nep-cfn New Economics Papers
on Corporate Finance
Issue of 2024‒04‒15
seven papers chosen by
Zelia Serrasqueiro, Universidade da Beira Interior

  1. Board Gender Diversity in China and Eastern Europe By IWASAKI, Ichiro; MA, Xinxin; MIZOBATA, Satoshi
  2. Prediction of Corporate Credit Ratings with Machine Learning: Simple Interpretative Models By Koresh Galil; Ami Hauptman; Rosit Levy Rosenboim
  3. ESG as protection against downside risk By Kräussl, Roman; Oladiran, Tobi; Stefanova, Denitsa
  4. Portfolio decarbonisation strategies: questions and suggestions By Paolo Angelini
  5. Capital Structure Adjustment Speed and Expected Returns: Examination of Information Asymmetry as a Moderating Role By Masoud Taherinia; Mehrdad Matin; Jamal Valipour; Kavian Abdolahi; Peyman Shouryabi; Mohammad Mahdi Barzegar
  6. Financial knowledge and career aspirations among the young: a route to entrepreneurship By Sara Lamboglia; Noemi Oggero; Mariacristina Rossi; Massimiliano Stacchini
  7. Spare tyres with a hole: investment funds under stress and credit to firms By Nicoletti, Giulio; Rariga, Judit; Rodriguez d’Acri, Costanza

  1. By: IWASAKI, Ichiro; MA, Xinxin; MIZOBATA, Satoshi
    Abstract: This paper reports on an empirical analysis of 42, 094 public/private companies in China and 21 Eastern European countries to grasp the actual state and determinants of board gender diversity in emerging market firms. We confirmed that firms in these countries are comparable to those in advanced nations in terms of the prevalence of firms recruiting female board members and the female share of board directorships. Furthermore, in emerging market countries, internal promotions are used as often as, or even more often than, external ones to recruit women to director positions. The results revealed that board composition and ownership structure are important determinants of the gender diversity of the corporate board in emerging market firms. We also found that the effects of these factors vary significantly depending on the country/region and the listing status of firms and that two qualitatively different decision-making stages related to the appointment of women to board positions (i.e., a decision as to whether to appoint any women to the board and a decision as to how many board positions should be reserved for women) have a substantial impact on the empirical results.
    Keywords: board gender diversity, board composition, ownership structure, emerging markets, China, Eastern Europe
    JEL: D22 G32 J16 K22 L22 P31
    Date: 2024–03
  2. By: Koresh Galil (BGU); Ami Hauptman (Computer Science Department of Sapir College); Rosit Levy Rosenboim (Applied Economics Department of Sapir College)
    Keywords: Corporate Ratings, Machine Learning, Classification and Regression Tree, Support Vector Regression, CART, SVR, Size
    JEL: C45 C53 G24 G32
    Date: 2023
  3. By: Kräussl, Roman; Oladiran, Tobi; Stefanova, Denitsa
    Abstract: We examine whether the uncertainty related to environmental, social, and governance (ESG) regulation developments is reflected in asset prices. We proxy the sensitivity of firms to ESG regulation uncertainty by the disparity across the components of their ESG ratings. Firms with high ESG disparity have a higher option-implied cost of protection against downside tail risk. The impact of the misalignment across the different dimensions of the ESG score is distinct from that of ESG score level itself. Aggregate downside risk bears a negative price for firms with low ESG disparity.
    Keywords: ESG, rating, downside risk, options, regulation, risk premium
    JEL: G12 G18 G32
    Date: 2023
  4. By: Paolo Angelini (Bank of Italy)
    Abstract: Financial intermediaries are integrating climate in their portfolio management and lending strategies. A shared objective is to properly manage the related risks. Many are also driven by the desire to do their part to help the transition towards a low-carbon economy. In their efforts to pursue these two objectives, many intermediaries have been pledging to reduce the carbon emissions financed by the assets side of their balance sheets, and to achieve net zero financed emissions by 2050, possibly meeting intermediate quantitative targets. Divesting from carbon-intensive firms and investing in low-carbon ones should reduce transition risk (the first objective), and should make access to finance more difficult for high emitters, pushing them to curtail investment in polluting technologies (the second objective). This paper argues that this strategy, apparently simple and sensible, hides numerous complexities whose implications have not yet been fully fleshed out, and that some of its consequences might be undesired. In a nutshell, in spite of substantial progress in recent years, more research is necessary to shed light on how the financial sector can effectively pursue the above objectives.
    Keywords: financial intermediaries, green transition, climate change, decarbonization
    JEL: G20 G32 Q01 Q54
    Date: 2024–03
  5. By: Masoud Taherinia; Mehrdad Matin; Jamal Valipour; Kavian Abdolahi; Peyman Shouryabi; Mohammad Mahdi Barzegar
    Abstract: Shareholders' expectations of stock returns and fluctuations are constantly changing due to restrictions in financial status and undesirable capital structure, which constrain managers to limit the changes in price trends in order to cover the risk instigated and infused by the unfavorable situation. The present research examines the moderating impact of information asymmetry on the relationship between capital structure adjustment and expected returns. The data from 120 companies approved in the Tehran Stock Exchange were extracted, and a hybrid data regression model was used to test the research hypotheses. Findings indicate that the capital structure adjustment speed correlates with the expected returns. Moreover, the information asymmetry positively affects the relationship between capital structure adjustment speed and expected returns.
    Date: 2024–03
  6. By: Sara Lamboglia (Bank of Italy); Noemi Oggero (University of Turin and CERP); Mariacristina Rossi (COVIP and University of Turin); Massimiliano Stacchini (Bank of Italy)
    Abstract: In this study, we explore whether financial literacy plays a role in shaping the career aspirations of young people. Using data collected in 2023 by the Bank of Italy on a representative sample of individuals aged 18-34, we find that financial knowledge increases the intention to become an entrepreneur. Our results are confirmed by using instrumental variable estimations. We also show that financial knowledge helps to reduce indecisiveness regarding future professional choices, making young people more focused on their aspirations.
    Keywords: financial literacy, entrepreneurial intention
    JEL: G53 L26
    Date: 2024–03
  7. By: Nicoletti, Giulio; Rariga, Judit; Rodriguez d’Acri, Costanza
    Abstract: We study the impact of a liquidity shock affecting investment funds on the financing conditions of firms. The abrupt liquidity needs of investment funds, triggered by the outbreak of the Covid-19 pandemic, prompted a retrenchment from bond purchases of firms and a withdrawal of short term funds from banks, impacting firm financing costs directly via bond markets, and indirectly via banks. According to our results, the spreads of corporate bonds held by investment funds increased. Furthermore, an increase in the short term funding exposure of a bank to investment funds triggered a contraction in new loans to euro area firms. Overall, our results show that while non-banks in general support firm financing by acting as a spare tyre when banks do not, their own stress can trigger a contractionary credit supply effect for firms. JEL Classification: E52, G23, G30
    Keywords: bank lending channel, bond lending channel, firm financing, investment funds, monetary policy
    Date: 2024–03

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