nep-cfn New Economics Papers
on Corporate Finance
Issue of 2023‒04‒17
eight papers chosen by
Zelia Serrasqueiro
Universidade da Beira Interior

  1. Welcome on board? Appointment dynamics of women as directors By Schoonjans, Eline; Hottenrott, Hanna; Buchwald, Achim
  2. Access to Credit after Emerging from Corporate Bankruptcy By Chloé Zapha; Banque de France
  4. Strapped for cash: The role of financial constraints for innovating firms By Esther Ann Boler; Andreas Moxnes; Karen Helene Ulltveit-Moe
  5. Regional favoritism in access to credit: Just believe it By Osei-Tutu, Francis; Weill, Laurent
  6. Tracing the International Transmission of a Crisis Through Multinational Firms By Marcus Biermann; Kilian Huber
  7. Supervisory policy stimulus: evidence from the euro area dividend recommendation By Ernest Dautović; Leonardo Gambacorta; Alessio Reghezza
  8. Board of Directors’ Networks, Gender, and Firm Performance in a Male-Dominated Industry: Evidence from U.S. Banking By Owen, Ann; Temesvary, Judit; Wei, Andrew

  1. By: Schoonjans, Eline; Hottenrott, Hanna; Buchwald, Achim
    Abstract: Increasing the participation of women in top-level corporate boards is high on the agenda of policymakers. Yet, we know little about director appointment dynamics and the drivers and impediments of women appointments. This study builds on organizational and group-level behavior theories and empirically investigates how ex-ante board structures and gender-specific board dynamics impact the representation of women on corporate boards. We study boards of listed firms in Europe between 2002 and 2019 and find a declining appointment probability for every additional woman, i.e. the share of women already on the board negatively predicts the likelihood of additional women appointments. Further, we find evidence of a replacement effect, i.e. the likelihood of a woman being appointed as director is significantly larger when a woman, compared to when a man, leaves the board. We do not find spillover effects from non-executive to executive boards. These results are robust to econometric model specifications that address potential endogeneity concerns using matching and instrumental variables. Our results confirm that board director appointments are gender specific and suggest that demand-side factors such as explicit and implicit norms drive women appointments up to a certain threshold.
    Keywords: Executive Directors, Non-Executive Directors, Appointments, Board Dynamics, Gender, Tokenism, Critical Mass, Corporate Governance
    JEL: G34 J08 J16 J71 L22
    Date: 2023
  2. By: Chloé Zapha (Banque de France - Banque de France, Université Paris Dauphine-PSL - PSL - Université Paris sciences et lettres, LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris sciences et lettres - CNRS - Centre National de la Recherche Scientifique); Banque de France
    Abstract: This paper identifies the credit restrictions that small firms are facing after emerging from bankruptcy. Using the French credit register, I implement a differencein-difference strategy that exploits staggered removal of bankruptcy flags in the form of an exogenous change in credit ratings. I focus on small and medium businesses between 2012 and 2019 and show that the flag removal leads to an increase in bank credit of 1.7%. The flag removal does not make relationship banks forget about the past bankruptcy. Instead, it removes adverse information for new banks that subsequently start lending. As a result, financially constrained firms rely less on supplier debt and increase their investment by 15%.
    Keywords: Corporate Bankruptcy, Debt Restructuring, Credit Rating, Bank Lending Relationship, SMEs
    Date: 2023–01–26
  3. By: Rasid, Abdu
    Abstract: Introduction: This study aims to determine the impact of corporate governance structures on external fees in sharia stocks that are consistently listed in JII in 2013-2018. Methods: The number of samples in this study recorded 12 consistent sharia stocks listed in the years 2013-2018. This study uses a quantitative approach with panel data analysis method. Results: The results show that the average size of the board of commissioners is six to seven people, the average size of the board of directors is seven to eight people, the average size of the audit committees is three to four people, and the average size of the internal audit is fifteen to sixteen people. The hypothesis test shows that variables which have a significant impact on the audit fee are the size of the board of commissioners and the internal audit. Meanwhile, the size of the board of directors and the audit committees do not have a positive impact on audit fees. Conclusion and suggestion: Companies use more funding from debt than their own capital. Judging from the liquidity ratio, it shows that the company is in a liquid state, which is very capable of fulfilling obligations or debts that must be immediately paid by the company.
    Date: 2023–02–17
  4. By: Esther Ann Boler; Andreas Moxnes; Karen Helene Ulltveit-Moe
    Abstract: This paper makes use of a reform that allowed firms to use patents as stand-alone collateral, to estimate the magnitude of collateral constraints and to quantify the aggregate impact of these constraints on misallocation and productivity. Using matched firm-bank data for Norway, we find that bank borrowing increased for firms affected by the reform relative to the control group. We also find an increase in the capital stock, employment and innovation as well as equity funding. We interpret the results through the lens of a model of monopolistic competition with potentially collateral constrained heterogeneous firms. Parameterizing the model using well-identified moments from the reduced form exercise, we find quantitatively large gains in output per worker in the sectors in the economy dominated by constrained (and intangible-intensive) firms. The gains are primarily driven by capital deepening, whereas within-industry misallocation plays a smaller role.
    Keywords: intangible capital, patents, credit constraints, misallocation, productivity
    Date: 2023–03–14
  5. By: Osei-Tutu, Francis; Weill, Laurent
    Abstract: We examine the effect of regional favoritism on the access of firms to credit. Using firm-level data on a large sample of 29, 000 firms covering 47 countries, we investigate the hypothesis that firms in the birth regions of national political leaders have better access to credit. Our evidence suggests that firms located in birth regions of political leaders are less likely to be credit constrained. The effect takes place through the demand channel: firms in leader regions face fewer hurdles in applying for loans. We find no evidence, however, of preferential lending from banks to firms in leader regions. Thus, regional favoritism affects access to credit through differences in perceptions of firm managers, not deliberate changes in the allocation of resources by political leaders.
    Keywords: regional favoritism, access to credit, borrower discouragement
    JEL: D72 G21
    Date: 2023
  6. By: Marcus Biermann; Kilian Huber
    Abstract: We show that multinational firms transmit shocks across countries through their internal capital markets. We study a credit supply shock to parent firms in Germany. International affiliates outside Germany supported their parents through internal lending, became financially constrained themselves, and experienced lower real growth. We find that managers were "Darwinist" with respect to international affiliates but "Socialist" in the home country, that internal capital markets transmitted the credit shock more strongly than a non-financial shock, and that access to developed credit markets attenuated the real effects. The total real impact of shock transmission through multinationals on foreign economies was large.
    JEL: E4 F2 F3 G01 G2 G3
    Date: 2023–03
  7. By: Ernest Dautović; Leonardo Gambacorta; Alessio Reghezza
    Abstract: At the onset of the Covid-19 outbreak, central banks and supervisors introduced dividend restrictions as a new policy instrument aimed at supporting lending to the real economy and strengthening banks' capacity to absorb losses. In this paper we estimate the impact of the ECB's dividend recommendation on bank lending and risk-taking. To address identification issues, we rely on credit registry data and a direct measure that captures variation in compliance with the recommendation across banks in the euro area. The analysis disentangles the confounding effects stemming from the wide range of monetary and fiscal policies that supported credit during the Covid-19 downturn and investigates their interaction with the dividend recommendation. We find that dividend restrictions have been an effective policy in supporting financially constrained firms, adding capital space to banks, and limiting some forms of procyclical behaviour. The effects on lending are larger for small and medium enterprises and for firms operating in Covid-19 vulnerable sectors. At the same time, we do not find evidence of a significant increase in lending to riskier borrowers and "zombie" firms.
    Keywords: dividend restrictions, supervisory policy, credit supply, European Central Bank, Covid-19
    JEL: E5 E51 G18 G21
    Date: 2023–03
  8. By: Owen, Ann; Temesvary, Judit; Wei, Andrew
    Abstract: Leadership roles in banking remain dominated by men; only about one in six bank board members is female. Connections among board members can improve firm performance, but women on boards are much less connected than men. In this paper, we study how gender relates to the role of connections: how do connected female versus male board members affect banks’ performance? Using IV techniques to account for the endogeneity of connections, we find that (1) better connected female (but not male) board members improve bank profitability and reduce earnings management; (2) connections of women on important board committees also improve performance – especially when the share of women on the board is relatively high (above the median).
    Keywords: bank boards; professional networks; gender diversity; instrumental variables
    JEL: G21 G34 J16
    Date: 2023–03

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