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on Corporate Finance |
| By: | Raputsoane, Leroi |
| Abstract: | This study analyses the relationship between the attributes of a selected set of the minerals companies and corporate governance in South Africa. This is achieved by comparing the corporate governance rating of companies in the minerals sector to that of the companies in the other sectors of the economy against a set of attributes that comprise the sampled companies’ economic activity, size, market performance, financial performance and transparency. The empirical results have shown that autonomous corporate governance as well as the measures of transparency, required disclosure and additional disclosure, of the sampled companies have a statistically significant positive relationship with corporate governance, while the companies’ attributes that include the companies’ economic activity, size as well as market and financial performance do not have a statistically significant relationship with corporate governance. Consequently, the conclusion is no discernible difference in corporate governance of companies in the minerals sector compared to companies in the other sectors of the economy. |
| Keywords: | Corporate governance, Minerals companies, Companies’ attributes |
| JEL: | C13 D22 G3 |
| Date: | 2024–09–02 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:121906 |
| By: | Boris Nikolov (University of Lausanne; Swiss Finance Institute; European Corporate Governance Institute (ECGI)); Norman Schuerhoff (Swiss Finance Institute - HEC Lausanne); Zepeng Wang (University of Lausanne and Swiss Finance Institute) |
| Abstract: | Corporate financial leverage within competition networks is determined by both direct and indirect competitors. Using data on firms’ self reported competitors, we identify eleven stable competition communities within the U.S. economy, where firms are grouped into communities based on competitive interactions both within and across industries. We find a strong complementarity between a firm’s leverage and that of its community members, consistent with strategic interactions with both immediate peers and chain effects from the propagation of shocks affecting indirect peers. To achieve identification, we employ a granular instrumental variable approach. Our results highlight that firms’ financial strategies are shaped not only by direct competition but also by the broader competitive environment. |
| Keywords: | capital structure, strategic competition, financial complementarity, competitor networks |
| JEL: | G31 G32 L13 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:chf:rpseri:rp2445 |
| By: | Anastasia Litina (Department of Economics, University of Macedonia); Luca J. Uberti (Department of Economics (DEMS) at the University of Milano-Bicocca.); Skerdilajda Zanaj (DEM, University of Luxembourg) |
| Abstract: | In an era where gender norms vary widely and quite frequently hint to gender inequality in the labor market, previous studies have shown that higher gender diversity is associated with better economic outcomes. Using a novel dataset that provides granular data at the firm level, we test this hypothesis in the context of gold mining companies. We concentrate on a relatively overlooked aspect, namely cost efficiency, and study whether a larger number of women directors is associated with more efficient use of a company’s resources. We use a stochastic frontier methodology to estimate the cost-efficiency of gold mines for a representative sample of global mining companies. Using fixed-effects and instrumental-variable regressions, we find that an increase in female representation on the parent company’s board translates into significant efficiency gains for the mining operations controlled by the parent company. Specifically, a one standard-deviation increase in the share of female directors increases cost-efficiency by 12 percent of a standard deviation of our main efficiency index. This finding is robust to using alternative instruments for female representation, alternative stochastic-frontier methodologies, and different specifications of the main estimating equation. Interestingly, the efficiency gains induced by female directors do not necessarily improve the overall performance of the company as measured by accounting profitability. Yet, cost efficiency is associated with higher cost-sustainability and long-term viability of a firm, thereby rendering it more resilient. This hints that the underlying mechanism is consistent with evidence that suggests that women directors exert a higher monitoring and audit effort than their male counterparts. Our results provide additional evidence of a distinctly female style in corporate leadership and shed light to different aspects of a firm’s productivity. Understanding differences in styles of leadership, allows policy makers to implement more inclusive policies in the labor market and firms to endorse diversity in leadership. This ultimately can lead to more inclusive norms in the labor market. |
| Keywords: | Gender; Boards of directors; Cost efficiency; Stochastic Frontier Analysis; Mining |
| JEL: | D22 D24 G39 M14 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:mcd:mcddps:2024_09 |
| By: | Wafaa El Gouz (Mohamed V University, Morocco); Azzeddine Allioui (ESCA Ecole de Management, Morocco) |
| Abstract: | The purpose of this study is to analyze the transformational influence that financial training has on the financial management practices of small enterprises in Morocco and to investigate the subsequent socioeconomic contributions that will result from this training. An all-encompassing research framework that incorporates both quantitative and qualitative research approaches is used in this study, which is conducted within the setting of a rapidly expanding small company sector that is experiencing financial difficulties. Research methods such as questionnaires, interviews, and case studies are applied in order to evaluate the effectiveness of financial training programs in providing small businesses with improved capacities to make responsible financial decisions. The results are intended to provide light on the actual effects of financial training, which include improvements in financial measures, risk management, and investment choices inside the organizations that were targeted. The study investigates not only the consequences on a micro level, but also the implications on a macro level that strengthened financial management will have on the socioeconomic landscape of Morocco as a whole. This research makes a contribution to the current body of knowledge by shedding light on the complex interaction that exists between financial management, financial training, and the generation of socioeconomic value. It is anticipated that the findings will provide policymakers, educators, and business leaders with information on effective techniques to promote financial resilience within small firms, hence creating sustained contributions to the socioeconomic growth of Morocco. |
| Keywords: | financial management, financial training, risk management, small businesses |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:smo:raiswp:0387 |
| By: | Fang, Francis Haoyu; Vlaicu, Razvan |
| Abstract: | Private firms establish relationships with banks in local markets to obtain adequate financing for their operations through credit and loans. As major banks reduced their branch networks in recent years, many firms have lost access to their local bank. We evaluate the impact of a large number of branch closures on firm operations, wages and employment, and economic output in Brazil from 2011 to 2021. We adopt a difference-in-differences strategy with staggered treatment timing, employing both two-way fixed effects and Callaway-Sant'Anna estimators. Our study finds that bank branch closures result in a reduction in establishments with active operations from 1.2% initially to 8.1% within 4-7 years, a 0.5 decline in weekly hours of formal employment, and a compression in the real wage distribution. Micro firms, trade and service firms, and agricultural firms are found to be the most vulnerable. Our study highlights the importance of physical bank branches that provide financial access and meet the localized financial demand of several types of firms. |
| Keywords: | Bank branch closures;Employment;Firm activity;Economic Impact;Financial Access;Brazil;Firm operations |
| JEL: | G21 J21 R11 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:idb:brikps:13645 |
| By: | Sonia B. Di Giannatale (Division of Economics, CIDE); Itza Tlaloc Quetzalcoatl Curiel-Cabral (Division of Economics, CIDE); Genaro Basulto (Tepper School of Business, Carnegie Mellon) |
| Abstract: | We propose a dynamic principal-agent model where the agent's initial bargaining power is the state variable and a law of motion that governs their bargaining power's behavior. Our numerical results indicate that agents with the same relative risk aversion might show dif- ferent paths of their bargaining powers, and that more powerful the incentives ensue higher variability in the agent's salary. We implement an empirical equation to identify CEOs' bar- gaining power and find a set of values of the state variable for which the proposed dynamics explains well the relationship between firm performance and CEO compensation. Finally, by analyzing a panel sample of annual observations for 9, 084 CEOs in the U.S., we conclude that our estimates are consistent with empirical findings of a slow yearly growth in CEOs' compensation. |
| Keywords: | Dynamic Analysis, Contract Theory, Executive Compensation |
| JEL: | C61 D86 J33 |
| Date: | 2023–01 |
| URL: | https://d.repec.org/n?u=RePEc:emc:wpaper:dte630 |