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on Corporate Finance |
| By: | Behringer, Jan; van Treeck, Till; Victor, Vincent |
| Abstract: | This paper investigates the role of family firms in the fall of the labor share and rise in corporate saving in Germany from 1993 to 2019. Combining a new Family Ownership and Governance (FOG) database with financial data, we analyze 929 publicly listed firms. Our findings show that firm-level labor share declines are widespread in Germany, contrasting with findings from the U.S. that link this trend to a few fast-growing superstar firms. Family firms, particularly in manufacturing, experienced sharper decreases in the labor share and stronger increases in corporate saving compared to non-family firms. The level of family involvement in Germany's two-tier board system (management and supervisory board) further affects these outcomes. Despite paying lower wages, we find no evidence that family firms provide greater employment stability. Our results challenge global generalizations about the drivers of the labor share and corporate saving, while emphasizing the macroeconomic relevance of family firms, especially in Germany's corporate sector. |
| Keywords: | Labor share, corporate saving, family firms |
| JEL: | D22 D33 G32 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ifsowp:313637 |
| By: | Enriques, Luca; Nigro, Casimiro A.; Tröger, Tobias |
| Abstract: | Policymakers around the globe have sought to stimulate Venture Capital (VC) investments, and an extensive literature has inquired into the institutional determinants of a vibrant VC market, including corporate law. We contribute to that literature by exploring the significance of corporate law for VC contracting and hence VC investments. Corporate law's relative rigidity or flexibility is key to the efficiency of the contractual technology governing VC deals. Importantly, it can hamper such transactions through a number of "constraints, " which we have identified in a companion paper. To illustrate our point, in another companion paper, we take German and Italian corporate laws as two case studies and show how they are largely averse to VC contracting. In addition, we show that the regulatory constraints they impose stem from blackletter corporate law much less often than from scholarly constructs and courts' interpretations. This chapter anticipates two objections that cast doubt over the importance of our findings as to the construction of vibrant VC markets in Germany and Italy. Specifically, the first of these objections is that VC funds and entrepreneurs planning to run their startups in Germany and Italy can circumvent the strictures of local corporate laws by incorporating abroad, and the other is that formal contracts are inconsequential in VC deals, meaning that the regulatory constraints we document are irrelevant. Meanwhile, the chapter also shows that the detailed understanding of regulatory constraints unveiled by our research can inform more effective policymaking. Ultimately, we make two policy recommendations: first, we propose the adoption of a statutory provision that would explicitly insulate the arrangements that typically shape U.S. VC deals from undue interventions; and, second, we argue in favor of a standard charter aligned with U.S. VC transactional practice that the law itself should declare entirely enforceable. |
| Keywords: | Comparative Corporate Law, Comparative Corporate Governance, Entrepreneurship, Financial Contracting, Private Ordering, Startups, Venture Capital, Entrepreneurial Finance |
| JEL: | G38 K22 L26 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:safewp:313650 |
| By: | Enriques, Luca; Nigro, Casimiro A.; Tröger, Tobias |
| Abstract: | Venture capital ("VC") has built a solid reputation for spurring innovation and economic growth, thus emerging as a crown jewel of the U.S. economy since the 1980s. The development of the U.S. VC market has benefited from the enabling nature of U.S. (Delaware) corporate law, which allows parties to devise a complex contractual framework that economists consider the best realworld solution to the market frictions bedeviling the finance of high-tech innovative projects. The law and finance literature has paid attention to corporate law as one of the determinants of VC investments by examining how variations in shareholder protection shape VC contracting. It has underscored the importance of flexible corporate law to enable the tailor-made arrangements that define VC-backed firms' unique governance structure. Vice versa, it has also documented anecdotally how mandatory corporate laws can impede the adoption and use of some specific components of the U.S. contractual framework. This article contributes to this literature, first, by conceptualizing, in a general theoretical framework, the role that flexible or rigid corporate law in action plays in supporting or hindering VC. Second, it identifies the channels through which mandatory corporate law constrains VC contracting. Third, it documents the real-world significance of these phenomena by illustrating how the constraints stemming from the corporate law regimes in force in two European jurisdictions, namely Germany and Italy, impact the transplant of the contractual framework governing VC deals in the U.S. |
| Keywords: | Comparative Corporate Law, Comparative Corporate Governance, Entrepreneurship, Financial Contracting, Private ordering, Start-ups, Venture Capital |
| JEL: | G38 K22 L26 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:safewp:313649 |
| By: | Nobuaki Hamaguchi (Research Institute for Economics and Business Administration, Kobe University and Research Institute of Economy, Trade and Industry, JAPAN); Joao Carlos Ferraz (Institute of Economics, Federal University of Rio de Janeiro, BRAZIL) |
| Abstract: | The objective of this article is to determine and analyse the factors behind the growth of Japanese startups. The framework of reference is derived from the Resource Based View of the firm (Penrose 2009) and the quantitative analysis relies on data from a survey carried out in 2022 with 753 Japanese startups. The article assesses internal (entrepreneur, workforce, innovation) and external (finance, knowledge access and location) resources under uncertainty. Econometric findings suggest that larger but younger firms with a domestic market orientation, and experienced entrepreneurs drive growth, while intellectual property ownership and equity financing for fixed capital investment positively impact economic success. Market-product mismatches and weak supplier quality hinder growth, and Tokyo's location benefits ICT start-ups but not others. Employment growth, though weakly linked to sales growth is strongly influenced by business confidence and access to skilled labour and investors. These findings provide strategic insights to inform policies to foster start-up success in Japan. |
| Keywords: | Internal resource; External resource; Uncertainty |
| JEL: | M13 O32 G32 R58 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:kob:dpaper:dp2025-05 |
| By: | Mario Cerrato; Shengfeng Mei |
| Abstract: | Cooperman et al. (2025) show that the covariance of banks’ funding costs and credit line drawdowns is debt overhang cost to the bank’s equity holders (Myres, 1974). In this paper, we start from this important result and extend it by showing that central banks’ quantitative easing (QE) can mitigate this cost. We focus on the COVID-19 shock. We show empirically that funding costs generate frictions related to banks’ shareholders (debt overhang cost), and banks transfer the cost to the credit lines’ prices. Our novel econometric analysis, event studies, and theory suggest and formalise its mechanism. Our findings shed further light on the intricate relationship between banks’ funding costs and related debt overhang (Andersen et al. 2019), but, crucially, focusing on an important source of credit for firms: credit lines. |
| Keywords: | Quantitative Easing, Central Bank, Debt Overhang, Credit Line |
| JEL: | G01 G21 G28 G32 E44 E58 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:gla:glaewp:2025_03 |
| By: | Sedki Zaiane (National Research University Higher School of Economics) |
| Abstract: | This study investigates the impact of women on boards on bank risk-taking in the MENA context and whether a critical mass of women on boards affects bank risk. The influence of woman directors on bank risk is studied using a sample of 126 commercial banks for the period 2007–2020. A dynamic panel threshold method is adopted in order to investigate the critical mass of woman on boards and it is impact on risk. The findings suggest a nonlinear association between women on boards and bank risk-taking confirming the critical mass hypotheses. The results show that the percentage of women on the board matter in shaping risk decisions. More precisely, we find that there is a negative and significant impact only when the proportion of women exceeds a certain threshold. A set of robustness checks confirms our findings. The findings highlight the importance of achieving a critical mass of women on boards to influence corporate governance and risk management. Therefore, policies should aim to surpass the empirically determined threshold to achieve a meaningful reduction in risk-taking. While most studies on this topic either assume a specific critical percentage or treat the relationship as linear, this research uses a threshold regression model to empirically determine the threshold that goes beyond simply assuming a critical percentage. |
| Keywords: | Women on Boards, Bank Risk-Taking, Critical Mass, Panel Threshold Regression, MENA region |
| JEL: | Z |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:hig:wpaper:98/fe/2025 |