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on Corporate Finance |
| By: | Nguyen, Quang Khai |
| Abstract: | This study investigated the impact of the COVID-19 crisis on firm risk and performance in different country-level governance qualities in the MENA region. Analyzing a sample of 739 non-financial listed firms in 12 MENA countries for the period 2011–2020, we found that the COVID-19 crisis negatively impacted the performance of firms, especially low-performance firms, in most industries, and increased firm risk in general. Moreover, we found that national governance quality plays an important role in mitigating the negative impact of the COVID-19 crisis on firm operations. Specifically, national governance quality reduces the negative impact of the COVID-19 crisis on firm performance and the positive impact of the crisis on firm risk. The results are consistent with our contention that national governance quality contributes to creating a positive environment for businesses activities and reducing economic shocks. |
| Keywords: | COVID-19; performance |
| JEL: | G0 G3 |
| Date: | 2023 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:121001&r= |
| By: | Jing Xie (Department of Finance and Business Economics, Faculty of Business Administration, University of Macau) |
| Abstract: | I uncover that equity mutual funds with significant investments in publicly traded family firms (pro-FF funds) exhibit superior performance compared to other funds. This effect is more pronounced when family firms are harder to value or less liquid. Pro-FF funds yield higher returns on family firm investments than other funds do on similar holdings. The net purchasing activities made by pro-FF funds have predictive power for future stock returns and earnings announcement surprises of family firms. One plausible explanation for this informational advantage lies in pro-FF funds focusing on family firms in closer geographical proximity. The positive impact of FF investment on fund performance holds for all three subsets of family firms that are managed by founders, descendants, or professional CEOs. |
| Keywords: | Mutual funds; Informed trading; Family firms; Ownership Structure; Insiders |
| JEL: | G11 G23 G32 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:boa:wpaper:202411&r= |
| By: | Thomas J. Chemmanur (Carroll School of Management, Boston College); Zeyu Sun (School of Accounting, Capital University of Economics and Business); Jing Xie (Department of Finance and Business Economics, Faculty of Business Administration, University of Macau) |
| Abstract: | We find that firms are more inclined to distribute dividends when a larger fraction of other firms held by the same common institutional blockholder (CIB) have paid dividends. This effect also holds for the level of and the change in dividend payment. We establish causality using exogenous perturbations in peer relations. In particular, we show that the similarity in firms’ dividend policies becomes greater after the exogenous creation of new peer relations between them due to asset managers’ mergers and Russell index reconstitutions. The peer effect is stronger when peers have maintained relations with the focal firm for a longer period or when focal firms’ stock liquidity is higher. We also find that a CIB is more likely to vote against manager sponsored proposals in nondividend-paying investee firms if a larger proportion of the CIB’s other investee firms have paid dividends. Overall, our results provide fresh evidence of dividend clienteles. |
| Keywords: | dividend policy; peer effects; common institutional blockholders; shareholder voting; dividend clienteles. |
| JEL: | G35 G23 G20 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:boa:wpaper:202407&r= |
| By: | Andrea Bellucci (University of Insubria and MoFiR); Alexander Borisov; Gianluca Gucciardi (University of Milano-Bicocca and MoFiR); Alberto Zazzaro (University of Naples Federico II, CSEF and MoFiR.) |
| Abstract: | Technological advancements and globalization of venture capital (VC) point to a diminishing role of direct face-to-face (F2F) interactions between VCs and entrepreneurs seeking funding. We show that ability to conduct such interactions remains an important factor for segments of the VC market, and especially for its internationalization. Using a sample of VC deals around the world, and the staggered implementation of travel restrictions across countries in response to the spread of Covid-19 in 2020, we find that investment by foreign VCs in a country drops after it halts inbound travel. Our analysis of possible channels suggests that information asymmetry between contracting parties is the main driver of the importance of F2F, while technological constraints on the transmission of information and cultural differences are less significant. |
| Keywords: | Face-to-Face Interaction, Investments, Venture Capital |
| JEL: | G24 F21 D81 E22 E44 |
| Date: | 2024–06–23 |
| URL: | https://d.repec.org/n?u=RePEc:sef:csefwp:721&r= |
| By: | Athanasakou, Vasiliki; Ferreira, Daniel; Goh, Lisa |
| Abstract: | We study changes in the number of CEO stock option grants. Despite some evidence of short-term rigidity, the number of options granted changes frequently over time. CEOs of firms with unusual investment patterns subsequently receive fewer stock options as part of their compensation packages. CEOs who hold exercisable deeply-in-the-money options (overconfident CEOs) also receive fewer stock options in subsequent periods. Our results show that past CEO behavior predicts stock option grants. These insights can inform theoretical discussion on option-granting behavior and, more broadly, on the board's re-contracting process. |
| Keywords: | CEO overconfidence; corporate investment; stock option grants; stock option rigidity; AAM requested |
| JEL: | G30 G32 J33 M41 M52 |
| Date: | 2022–08–01 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:115609&r= |
| By: | Fotios Kalantzis; Salma Khalid; Alexandra Solovyeva; Marcin Wolski |
| Abstract: | Using a novel cross-country dataset, which merges firm-level financials with information on firms’ participation in the European Unions’ Emissions Trading System (ETS), we investigate how firm performance is affected by tightening of environmental policies that put a price on pollution. We find that more stringent policies do not have a strong negative impact on the profitability of ETS-regulated or non-ETS firms. While firms report an increase in their input costs during periods of high carbon prices, their reported turnover is also higher. Among ETS-regulated firms which must purchase emission certificates under the EU ETS, tightening of climate policies in periods of high carbon prices results in increased investment, particularly in intangible assets. We establish robustness of our results using a quantile regression analysis, ensuring our key findings are not driven by distributional irregularities. Our findings provide support for the benefits of EU ETS on accelerating firms’ climate transition, while keeping firm-level financial costs at bay. |
| Keywords: | climate finance; climate change; decarbonization; firm-level analysis; Emissions Trading System (ETS) |
| Date: | 2024–06–28 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2024/135&r= |
| By: | Allaudeen Hameed (NUS Business School, National University of Singapore); Jing Xie (Department of Finance and Business Economics, Faculty of Business Administration, University of Macau); Yuxiang Zhong (School of Management, Huazhong University of Science and Technology) |
| Abstract: | We find strong international evidence favoring dividend payouts as a salient stock characteristic affecting future stock returns. We find that dividend-paying stocks outperform non-dividendpaying stocks globally by 0.58% per month, adjusting for exposure to global and regional risk factors. The degree of dividend payers’ outperformance relative to non-dividend payers is unrelated to tax rates on dividends. We show that the dividend premium comes from the payers’ superior performance during ex-dividend months and the inflated ex-dividend month return partially reverses in the following month. The dividend premium co-moves across countries, especially between countries where ex-dividend dates are clustered in the same calendar month, and it is higher following market downturns. Collectively, our evidence points to dividend premium reflecting investor demand for dividends, particularly during dividend payment months. |
| Keywords: | Dividend premium; Return comovement; International studies; Asset pricing |
| JEL: | G12 G35 N20 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:boa:wpaper:202405&r= |
| By: | Han, Seoni (KOREA INSTITUTE FOR INTERNATIONAL ECONOMIC POLICY (KIEP)) |
| Abstract: | Digital technology is gaining attention as a game changer to reshape the landscape of Africa’s financial industry. This widespread adoption of mobile money has significantly broadened financial accessibility and reduced the proportion of the financially excluded population. The transformation of the financial industry was further accelerated by the COVID-19 pandemic with a surge in online payments and increased fintech activities. Digital finance has arisen as a solution to address the economic and non-economic constraints in the financial market, such as transaction costs, information asymmetry between financial institutions and customers, and uncertainty in outcomes of financial services. Digital finance strengthens economic resilience of individuals and households by offering a broader spectrum of strategies for risk mitigation and risk sharing. In Kenya, mobile money penetration has facilitated financial management for low-income groups, increased women’s labor market participation, and reduced poverty rates. The access to finance of small and medium-sized enterprises is especially crucial in developing countries. Limited access to financial services poses significant challenges for SMEs, obstructing their ability to operate seamlessly, increase sales, and boost exports. In Sub-Saharan Africa, only about one-fifth of SMEs can gain access to loans through traditional financial institutions. Han et al. (2023) conducts on an empirical analysis of Kenyan firms and finds that the firms’ use of mobile money is positively correlated with their financial accessibility, and their investment activities in both tangible assets (fixed assets) and intangible assets (R&D expenditure). Korea has the potential to strengthen its cooperation with Africa in digital finance and the financial sector by actively participating in international initiatives for financial inclusion, promoting more private investments into the financial sector or fintech industry in Africa, enhancing Africa's digital competitiveness in digital infrastructure and skilled workforce, and finally supporting digital transformation in the context of regional integration. |
| Keywords: | Africa; Digital technology; Digital Finance; Financial Inclusion |
| Date: | 2024–05–31 |
| URL: | https://d.repec.org/n?u=RePEc:ris:kiepwe:2024_015&r= |