nep-cfn New Economics Papers
on Corporate Finance
Issue of 2024‒02‒05
four papers chosen by
Zelia Serrasqueiro, Universidade da Beira Interior

  1. Does the Ind AS moderate the relationship between capital structure and firm performance? By M N, Nikhil; S Shenoy, Sandeep; Chakraborty, Suman; B M, Lithin
  2. Female Entrepreneur on Board:Assessing the Effect of Gender on Corporate Financial Constraints By Ruiying Xiao
  3. Gendered Access to Finance: The Role of Team Formation, Idea Quality, and Implementation Constraints in Business Evaluations By Vojtech Bartos; Silvia Castro; Kristina Czura; Timm Opitz
  4. Protecting wall street or main street: SEC monitoring and enforcement of retail-owned firms By Iselin, Michael; Johnson, Bret; Ott, Jacob; Raleigh, Jacob

  1. By: M N, Nikhil; S Shenoy, Sandeep; Chakraborty, Suman; B M, Lithin
    Abstract: In line with the wide implementation of IFRS around the globe, the significant shift in the Indian accounting system appertained to the Ind AS is expected to have a substantial impact on the firm-level information environment. Nevertheless, the question of whether the adoption of such standards moderates the relationship between leverage and firm performance remains unanswered. In this backdrop, we aim to close this research gap employing 3120 firm-year observations from 401 Indian non-financial firms for a period from 2013 to 2022. Notably, we found that the leverage among Indian firms discourages profitability. Further, the adoption of Ind AS negatively moderates the leverage and firm performance association. The findings suggest that the enhanced transparency and the firm's reporting quality dissuade risk-averse investors from investing in highly levered companies. As a result, investors avoid risky investments, and firms must strive to foster their trust and motivation. The conclusion of the present research draws significant implications for management and policymakers while also contributing to the ongoing debate on capital structure and firm performance.
    Keywords: emerging country, debt, GMM, IFRS convergence, India, investors, information environment, leverage
    JEL: C33 G32 M48
    Date: 2023–09–02
  2. By: Ruiying Xiao
    Abstract: This study investigates the impact of female leadership on the financial constraints of firms, which are publicly listed entrepreneurial enterprises in China. Utilizing data from 938 companies on the China Growth Enterprise Market (GEM) over a period of 2013-2022, this paper explores how the female presence in CEO positions, senior management, and board membership influences a firm's ability to manage financial constraints. Our analysis employs the Kaplan-Zingales (KZ) Index to measure these constraints, encompassing some key financial factors such as cash flow, dividends, and leverage. The findings reveal that companies with female CEOs or a higher proportion of women in top management are associated with reduced financial constraints. However, the influence of female board members is less clear-cut. Our study also delves into the variances of these effects between high-tech and low-tech industry sectors, emphasizing how internal gender biases in high-tech industries may impede the alleviation of financing constraints on firms. This research contributes to a nuanced understanding of the role of gender dynamics in corporate financial management, especially in the context of China's evolving economic landscape. It underscores the importance of promoting female leadership not only for gender equity but also for enhancing corporate financial resilience.
    Date: 2024–01
  3. By: Vojtech Bartos (University of Milan); Silvia Castro (LMU Munich); Kristina Czura (University of Groningen); Timm Opitz (Max Planck Institute for Innovation and Competition)
    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: 2023–12–06
  4. By: Iselin, Michael; Johnson, Bret; Ott, Jacob; Raleigh, Jacob
    Abstract: This study examines whether retail ownership of a firm is associated with the likelihood that the firm is subject to monitoring and enforcement by the two largest divisions of the SEC. Monitoring is a form of ex ante or preventative regulatory oversight, while enforcement is a form of ex post or punitive oversight. We find a negative association between retail ownership and SEC monitoring. In contrast, we find a positive association between retail ownership and SEC enforcement. These results suggest that the SEC is less likely to monitor firms with high retail ownership, potentially leaving current retail investors more vulnerable to unresolved financial reporting issues. Additionally, the SEC is more likely to issue enforcement actions against firms with high retail ownership, imposing costs on current retail investors when the firm is accused of egregious cases of perceived financial misreporting.
    Keywords: retail ownership; SEC enforcement; SEC monitoring
    JEL: M41 G18
    Date: 2022–12–16

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