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on Corporate Finance |
| By: | Rizal Mawardi (Accounting Study Program, Faculty of Economics, Perbanas Institute, Jakarta, Indonesia Author-2-Name: Sylvi Angelia Author-2-Workplace-Name: Accounting Study Program, Faculty of Economics, Perbanas Institute, Jakarta, Indonesia Author-3-Name: Author-3-Workplace-Name: 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 study is to examine the effect between financial distress, corporate governance, auditor switching and audit delay. This research sample using data on a manufacturing company on the Indonesia Stock Exchange. Methodology – The analysis technique used is multiple linear regression analysis technique. Findings – The research finding show that financial distress and the size of the audit committee have a significant effect on audit delay, while the concentration of ownership, managerial ownership, change of directors, and auditor switching has no significant effect on audit delay. Second finding explain that consideration for companies listed on the Indonesia Stock Exchange to pay attention to the timeliness of submitting financial reports and independent auditor reports so as not to get sanctions from the Financial Services Authority. Novelty – Our novelty research using the relationship of Financial Distress, Corporate Governance and Auditor Switching on new research model to Audit Delay. Type of Paper - Empirical" |
| Keywords: | Financial Distress, Corporate Governance, Auditor Switching, Audit Delay |
| JEL: | M41 M42 |
| Date: | 2021–09–30 |
| URL: | http://d.repec.org/n?u=RePEc:gtr:gatrjs:jfbr189&r= |
| By: | Vanessa Behrmann; Lars Hornuf; Jochen Zimmermann |
| Abstract: | In this article, we investigate the deregulation efforts resulting from the 2015 transposition of the EU’s Transparency Directive into German law and analyze whether a reduction in the minimum content requirements for quarterly reporting increases information asymmetries and decreases firm value. Using a novel dataset of firms that are listed on the Frankfurt Stock Exchange, our results reveal that over the period from 2012 to 2019, lower quarterly reporting levels on average have increased information asymmetry and reduced firm value. We find that this effect is stronger for second-tier stocks and firms with low media coverage. Our results are robust to potential selection effects regarding firms’ choice of quarterly reporting content levels. |
| Keywords: | quarterly reporting, disclosure deregulation, financial reporting, interim management statement, transparency directive |
| JEL: | G14 G32 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_9344&r= |
| By: | Alain Bensoussan (emlyon business school); Benoit Chevalier-Roignant; Alejandro Rivera |
| Abstract: | We model the expansion decision of a levered firm. Straight debt distorts both timing and scaling: the firm invests less and later than its all-equity financed counterpart. The inclusion of performance sensitivity in the debt contract mitigates such distortions. Moreover, performance sensitivity is consistent with firm value maximization within a standard trade-off theory of capital structure. As a result, our model rationalizes the widespread use of performance sensitive debt (PSD), especially amongst fast growth firms. |
| Keywords: | Capital Structure,Real Options,Performance-Sensitive Debt,Debt Overhang |
| Date: | 2021–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03364891&r= |
| By: | Sabrina T. Howell; Theresa Kuchler; David Snitkof; Johannes Stroebel; Jun Wong |
| Abstract: | We explore the sources of racial disparities in small business lending by studying the $806 billion Paycheck Protection Program (PPP), which was designed to support small business jobs during the COVID-19 pandemic. PPP loans were administered by private lenders but federally guaranteed, largely eliminating unobservable credit risk as a factor in explaining differential lending by race. We document that even after controlling for a firm’s zip code, industry, loan size, PPP approval date, and other characteristics, Black-owned businesses were 12.1 percentage points (70% of the mean) more likely to obtain their PPP loan from a fintech lender than a traditional bank. Among conventional lenders, smaller banks were much less likely to lend to Black-owned firms, while the Top-4 banks exhibited little to no disparity after including controls. We use novel data to show that the disparity is not primarily explained by differences in pre-existing bank or credit relationships, firm financial positions, fintech affinity, or borrower application behavior. In contrast, we document that Black-owned businesses’ higher rate of borrowing from fintechs compared to smaller banks is particularly large in places with high racial animus, pointing to a potential role for discrimination in explaining some of the racial disparities in small business lending. We find evidence that when small banks automate their lending processes, and thus reduce human involvement in the loan origination process, their rate of PPP lending to Black-owned businesses increases, with larger effects in places with more racial animus. |
| JEL: | G21 G23 G28 G41 J15 |
| Date: | 2021–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29364&r= |
| By: | Girotti Mattia,; Salvadè Federica |
| Abstract: | This paper studies whether greater competition can mitigate agency problems within banks. We measure the intensity of the agency conflict within a bank by the volume of loans that the bank lends to its insiders (e.g., executives). We first check that these loans are a form of private benefit. By exploiting interstate branching deregulation, we then show that banks react to greater competition by reducing insider lending, especially when the entry of new competitors may more strongly affect bank profitability. Results are robust to using various identification approaches and alternative indicators of agency conflict. We conclude that competitive pressure reduces managerial self-dealing. |
| Keywords: | Banks, Agency Problems, Private Benefits, Competition, Insider Loans |
| JEL: | G21 G28 G38 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:bfr:banfra:831&r= |
| By: | Sabrina T. Howell; Theresa Kuchler; David Snitkof; Johannes Stroebel; Jun Wong |
| Abstract: | We explore the sources of racial disparities in small business lending by studying the $806 billion Paycheck Protection Program (PPP), which was designed to support small business jobs during the COVID-19 pandemic. PPP loans were administered by private lenders but federally guaranteed, largely eliminating unobservable credit risk as a factor in explaining differential lending by race. We document that even after controlling for a firm’s zip code, industry, loan size, PPP approval date, and other characteristics, Black-owned businesses were 12.1 percentage points (70% of the mean) more likely to obtain their PPP loan from a fintech lender than a traditional bank. Among conventional lenders, smaller banks were much less likely to lend to Black-owned firms, while the Top-4 banks exhibited little to no disparity after including controls. We use novel data to show that the disparity is not primarily explained by differences in pre-existing bank or credit relationships, firm financial positions, fintech affinity, or borrower application behavior. In contrast, we document that Black-owned businesses’ higher rate of borrowing from fintechs compared to smaller banks is particularly large in places with high racial animus, pointing to a potential role for discrimination in explaining some of the racial disparities in small business lending. We find evidence that when small banks automate their lending processes, and thus reduce human involvement in the loan origination process, their rate of PPP lending to Black-owned businesses increases, with larger effects in places with more racial animus. |
| JEL: | G21 G23 G28 G41 J15 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_9345&r= |
| By: | Hongyan Liang (Faculty of Business Administration Gies College of Business University of Illinois Urbana-Champaign Champaign IL 61820, USA Author-2-Name: Zilong Liu Author-2-Workplace-Name: Discover Financial Service Riverwoods IL 60015, USA Author-3-Name: Author-3-Workplace-Name: 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 - This paper uses a sample of annual observations of European banks to examine whether the liquidity risk affects a bank's risk-taking behavior and its future loan growth. Methodology – A sample of European banks (27 member countries of the European Union plus U.K.) over the period of 2005 to 2019 are used in this study. Liquidity risk is measured by the ratio of liquid assets to total assets. Given the longitudinal nature of the data, the authors use panel regression with bank fixed effects to control for unobserved characteristics that might affect the dependent variable. Findings – The authors find that banks holding more liquid assets take less risk and show a higher subsequent loan growth rate. These results hold for both small and large banks. Novelty – To the authors' best knowledge, this is one of the earliest studies to carefully examine the effects of liquidity risk on risk-taking behavior and loan growth rate for European banks. Our research suggests that the current Basel III requirement on liquidity ratio can decrease bank's risking-taking behavior while not necessarily impact their future loan growth. Type of Paper - Empirical" |
| Keywords: | Bank Liquidity Risk; Risk-taking Behavior; Loan Growth; Basel III |
| JEL: | G21 G01 G18 |
| Date: | 2021–09–30 |
| URL: | http://d.repec.org/n?u=RePEc:gtr:gatrjs:jfbr187&r= |
| By: | Comincioli, Nicola; Panteghini, Paolo M.; Vergalli, Sergio |
| Abstract: | This study introduces a real option model to investigate how fiscal policy affects a representative firm's investment decision and to measure its welfare effects. On the one hand, the effects of financial instability on the optimal investment timing and on the probability of default are studied. On the other hand, it is shown how the net present value of an investment project, the tax revenue generated and the welfare are influenced by financial instability. Then, a comparison of welfare effects of tax policy on start-ups, mature and obliged firms is provided. This comparison provides policy-makers a tool to shape their tax systems according to the characteristics of their firms. All presented analyses are supported by numerical simulations, based on realistic data. |
| Keywords: | Risk and Uncertainty |
| Date: | 2021–10–22 |
| URL: | http://d.repec.org/n?u=RePEc:ags:feemwp:314929&r= |
| By: | Spengel, Christoph; Fischer, Leonie; Ludwig, Christopher; Müller, Jessica; Weck, Stefan; Winter, Sarah |
| Abstract: | The economic crisis following the COVID-19 pandemic has increased the debt levels of corporations and reduced the level of investments. From a tax perspective, interest payments on debt are generally deductible from the corporate tax base, while costs related to equity are not. This debt-equity bias is a deep-rooted issue in today's tax system and inhibits equity-financed investments. From a microeconomic perspective, the bias leads to socially undesirable inefficiencies in capital markets, resulting in welfare losses. From a macroeconomic point of view, high debt levels hinder economic growth. To provide a stable and supportive tax environment for a sustainable recovery after the corona crisis, the European Commission has published a framework on "Business Taxation for the 21st Century" in May 2021. Besides other (long-term) proposals, a debt equity bias reduction allowance (DEBRA) should be developed to address the tax-induced distortions of debt financing. For a legislative proposal, the European Commission identified three possible concepts: First, a Comprehensive Business Income Tax (CBIT) that disallows the tax-deductibility of any financing cost. Second, an Allowance for Corporate Equity (ACE) that provides for the deductibility of notional interest on either all equity or new equity. And third, an alignment of the treatment of debt and equity financing by deducting a notional return on all capital, namely an Allowance for Corporate Capital (ACC). |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewpbs:72021&r= |
| By: | Fatma Zaarour (University of Sousse, IHEC, LaREMFiQ, BP n° 40 - 4054 Sousse, Tunisia Author-2-Name: Adnene AJIMI Author-2-Workplace-Name: University of Sousse, IHEC, LaREMFiQ, BP n° 40 - 4054 Sousse, Tunisia Author-3-Name: Author-3-Workplace-Name: 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 - This study examines the relation between stock market capitalization and international financial integration for 23 developing countries during 1996 - 2018. Methodology/Technique - By using recently developed econometric panel techniques. The present paper takes into consideration cross section and structural breaks. Findings - Our findings show several interesting results. First, the existence of a long run relationship between the stock market and financial integration, particularly when private capital flows are included. Second, with the presence of structural breaks the result shows that international financial integration has a negative impact on stock market, which means that financial integration loses its explanatory power over the crisis period. Novelty - There is no applied study on the verification of the volatility of international capital flows (foreign direct investments and remittances) in the analysis of the relationship between international financial integration and stock markets. Type of Paper - Empirical" |
| Keywords: | Cointegration, Cross-Section, International Financial Integration, Panel Unit Root, Structural Breaks, Stock Market. |
| JEL: | C23 C51 C58 F02 F21 F24 G01 |
| Date: | 2021–09–30 |
| URL: | http://d.repec.org/n?u=RePEc:gtr:gatrjs:jber208&r= |
| By: | Sharma, Sankalp; Bairagi, Subir K. |
| Keywords: | Agricultural and Food Policy, Agribusiness, Risk and Uncertainty |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea21:313998&r= |