nep-cfn New Economics Papers
on Corporate Finance
Issue of 2023‒10‒09
nine papers chosen by
Zelia Serrasqueiro, Universidade da Beira Interior

  1. The 2022 EIF SME Access to Finance Index - August 2023 Update By Torfs, Wouter
  2. The Impact of Venture Capital on Economic Growth By Steven Poelhekke; Benjamin Wache
  3. Does corporate environmentalism affect corporate insolvency risk? The role of market power and competitive intensity By Saqib Aziz; Mahabubur Rahman; Dildar Hussain; Duc Nguyen
  4. Loan Recoveries and the Financing of Zombie Firms over the Business Cycle By Asli Demirgüç-Kunt; Bálint Horváth; Harry Huizinga
  5. Do firms consider stakeholder interests as a means to create shareholder value or as the ultimate goal? Evidence from Japanese dividend policies By KONISHI, Masaru; 小西, 大; SAITO, Junyu
  6. Label to match - Firms’ signaling decisions when not everyone cares By Fritz, Qi Gao
  7. Governance mechanisms and corporate performance: A systematic review of the literature By Mohamed Benzbir; Mohamed Hamdaoui
  8. Disclosure Regulation, Intangible Capital and the Disappearance of Public Firms By Sara Casella; Hanbaek Lee; Sergio Villalvazo
  9. ‬Socioemotional wealth and internal audit in family firms: trade-off between economic and non-economic goals By Nebbache Salah Eddine; Mokrani Abdelkrim

  1. By: Torfs, Wouter
    Abstract: This working paper elaborates on the most recent update of the EIF SME Access to Finance (ESAF) Index, a composite indicator used to monitor the state of SME external financing markets in the EU. The current update, using data for 2022, constitutes the tenth iteration of this exercise, resulting in a 10-year long time series for each of the 27 EU countries. The latest data captures the first impact of the rise in inflationary pressures and sustained geopolitical uncertainty arising from the war in Ukraine on European SMEs' access to finance. For an extensive overview of the current state of SME financing markets the reader is referred to the EIF's European Small Business Finance Outlook (Kraemer-Eis et al., 2023). The EIF Working Papers are designed to make available to a wider readership selected topics and studies in relation to EIF's business. The Working Papers are edited by EIF's Research & Market Analysis and are typically authored or co-authored by EIF staff or are written in cooperation with EIF.
    Date: 2023
  2. By: Steven Poelhekke (Vrije Universiteit Amsterdam); Benjamin Wache (CPB Netherlands)
    Abstract: Does venture capital (VC) investment yield economic growth? A large literature studies the effect of VC investments on firm-level activity, but its effects on economic growth are less well understood. We identify the effect of VC investment flows on destination county employment, wages, and establishment creation, using a novel instrument that captures the ‘social connectedness’ of counties to major sources of VC investment. Using detailed data on VC flows from investors to companies, we find a large positive impact of VC investment, suggesting that strong social connections to large venture capital hubs are an important contributor to regional economic growth.
    Keywords: Growth, venture capital, social connectedness
    JEL: R11 G24 G41
    Date: 2023–08–30
  3. By: Saqib Aziz (ESC [Rennes] - ESC Rennes School of Business); Mahabubur Rahman (ESC [Rennes] - ESC Rennes School of Business); Dildar Hussain (ESC [Rennes] - ESC Rennes School of Business); Duc Nguyen (IPAG Business School, VNU - Vietnam National University [Hanoï])
    Abstract: Little is known about the effects of green performance on corporate insolvency risk. This study examines the relationship between green performance and firm insolvency risk from both theoretical and empirical perspectives. Using a panel of 179 US firms included in the Newsweek Green Rankings and a system generalised method of moments estimation which generates endogeneity-robust regression coefficients, we found that firms with higher green performance are at lower risk of insolvency. We further postulate and provide theory-based empirical evidence that the nexus between green performance and insolvency risk is contingent upon other internal and external boundary conditions. Specifically, this research documents that the nexus between green performance and firm insolvency risk is moderated by market power as well as industry competitive intensity. The results of this study are robust across several sensitivity analyses.
    Keywords: Green performance, Insolvency risk, Market share, Industry competitiveness, Z-score
    Date: 2021–11
  4. By: Asli Demirgüç-Kunt (Center for Global Development); Bálint Horváth (University of Arizona); Harry Huizinga (Tilburg University and CEPR)
    Abstract: Using new data from the European Banking Authority on loan recovery outcomes, we examine how variation in loan recovery efficiency affects the transmission of financial sector and overall economic weakness to firm-level financial and real outcomes. We find that firms linked to under-capitalized banks experience higher debt, employment, and sales growth rates, if they are located in countries with less efficient loan recoveries. Furthermore, during economic downturns zombie firms—insolvent firms that continue to receive credit—achieve higher debt, employment, and sales growth, and fewer defaults if they are resident in such countries. Overall, we find that less efficient loan enforcement mitigates the transmission of financial sector and economic weakness to firm-level outcomes. This stabilizing effect, however, is likely to come at the cost of significant distortions documented in earlier literature.
    Keywords: loan recovery, zombie firm, business cycle
    JEL: E32 G21
    Date: 2023–09–22
  5. By: KONISHI, Masaru; 小西, 大; SAITO, Junyu
    Abstract: By using data on Japanese firms, this study investigates empirically whether value creation for non-shareholder stakeholders can be interpreted as a means to maximize shareholder value or is in itself the ultimate goal. We examine the impact of stakeholder management on firms’ dividend policies. Because a firm’s board of directors determines whether to pay dividends and how much to pay, dividend policies are appropriate measures of firms’ orientations toward shareholder value maximization. Our findings show no relationship between stakeholder management and dividend policies in most estimations. However, we find some evidence of a positive relationship between stakeholder management and dividend policies for firms with negative earnings. The overall results suggest that providing value to non-shareholder stakeholders is not the ultimate goal of stakeholder management.
    Keywords: stakeholder management, shareholder primacy, dividend, payout policy, Japan
    Date: 2023–09
  6. By: Fritz, Qi Gao
    Abstract: In this paper, I propose a model to investigate firms’ signaling decisions on the product level. By seeking (imperfect) third-party certification, firms can label their products with good quality for which only some consumers care. Combining the signaling game with a matching problem, I am able to investigate the impact of the size of conscious consumers and asymmetric firm size on firms’ signaling decisions. In general, the level of certification costs determines the occurrence of different equilibria. While more conscious buyers unambiguously increase the probability of separating and semi-separating equilibria, the effect on the pooling equilibrium is not that straightforward. Asymmetric firm size negatively influences the occurrences of all equilibria. However, product allocation schemes play an important role in such negative effects.
    Date: 2023–09–04
  7. By: Mohamed Benzbir (PhD Student - UB - Université de Bourgogne); Mohamed Hamdaoui
    Abstract: The objective of this study is to present the current state of research regarding the relationship between governance mechanisms and the performance of listed companies from 1990 to 2022. Employing a systematic review methodology, we carefully reviewed and examined 80 publications, taking into account their content and context. The publications underwent classification based on theoretical perspectives, research methodologies, and empirical investigations. The findings of our analysis unequivocally reveal the fragmentation of the research field and emphasize the significant knowledge gaps that persist. Undoubtedly, considerable strides have been devoted to investigating the relationship between corporate governance and the performance of listed companies. However, our review highlights several areas that require further research to deepen our understanding. Firstly, delving into the intricate interactions between various corporate governance mechanisms and their impact on company performance is of paramount importance. Further studies are necessary to assess how these mechanisms interact and complement each other. Additionally, new theoretical perspectives need should be developed to enhance our understanding of governance mechanisms and their effect on the performance of listed companies. Existing theoretical frameworks can be further developed and customized to encompass the dynamic changes in financial markets and evolving practices of governance. Similarly, new research methods can provide more profound insights into the relationship between governance mechanisms and corporate performance.
    Abstract: Cette étude se propose de présenter l'état de la recherche sur la relation entre les mécanismes de gouvernance et la performance des entreprises cotées en bourse sur la période s'étendant de 1990 à 2022. En utilisant une méthodologie de revue systématique, nous avons procédé à l'analyse et à la mise en perspective de 80 publications. Ces publications ont été regroupées en fonction des perspectives théoriques, des méthodes de recherche et des travaux empiriques. Les résultats de notre analyse révèlent clairement la fragmentation du domaine de recherche et soulignent les importantes lacunes de connaissances qui demeurent encore prégnantes. Il est indéniable que des progrès significatifs ont été réalisés dans l'étude de la relation entre la gouvernance et la performance des entreprises cotées en bourse. Cependant, notre revue met en évidence plusieurs domaines où des recherches supplémentaires sont nécessaires pour approfondir notre compréhension. Il est essentiel d'explorer plus en détail les interactions entre les différents mécanismes de gouvernance d'entreprise et leur impact sur la performance de l'entreprise. Des études plus approfondies sont nécessaires pour évaluer comment ces mécanismes interagissent et se complètent mutuellement. En outre, de nouvelles perspectives théoriques doivent être développées pour mieux appréhender les mécanismes de gouvernance et leur effet sur la performance des entreprises. Les cadres théoriques existants peuvent être enrichis et adaptés pour tenir compte de l'évolution des marchés financiers et des pratiques de gouvernance. De même, de nouvelles méthodes de recherche peuvent fournir des perspectives plus approfondies sur la relation entre les mécanismes de gouvernance et la performance des entreprises.
    Keywords: governance, mechanism, performance, listed company, systematic review, gouvernance mécanisme performance entreprise cotée revue systématique Classification JEL : G34 L25 Type de l'article : Article théorique governance mechanism performance listed company systematic review JEL Classification: G34 L25 Paper type: Theoretical Research
    Date: 2023–08–17
  8. By: Sara Casella; Hanbaek Lee; Sergio Villalvazo
    Abstract: Since the mid-1990s, the number of listed firms in the U.S. has halved, and their public disclosure has become opaquer. To explain these trends, we develop a general equilibrium model where the choices of going public or private and the transparency of voluntary disclosure are characterized analytically. In the equilibrium, the stock market with directed search and the private equity market with random search co-exist. According to the estimation, stricter disclosure regulation and increased intangible capital share are the key drivers of the observed patterns. Lastly, we characterize a policymaker’s trade-off between welfare and productivity and analyze the optimal policy.
    Keywords: intangible capital; corporate disclosures; technology diffusion
    JEL: D24 G24 G38
    Date: 2023–06–30
  9. By: Nebbache Salah Eddine (Ecole Supérieure de Commerce –Koléa, (Algérie)); Mokrani Abdelkrim (Ecole Supérieure de Commerce –Koléa, (Algérie))
    Abstract: The paper considers that the internal auditing role in family firms is unique owing to the overlap and ambiguity of roles between the family and the firm. Besides, family firms' characteristics seem to influence the internal audit role. In this context, internal auditing must effectively deal with the factors leading to conflict in family firms. The study aims to emphasize the interpretation of the internal audit role in family businesses, and the article suggests a specific role for the internal audit that is the tradeoff between economic aspirations and socioemotional wealth dimensions. In order to achieve this objective, a questionnaire was prepared and distributed to internal auditors, chief financial officers, and certified public accountants of Algerian family businesses. The results reveal that the cognitive role had the highest mean score (3.04), followed by the trade-off between economic and non-economic goals (2.79) and the disciplinary role (2.64).
    Keywords: internal audit family firm conflict socioemotional wealth JEL Classification Codes: G38 G41 M42, internal audit, family firm, conflict, socioemotional wealth JEL Classification Codes: G38, G41, M42
    Date: 2023–06–04

This nep-cfn issue is ©2023 by Zelia Serrasqueiro. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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