|
on Corporate Finance |
| By: | Kim, Hyun-Seok (Korea Institute for Industrial Economics and Trade) |
| Abstract: | In recent years, global financial markets have experienced unprecedented volatility due to a confluence of factors, including the COVID-19 crisis, the Russian-Ukraine war, the US-China rivalry and strategic economic decoupling, conflict in the Middle East, and severe supply chain disruptions. Central banks responded to the inflationary pressures caused by these and other factors with aggressive monetary policy, which has in effect meant a sharp increase in interest rates across the globe. Lingering uncertainties in financial markets have also contributed to high lending rates, as greater risks drive financial institutions and investors in corporate financing markets to demand higher returns on their investments. And rates seem unlikely to fall in the long term, as ongoing changes to the structure of the global economy — the evolving dynamics of globalization, falling birth rates, and an aging population — exert upward pressure on inflation, anchoring interest rates at current levels. As a consequence, many firms have struggled to access funding through direct finance channels (equity sales and bond issuance) and instead rely mostly on indirect finance (loans). This owes partially to the fact that, as rates grew in 2022 and stayed high in 2023, corporate debt burdens ballooned, raising the risk of widespread bankruptcies. In this study, I examine how greater uncertainties in financial markets affect corporate borrowing costs. In Korea, the two key capital markets with an influence on corporate finance are the loan market, where banks play a central role, and the corporate bond market, where firms issue bonds to raise funds. |
| Keywords: | corporate debt; corporate financing; capital financing; corporate lending; corporate bond market; capital markets; Korea; KIET |
| JEL: | G30 G31 G32 G34 G38 O16 |
| Date: | 2024–09–01 |
| URL: | https://d.repec.org/n?u=RePEc:ris:kieter:2024_025 |
| By: | von Essen, Emma (Uppsala University); Smith, Nina (Aarhus University) |
| Abstract: | The paper explores the impact of the gender composition of Boards of Directors on gender diversity and earnings gaps among executive management using administrative data on all Danish private sector firms from 1995 to 2018. We find that it is not the quantity of women directors but the quality of the women entering the board that matters in generating positive spillovers on the gender gaps within the firms. Quality is viewed as the power, conceptualized as the possible influence in the boardroom, and operationalized as the position and board experience of the directors. A way of channeling power is also through the director's networks. Powerful women directors increase spillovers, while male directors have a negative impact. However, male directors' connections to females positively decrease the gender gaps. Interestingly, the spillovers are not large enough to generate a sustained change in the gender composition of the executive board, mainly because women executives exit to a larger extent than men. |
| Keywords: | board of directors, gender diversity, spillover effects |
| JEL: | J16 M12 M51 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17401 |
| By: | Campiglio, Emanuele; Spiganti, Alessandro; Wiskich, Anthony |
| Abstract: | Access to finance is a major barrier to clean innovation. We incorporate a financial sector in a directed technological change model, where research firms working on different technologies raise funding from financial intermediaries at potentially different costs. We show that, in addition to a rising carbon tax and a generous but short-lived clean research subsidy, optimal climate policies include a clean finance subsidy directly aimed at reducing the financing cost differential across technologies. The presence of an endogenous financing experience effect induces stronger mitigation efforts in the short-term to accelerate the convergence of heterogeneous financing costs. This is achieved primarily through a carbon price premium of 39% in 2025, relative to a case with no financing costs. |
| Keywords: | carbon tax; endogenous growth; green financial policy; innovation policy; low-carbon transition; optimal climate policy; sustainable finance |
| JEL: | H23 O31 Q55 Q58 G18 |
| Date: | 2024–11–30 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:126063 |
| By: | Cowx, Mary (Arizona State U); Lester, Rebecca (Stanford U); Nessa, Michelle (Michigan State U) |
| Abstract: | We study the tax payment and innovation consequences of limiting the tax deductibility of research and development (“R&D†) expenditures. Beginning in 2022, U.S. companies are required to capitalize and amortize R&D rather than immediately deduct these expenditures. We utilize variation in U.S. firms’ fiscal year ends to test the effects of the R&D tax change in a difference-in-differences framework. We first document that affected U.S. firms’ cash effective tax rates increase by 11.9 percentage points (62%), on average. We then test and find decreases in R&D investment among domestic-only, research-intensive, and constrained firms. In aggregate, these estimates translate to a reduction in R&D of $12.2 billion in the first year among the most research-intensive firms. Further, we observe decreased capital expenditures and share repurchases among affected companies, suggesting that firms also reduced other types of investment and shareholder payout to meet the increased cash tax liability. The paper provides policy relevant evidence about the significant real effects of limiting innovation tax incentives. |
| JEL: | H25 M41 M48 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:ecl:stabus:4192 |
| By: | Phouphet KYOPHILAVONG (National University of Laos); Shandre Mugan THANGAVELU (Sunway University, University of Adelaide); Inpaeng SAYVAYA (Champasack University) |
| Abstract: | This paper examines the effects of urban amenities on the probability of firms exporting and firm productive performance in the Lao People’s Democratic Republic (Lao PDR). A logit model was used, finding that urban amenities have a positive and statistically significant effect on firm productivity. However, the results do not indicate any impact on the probability of firms exporting. Based on these results, both the government and private sector should invest more in improving urban amenities to facilitate efficient business operations and to enhance firm competition in global markets. In addition, the government should invest more in human capital and production facilities, especially in information and communications technology, to increase firm performance as well as the probability that they will export. |
| Keywords: | productivity, urban amenities, exporting |
| JEL: | O12 L21 L11 D24 |
| Date: | 2024–06–18 |
| URL: | https://d.repec.org/n?u=RePEc:era:wpaper:dp-2024-11 |
| By: | Demirer, Mert (MIT); Karaduman, Omer (Stanford U) |
| Abstract: | Using rich data on hourly physical productivity and thousands of ownership changes from U.S. power plants, we study the effects of acquisitions on efficiency and underlying mechanisms. We find a 2% average increase in efficiency for acquired plants, beginning five months after acquisitions. Efficiency gains rise to 5% under direct ownership changes, with no significant change when only parent ownership changes. Investigating the mechanisms, three-quarters of the efficiency gain is attributed to increased productive efficiency, while the rest comes from dynamic efficiency through changes in production allocation. Our evidence suggests that high-productivity firms buy underperforming assets from low-productivity firms and make them as productive as their existing assets through operational improvements. Finally, acquired plants improve their performance beyond efficiency by increasing output and reducing outages. |
| JEL: | G34 L22 L25 L40 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:ecl:stabus:4209 |