nep-cfn New Economics Papers
on Corporate Finance
Issue of 2023‒02‒13
seven papers chosen by
Zelia Serrasqueiro
Universidade da Beira Interior

  1. Financial Constraints, Productivity, and Investment: Evidence from Lithuania By Ms. Yu Shi; Karim Foda; Maryam Vaziri
  2. The Cash Flow Concept in Modern Financial Analysis of Internal Sources of Companies’ Investment Financing By Bukvić, Rajko; Pavlović, Radica
  3. Covered bonds and bank portfolio rebalancing By Jin Cao; Ragnar E. Juelsrud; Talina Sondershaus
  4. Corporate indebtedness and macroeconomic stabilisation from a long-term perspective By Moritz Schularick
  5. Supply Chain Management and Firm Performance By Kim, Soo-Dong
  6. Supporting Sustainable Financing and Access to Finance in Armenia By Kiichi Tokuoka; Maria Atamanchuk
  7. The Impact of Corporate Climate Action on Financial Markets: Evidence from Climate-Related Patents By Hege, Ulrich; Pouget, Sébastien; Zhang, Yifei

  1. By: Ms. Yu Shi; Karim Foda; Maryam Vaziri
    Abstract: This paper studies the relation between firms' access to finance, labor productivity and investment using Lithuanian firm-level data from 2000–2018. To do so, we construct a measure of financial constraints. We estimate that, given firm characteristics, removing these constraints can improve average productivity and investment of firms in Lithuania by 0.51 percent and 7.2 percent, respectively. Our results further suggest that policies targeting firm age and size together will be more effective in mitigating the impact of financial constraints as the relationship between firm age and size with financial constraints exhibits non-linearities.
    Keywords: Financial Constraints; Productivity; Investment; SMEs; Transition Economies; financing constraint; firm age; evidence from Lithuania; firm's age distribution; balance sheet information; Labor productivity; Aging; Financial statements; Global
    Date: 2022–12–09
  2. By: Bukvić, Rajko; Pavlović, Radica
    Abstract: In recent theories of financial analysis, a financial approach has been adopted which is based on the dynamic (modern) coefficients established from cash flows - cash flow indicators. Some of the areas of their application are capital investments, which largely depend on internal sources of financing and the ability of companies to generate such sources of financing, especially in conditions of crisis and insolvency. In this regard, they have special importance for the Republic of Serbia, whose macroeconomic environment is further damaged by the current global world and energy crisis, insolvency, collapse and shutdown of domestic capacities, and the concentration of capital in the financial sector. In this study, the focus is on researching the difference between investment capacities based on internal sources of financing established on static and dynamic indicators, in order to prove the necessity of applying dynamic coefficients based on cash flow analysis, which are not very common in practice in Serbia. The advantages of using the mentioned parameters based on the cash flow concept as a modern tool in the research question on the example of energy as one of the most important branches of the Serbian economy were examined and proven.
    Keywords: cash flow coefficients, dynamic analysis, internal sources, investments, financing
    JEL: G11 G17 G31 G32 M40
    Date: 2023
  3. By: Jin Cao; Ragnar E. Juelsrud; Talina Sondershaus
    Abstract: We use administrative and supervisory data at the bank and loan level to investigate the impact of the introduction of covered bonds on the composition of bank balance sheets and bank risk. Covered bonds, despite being collateralized by mortgages, lead to a shift in bank lending from mortgages to corporate loans. Young and low-rated firms in particular receive more credit, suggesting that overall credit risk increases. At the same time, we find that total balance sheet liquidity increases. We identify the channel in a theoretical model and provide empirical evidence: Banks with low initial liquidity and banks with sufficiently high risk-adjusted return on firm lending drive the results.
    Keywords: asset encumbrance, covered bond, portfolio rebalancing, liquidity management
    JEL: G21 G23 G28
    Date: 2021–09–07
  4. By: Moritz Schularick (University of Bonn, Sciences Po, and Federal Reserve Bank of New York)
    Abstract: Corporate debt levels have risen sharply in advanced and emerging economies before and during the Covid pandemic. Will corporate debt overhang slow down the recovery from the pandemic? This paper studies the aftermath of corporate debt surges in long-run cross country data. History shows that the macro-economic aftermath of corporate debt booms is typically benign. Three caveats apply, but none of them currently raises alarm bells: (i) the sectoral composition of corporate debt must not be tilted towards investments in the non-tradable sectors; (ii) legal institutions for debt reorganization must work efficiently; (iii) in bank-based financial systems, stringent banking supervision must prevent the emergence or survival of zombie companies.
    Date: 2021–09
  5. By: Kim, Soo-Dong (Korea Institute for Industrial Economics and Trade)
    Abstract: This study analyzes the impact of changes in supply chain management on corporate performance in Korea. Focusing on four major industries that are closely related to supply chain reorganization, company-level micro data is used to determine the impact of each industry’s supply chain management on corporate performance. Using a empirical model, the work presents explicit results on how variables representing supply chain management affect firm performance. Specifically, it analyzes four main industries to derive the effects caused by the US-China trade conflict. The results of the empirical analysis are compared by dividing the sample into two periods: before and during COVID-19.
    Keywords: supply chains; supply chain management; COVID-19; firm performance; corporate performance; productivity; firm productivity; corporate productivity; Korea; semiconductors; batteries; mining and minerals; pharmaceuticals
    JEL: D24 L25
    Date: 2022–10–01
  6. By: Kiichi Tokuoka; Maria Atamanchuk
    Abstract: In Armenia, both external and domestic financing face challenges. Armenia’s share of inward foreign direct investment (FDI) in private external financing has declined significantly over the past decade. Access to domestic finance in Armenia is also moderate and masks important disparities. Against this background, this paper analyses the determinants of inward FDI and examines the impediments to increasing access to domestic finance. The paper confirms empirically that governance-related structural factors have a significant impact on inward FDI. Similar structural factors, informality and poor accounting practices are reported among major challenges for increasing access to finance for firms in Armenia. This paper finds that to improve financing in Armenia include: implementing structural reforms to improve the business environment, maintaining prudent macroeconomic policies, strengthening financial reporting, and improving financial inclusion through reduced informality in the economy.
    Keywords: Inward FDI; access to finance; financial inclusion
    Date: 2023–01–13
  7. By: Hege, Ulrich; Pouget, Sébastien; Zhang, Yifei
    Abstract: We study the impact of climate-related patents on financial markets. We exploit the quasi-random assignment of patent examiners with different degrees of leniency as an exogenous shock in patent approvals to allow for causal interpretations. We find that firms with more lucky climate-related patents subsequently display higher positive cumulative abnormal stock returns and enjoy a lower cost of capital, compared with similarly innovative but unlucky firms. These results hold especially during periods of high attention towards climate change and for initial climate patent granting. Firms with more lucky climate-related patents also exhibit better environmental ratings and attract more responsible institutional investors. OLS regressions show that firms developing more climate-related technologies reduce more direct carbon emission intensity.
    Keywords: climate-related patents; green patents; examiner leniency; climate change; implied cost of capital; ESG ratings; responsible investors; CO2 emissions.
    JEL: G11 G23 G24 O34
    Date: 2023–01

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