Research University Higher School of Economics); Boris Kuznetsov (National Research University Higher School of Economics) |
| Abstract: | In this paper, we investigate whether CEO characteristics (owner-manager status, age and gender) influence firm innovative performance and test empirically if the effect differs for market and transition economies. We use cross-sectional data of manufacturing firms in six EU countries and in Russia. To address heterogeneity, we explore innovation performance by size among SMEs and large businesses and by Pavitt sector. In both institutional settings, the presence of a family CEO either has no effect or improves innovative performance. On the contrary, the role of CEO gender is different in Russia and in the EU. In the EU, female CEOs are associated with less innovation, especially in SMEs and in the traditional sector. In Russia, CEO gender is not associated with differences in innovative performance and when it is (for the traditional sector), it favors female-run firms. For CEO age, considering product innovations, the oldest group of CEOs are less active in European firms while mature CEOs are more innovative in Russia. |
| Keywords: | CEO age, gender, manager-owner status, innovation, manufacturing firms |
| JEL: | D21 L60 P50 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:hig:wpaper:251/ec/2021&r= |
| By: | Matías Lamas (Banco de España); David Martínez-Miera (UC3M and CEPR) |
| Abstract: | We analyze the evolution and price implications of aggregate sectorial holdings of stocks, using detailed information on the universe of publicly traded stocks in the euro area. We document that: i) households’ (HH) direct holdings represent a higher fraction of total ownership in domestic bank stocks than in non-financial corporation (NFC) stocks; ii) HH holdings of stocks increase (decrease) following a decline (increase) in the stock price, especially for domestic bank stocks; and iii) an increase in domestic HH holdings is followed by future (persistent) increases in the price of NFC stocks, but not for bank stocks. Moreover, during equity issuances, an increase in the share of domestic HH holdings is followed by a future (persistent) decrease in the stock price of bank stocks, but not for NFC stocks. Our results are consistent with HH being liquidity providers in the stock market, and at the same time subject to negative information asymmetries. We argue that this latter effect is more prevalent in domestic bank stocks than in NFC given the close relationships between HH and banks. |
| Keywords: | household ownership, stock prices, equity issuance, banks, non-financial corporations, liquidity provision, informational asymmetries |
| JEL: | G11 G14 G21 G50 |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:bde:wpaper:2130&r= |
| By: | Joshua Ballance; Melanie Qing; J. Christina Wang |
| Abstract: | This policy brief uses Dun & Bradstreet (D&B) data to assess whether the Main Street Lending Program (MSLP) borrowers were in worse financial health than their peers before COVID-19 hit the economy hard in March 2020 or suffered worse deterioration afterward. The findings can help us better understand why these firms sought to obtain MSLP loans. We find that MSLP borrowers tend to be larger than their peer firms (that is, firms in the same industry and state). Within the same size group, MSLP borrowers are on average younger than their peers. Borrowers tended to have a slightly higher predicted risk of failure than their peers in March 2020. Their failure risk grew somewhat more than their peers' risk from March to the month when their MSLP loan request was submitted. These firms' relative performance in 2020 appears to be little correlated with their relative performance over the corresponding months in 2019. MSLP borrowers had worse actual delinquency records in March 2020, as well as more deterioration than their peers from March to the month of the MSLP loan submission. For the subset of borrowers with business spending data available from D&B, spending was on average higher in March 2020 than their peer companies' spending, and it fell somewhat less from March to the MSLP loan submission month. Taken together, our findings suggest that these firms borrowed from the MSLP because 1) their greater growth or survival potential, and hence relationship value, made lenders willing to lend to them, and 2) their higher credit risk made the MSLP attractive, as it enabled the borrowers to pay a lower price or obtain more credit than they would have otherwise. |
| Keywords: | Main Street Lending Program; Federal Reserve; COVID-19; Dun & Bradstreet firm-level data |
| JEL: | D22 E58 E63 E65 |
| Date: | 2021–09–08 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedbcq:93055&r= |
| By: | Jörn H. Block (emlyon business school); Alexander Groh; Lars Hornuf; Tom Vanacker; Silvio Vismara |
| Abstract: | Entrepreneurial finance markets are in a dynamic state. New market niches and players have developed and continue to emerge. The rules of the game and the methods for receiving financial backing have changed in many ways. This editorial and the special issue of Small Business Economics focus on crowdfunding (CF) and initial coin offerings (ICOs), which are two distinct but important entrepreneurial finance market segments of the future. Although the two market segments initially appear to be similar, we identify differences between them. Our comparison focuses on the stakeholders, microstructures, regulatory environments, and development of the markets. We conclude with suggestions for future ICO and CF research. |
| Keywords: | Initial Coin Offerings,Initial Token Offerings,Crowdfunding,Entrepreneurial Finance |
| Date: | 2021–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03337456&r= |