nep-cfn New Economics Papers
on Corporate Finance
Issue of 2023‒08‒14
four papers chosen by
Zelia Serrasqueiro
Universidade da Beira Interior

  1. Growing During a Global Crisis By Shahin, Ahmad E
  2. Firm resilience and growth during the economics crisis: lessons from the Greek depression By Christos, Genakos; Kaplanis, Ioannis; Tagaraki, Maria Theano; Tsakanikas, Aggelos
  3. Food Companies’ Productivity Dynamics: Exploring the Role of Intangible Assets By Nakatani, Ryota
  4. Aggregate Implications of Deviations from Modigliani-Miller: A Sufficient Statistics Approach By Robert J. Kurtzman; David Zeke

  1. By: Shahin, Ahmad E
    Abstract: Employing the data from the World Bank Enterprise surveys, we examine how the first shock of the COVID-19 pandemic has affected firm dynamics across the world. Our first group of robust models have tested the effect of internal firms’ managerial decisions and other external factors on the sales’ growth, where we found that the most important decisions are related to preserving and increasing liquidity levels, in addition to utilizing the workforce in giving more input to maintain and grow the firms’ sales. Our second group of robust models have tested the firms’ financial decisions and other external factors on the change of the firms’ liquidity levels, where we found that the firms’ liquidity levels are better protected by maintaining the relationships with financial institutions and government authorities, in addition to international firms through exporting. This paper adds to the literature through its focused examination of the immediate effect of the pandemic on firms during the months May to November 2020, while keeping a broad scope by covering 14, 751 firms from 25 economies around the world
    Keywords: Firm Dynamics, Growth, Financial Survival, Financial and Managerial Decisions, Liquidity and Cash, Access to Finance, Government Financial Support, Pandemic, COVID-19, Global Crisis, Enterprise Surveys
    JEL: D22 D81 G01 G14 G32 H84 M21 O57
    Date: 2021–11–09
  2. By: Christos, Genakos; Kaplanis, Ioannis; Tagaraki, Maria Theano; Tsakanikas, Aggelos
    Abstract: The global financial crisis that burst in 2008 adversely affected business performance in many countries, especially in Europe. However, the impact of the crisis on entrepreneurship and business dynamics differed amongst countries, depending on their businesses resilience, the policies implemented, but also their predominant productive structure. The magnitude and length of the Greek depression have no precedent among modern middle and high-income economies. Still, to date, there is no systematic analysis of the impact of the crisis on entrepreneurship and business dynamism. This study attempts to fill this gap by examining individual firm, sectoral and regional level characteristics that might affect existing firm resilience and new firm survival rate. We use two sources of data with the most extensive coverage of small (sole proprietorship) and large (other legal status firms) firms containing information on entry and exit in Greece. Matching data from patents and trademarks allow us to examine the interplay between entrepreneurship and innovation. Our analysis focuses on the factors that help or hinder firm survival and growth. We find that the crisis increased the exit likelihood for a firm by 5% to 16%. Larger firms, with significant fixed assets, lower financial leverage, operating in concentrated industries, but also those that are innovation and export oriented tend to have better chances of survival compared to their counterparts. These results are important for designing business policies not only in Greece but also other countries facing similar crises.
    Keywords: entrepreneurship; business dynamism; innovation; crisis policy; resilience
    JEL: D20 L20 L25 O30 R11
    Date: 2023–07–01
  3. By: Nakatani, Ryota
    Abstract: Food insecurity has risen amid economic recovery from the COVID-19 pandemic. Food companies’ productivity dynamics can be driven by intangible assets, financing, economies of scale, lifecycle, and technological convergence. We confront this by studying productivity drivers for detailed food manufacturing industries using cross-country firm-level panel data. The results show that intangible assets nonlinearly and heterogeneously affect productivity growth, and countries with fewer product market regulations demonstrate higher productivity benefits from asset intangibility. Intangible assets do not play a major role for start-up companies, while technological convergence drives productivity growth as they learn new technology in the food markets. Regarding the industrial differences, the bakery sector benefits the most from asset intangibility because of its brand images. Financing is particularly important for the meat/fish and dairy sectors, where capital equipment is necessary, and leverage effects are larger for countries with more access to financial institutions. Economies of scale are a vital productivity enhancer in the grain and starch sector for lowering fixed costs. Industrial policies to (i) raise the quality of intangible assets, (ii) promote financial access, and (iii) utilize scale economies are critical for improving the productivity of food manufacturers.
    Keywords: productivity growth; food manufacturing; asset intangibility; start-up; technological convergence; financing; scale economies; agri-food; product market regulations: financial development; grain and starch sector; meat and fish sector; dairy sector; fruit and vegetable sector; bakery sector
    JEL: D24 G32 L66 O34
    Date: 2023–07–08
  4. By: Robert J. Kurtzman; David Zeke
    Abstract: A few sufficient statistics can identify the aggregate effects of distortions to firm investment in a class of general equilibrium models that can accommodate rich general equilibrium effects including endogenous firm entry. This result does not depend on the microfoundation of the distortion; one can generate inferences about aggregate effects that apply for multiple microfoundations or in cases where a fully specified model is difficult to solve. To demonstrate the relevance of themethodology, we use it to quantify the aggregate consequences of costly external equity financing and a manager-shareholder friction, relying on estimates from the corporate finance literature to identify the sufficient statistics. The results elucidate differences between partial and general equilibrium findings and demonstrate how labor supply elasticities, complementarities in production, and firm entry interact with the different firm-level distortions.
    Keywords: Heterogeneous firms; General equilibrium; Firm entry; Agency costs; Costly external finance; Sufficient statistics
    JEL: E22 E23 G39
    Date: 2023–07–06

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