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on Corporate Finance |
| By: | Alfonsina Iona (School of Economics and Finance, Queen Mary University of London); Leone Leonida (King’s Business School, King’s College London) |
| Abstract: | Does corporate finance literature accurately identify firms facing homogeneous financing constraints when studying the impact of financing constraints on corporate investment? The short answer is no. The common practice of using pre-determined percentiles of a financing constraint metric compromises the validity of conclusions. Our empirical framework identifies four classes of firms facing homogenous financing constraints independently of the financing constraints metric used. Moreover, we show that while popular metrics of financing constraints may capture financing constraints reasonably well, differently from previous studies the sensitivity of investment to cash flow is inverse basin-shaped. We provide an understanding of this shape by studying investment and financial policies jointly, under different regimes of financing constraints. |
| Keywords: | Homogeneous Financing constraints; Sorting scheme; Inverse basin shaped investment–cash flow sensitivity; Interdependence of financial policies. |
| JEL: | C13 D25 G30 G31 G32 |
| Date: | 2024–10–09 |
| URL: | https://d.repec.org/n?u=RePEc:qmw:qmwecw:982 |
| By: | Koki Kanazawa (Digital Research Assistant, RONIN International); Kyosuke Kurita (School of Economics, Kwansei Gakuin University) |
| Abstract: | Using unique data on the amount of money held by the Indonesian three largest banks in each district and firm-level data of Indonesian micro enterprises in 2013 and 2014, we examine effects of four types of partnership with a private company, NPO/NGO, bank, and the government on access to finance of micro enterprises. Previous studies consider social capital as unofficial connection with other organizations. However, we newly examine an effect of official contracts as partnership and contribute to the literature by investigating many types of partnerships which have never considered and considering effect of supplier's side by utilizing data on bank's money in our estimation. It is found that firms with partnership with NPO/NGO are more likely to obtain loaned money as well as that with a bank. However, indicators of firms' performance and ability, such as ROA, entrepreneurs' education, and firms' size are statistically insignificant for loan approval. In addition, the amount of banks' money does not have statistically significant effect on loan approval. Therefore, it becomes explicit that Indonesian banks cannot effectively allocate loans to private sector because of corruption between specific private companies and public institutions and a simple policy like increasing money holdings of banks has no effect on distributing corporate loans to enterprises. |
| Keywords: | Partnership, SMEs, Bank loan, Indonesia, Microeconometrics |
| JEL: | G21 L14 O16 Z13 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:kgu:wpaper:279 |
| By: | Suhasto, RB. Iwan Noor; Anggraeny, Shinta Noor; Kirowati, Dewi; Khasanah, Alif Fidyah Nur |
| Abstract: | The aim of this research is to examine the effects of firm size, leverage, and free cash flow on earnings management and firm value. The population for this study consists of all companies listed on the LQ45 index at the Indonesia Stock Exchange from 2018 to 2022. The sample was selected using purposive sampling, resulting in 22 companies. This study employs a quantitative approach, utilizing IBM SPSS 23 for data analysis, with hypothesis testing conducted through Structural Equation Modelling (SEM). The results indicate that the proportion of firm size has a negative and insignificant effect on earnings management and firm value. Conversely, leverage growth and free cash flow have a positive and significant impact on both earnings management and firm value. |
| Date: | 2024–09–19 |
| URL: | https://d.repec.org/n?u=RePEc:osf:osfxxx:bj4cr |
| By: | Marcus Dejardin (University of Namur); Luca Farè (University of Bergamo); Éric Toulemonde (University of Namur) |
| Abstract: | This study examines the impact of a bankruptcy system reform process implemented in Slovenia on access to credit conditions and investments in innovation by small businesses. The reform process increased the recovery rate and reduced the time to resolve insolvency procedures, thus improving the efficiency of the bankruptcy system. Leveraging a dataset of 1, 245 Slovenian micro-, small-, and medium-sized enterprises, our results document an increase in innovation investments by small businesses after the reform process due to more accommodating access to credit conditions. |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:nam:defipp:2405 |
| By: | Xingnan Xue; Liwen Wang (SAFTI - Shenzhen Audencia Financial Technology Institute); Nan Hu |
| Abstract: | This study investigates how economic policy uncertainty affects within-firm corporate social responsibility (CSR) disclosure over time. Based on the institutional perspective, we propose that facing higher economic policy uncertainty, firms likely issue CSR reports that are similar to their own past reports (i.e. CSR time-series disclosure similarity), reflecting symbolic actions in corporate CSR disclosure. Further, this effect weakens for firms with state ownership but strengthens when those with financial constraints or experience net losses. Empirical results derived from a sample of Chinese listed firms from 2009 to 2021 offer strong support for our hypotheses. Overall, our study contributes to the literature on CSR disclosure and research on the consequences of economic policy uncertainty. |
| Keywords: | Economic policy uncertainty, Corporate social responsibility, Disclosure similarity, China |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-04699217 |