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on Corporate Finance |
| By: | Vojtech Bartos; Silvia Castro; Kristina Czura; Timm Opitz |
| Abstract: | We analyze gender discrimination in entrepreneurship finance. Access to finance is crucial for entrepreneurial success, yet constraints for women are particularly pronounced. We structurally unpack whether loan officers evaluate business ideas and implementation constraints differently for male and female entrepreneurs, both as individual entrepreneurs or in entrepreneurial teams. In a lab-in-the-field experiment with Ugandan loan officers, we document gender discrimination of individual female entrepreneurs, but no gender bias in the evaluation of entrepreneurial teams. Our results suggest that the observed bias is not driven by animus against female entrepreneurs but rather by differential beliefs about women’s entrepreneurial ability or implementation constraints in running a business. Policies aimed at team creation for start-up enterprises may have an additional benefit of equalizing access to finance and ultimately stimulating growth. |
| Keywords: | access to finance, gender bias, entrepreneurship, lab-in-the-field |
| JEL: | C93 G21 J16 L25 L26 O16 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10719&r=cfn |
| By: | Frank Kwakutse Ametefe; David Kitulazzi; Precious Brenni; Francois Viruly |
| Abstract: | Sustainability is increasingly gaining importance across the globe among investors, regulators, banks, governments, and various other stakeholders. The impact of different elements of sustainability such as corporate governance have also been studied extensively. Ametefe et al. (2023) identified two major strands of literature which consider the benefits of incorporating sustainable investment considerations in the investment decision of real estate firms. One strand looks at how sustainable investment practices impact the operating cost and profitability of real estate firms while a second strand looks at how ESG factors impact market fundamentals such as stock prices, return on asset, return on equity etc. Many of these studies however take a view that there is a uni-directional relationship between sustainable investment and real estate firm performance. The objective of this study is however to analyse the dynamic interrelationship between sustainable investment and the performance of real estate firms. The present study employs the ESG framework which evaluates a firm’s sustainable investment practices using the three pillars of environmental, social and governance sustainability. We make use of the Dumitrescu and Hurlin (2012) approach to testing Granger Causality which can be applied to a panel dataset. This test helps to determine if there is any, uni-directional or bi- directional relationship between real estate firm performance and the different elements of sustainability. The main focus of this paper is on listed real estate firms in South Africa, both REITs and non-REITs. The real estate market in market in developing countries have not been adequately represented in studies on this topic. For completeness however, we will include all firms listed on the JSE for which Bloomberg provides ESG data. Our analysis would be carried out on the overall ESG scores as well as specific ESG pillars i.e., Environmental, Social and Governance sustainability indicators. To determine how ESG scores vary between REITs and non-REITs, and also among the different industries and sectors, we will employ two tests, the Kruskal and Wallis (1952) test for K-independent samples and the Cuzick and Edwards (1990) test. These tests have been widely used to assess possible differences across independent samples (Wasiuzzaman et al., 2022). |
| JEL: | R3 |
| Date: | 2023–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:afr:wpaper:afres2023-021&r=cfn |
| By: | Flavio Alberti Docha; Luiza Betina Petroll Rodrigues |
| Abstract: | This article presents an unprecedented database, “Alexandria”, which consolidates a panel with more than 40 thousand Brazilian companies, of which 31 thousand are non-financial companies (NFCs). It then uses it to investigate the influence of “industry affiliation” and “participation in the securities market” on the level of indebtedness of NFCs from 2015 to 2021. The conclusions are as follows: (i) industry is important to explain the average and median level of indebtedness, especially among non-CVM companies, and "Agriculture", "Construction" and "Real Estate Services" are the least indebted industries; (ii) participation in the securities market seems to increase indebtedness, but the evidence is weaker than that obtained for the industry; and (iii) there is great heterogeneity in indebtedness, even within the same industry, especially among companies outside the securities market. These results suggest that studies based solely on listed companies fail to capture the heterogeneity of corporate debt strategies. |
| Date: | 2023–10 |
| URL: | http://d.repec.org/n?u=RePEc:bcb:wpaper:586&r=cfn |
| By: | Dionne, Georges (HEC Montreal, Canada Research Chair in Risk Management) |
| Abstract: | We discuss the difficult question of measuring causality effects in empirical analyses, with applications to asymmetric information and risk management. It is now well documented in the economic literature that policy analysis must be causal. Hence, the measurement of its effects must also be causal. After having presented the main frameworks for causality analysis, including instrumental variable, difference-in-differences, and generalized method of moments, we analyze the following questions: Does risk management affect firm value and risk? Do we face a moral hazard problem in the insurance data? How can we separate moral hazard from adverse selection and asymmetric learning? Is liquidity creation a causal factor for reinsurance demand? We show that residual information problems are often present in different markets, while risk management may increase firm value when appropriate methodologies are applied. |
| Keywords: | Asymmetric information; moral hazard; adverse selection; risk learning; risk management; causality test; dynamic data; essential heterogeneity; difference-in-differences; instrumental variable; propensity scor; generalized method of moments |
| JEL: | C12 C18 C23 C25 C26 D80 G11 G22 |
| Date: | 2023–10–31 |
| URL: | http://d.repec.org/n?u=RePEc:ris:crcrmw:2023_004&r=cfn |
| By: | MIYAKAWA Daisuke; YANAOKA Masaki; YAZAWA Hirotaka; YUKIMOTO Shinji |
| Abstract: | Firms can make use of tangible capital assets such as production equipment through capital investments and leasing. In this study, we examine the technical characteristics of the leasing industry by comparing the sensitivities of those two channels to capital investment opportunities. First, we find that investment in leasing is more sensitive to changes in investment opportunities in industries with relatively underdeveloped second-hand markets for tangible capital assets. Second, in industries with relatively underdeveloped second-hand markets, leasing activity is more sensitive to investment opportunity in firms facing tighter financial constraints. These results suggest that the ability to sell tangible capital assets on the second-hand market provides financially constrained firms with access to tangible assets. Such ability is an important technical feature of the leasing industry. |
| Date: | 2023–10 |
| URL: | http://d.repec.org/n?u=RePEc:eti:rdpsjp:23040&r=cfn |
| By: | Gustavo Joaquim; Bernardus Doornik; GJosé Renato Haas Ornelas |
| Abstract: | We use heterogeneous exposure to large bank mergers to estimate the effect of bank competition on both financial and real variables in local Brazilian markets. Using detailed administrative data on loans and firms, we employ a difference-in- differences empirical strategy to identify the causal effect of bank competition. Following M&A episodes, spreads increase and there is persistently less lending in exposed markets. We also find that bank competition has real effects: a 1% increase in spreads leads to a 0.2% decline in employment. We develop a tractable model of heterogeneous firms and concentration in the banking sector. In our model, the semi-elasticity of credit to lending rates is a sufficient statistic for the effect of concentration on credit and output. We estimate this elasticity and show that the observed effects in the data and predicted by the model are consistent. Among other counterfactuals, we show that if the Brazilian lending spread were to fall to the world level, output would increase by approximately 5%. |
| Keywords: | bank competition, mergers and acquisitions, lending, spreads, output |
| JEL: | G21 G34 E44 |
| Date: | 2023–10 |
| URL: | http://d.repec.org/n?u=RePEc:bis:biswps:1134&r=cfn |
| By: | Juan M. Sanchez |
| Abstract: | Standard financial conditions indexes use financial variables, which don’t necessarily capture how easy or hard it is for households and firms to access credit. How does a new index that doesn’t rely on such variables compare? |
| Keywords: | financial conditions indexes |
| Date: | 2023–07–31 |
| URL: | http://d.repec.org/n?u=RePEc:fip:l00001:96552&r=cfn |
| By: | Priit Jeenas |
| Abstract: | I study the role of firms' balance sheet liquidity in the transmission of monetary policy to investment. In response to monetary contractions, U.S. firms with fewer liquid asset holdings reduce investment relatively more. This can be explained by their higher likelihood to issue debt and the implied exposure to borrowing cost fluctuations. I rationalize these results using a heterogeneous firm macroeconomic model with financial constraints, debt issuance costs, and differential returns on cash and borrowing. Compared to a framework which ignores liquidity considerations, monetary transmission to aggregate investment is slightly dampened and depends on liquid asset portfolios beyond net worth. |
| Keywords: | monetary policy, investment, financial frictions, firm heterogeneity |
| Date: | 2023–10 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:1872&r=cfn |
| By: | Matthew E. Kahn; John Matsusaka; Chong Shu |
| Abstract: | This paper studies whether green investors can influence corporate greenhouse gas emissions through capital markets, either by divesting their stock and limiting polluters’ access to capital, or holding polluters’ stock and engaging with management. We focus on public pension funds, classifying them as green or non-green based on which political party controlled the fund. To isolate the causal effects of green ownership, we use exogenous variation caused by state-level politics that shifted control of the funds and portfolio rebalancing in response to returns on non-equity investment. Our main finding is that companies reduced their greenhouse gas emissions when stock ownership by green funds increased and did not alter their emissions when ownership by non-green funds changed. We find evidence that ownership and constructive engagement was more effective than confrontational tactics such as voting or shareholder proposals. We do not find that companies with green investors were more likely to sell off their polluting facilities (greenwashing). Overall, our findings suggest that (a) corporate managers respond to the environmental preferences of their investors; (b) divestment in polluting companies may be counterproductive, leading to greater emissions; and (c) private markets may be able to address environmental challenges without explicit government regulation. |
| JEL: | G11 G12 Q54 |
| Date: | 2023–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:31791&r=cfn |