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on Corporate Finance |
| By: | Huu Nhan DUONG; Jota ISHIKAWA; Katsumasa NISHIDE; S. Ghon RHEE |
| Abstract: | This study examines the impact of geopolitical risk (hereafter GPR) on the behavior of multinational manufacturing firms from Japan. We construct firm-level exposures to GPR indices using data on foreign direct investment and international trade. We find that only large firms respond to GPR, whereas small firms exhibit no significant reaction. Furthermore, the effect of GPR on accounting-based decisions, such as cash holdings and investment, varies depending on firms’ modes of internationalization. In particular, the results indicate that firms exposed to GPR through FDI reduce asset-side variables, such as cash holdings and capital expenditures. |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:eti:dpaper:25029 |
| By: | Björn Imbierowicz; Arne Nagengast; Esteban Prieto; Ursula Vogel; Arne J. Nagengast |
| Abstract: | The pace of globalization has slowed since the global financial crisis, raising concerns about widespread deglobalization and market fragmentation. We examine the effects of a deglobalization shock on bank lending, firm internal capital markets, and the real economy. Leveraging a unique dataset that combines a credit register with foreign direct investment (FDI) data, we are able to observe both domestic and cross-border credit exposures of German banks as well as internal capital market dynamics within multinational corporations (MNCs) – a feature rarely available in other countries’ data. We analyze the response to the Brexit referendum shock. On average, German banks reduced lending to United Kingdom (UK) firms following the shock due to increased uncertainty about future losses. More prudent banks reduced their credit more extensively, and less profitable subsidiaries experienced greater reductions. However, UK subsidiaries of large MNCs, with access to internal capital markets, offset this credit supply shock through internal funding, shielding them from negative real effects. We find that non-UK subsidiaries play a crucial role in internal capital markets by securing external financing and reallocating funds to support UK affiliates. Well capitalized banks reallocated lending to firms outside the UK, particularly those of German MNCs. Our findings underscore that while international financial frictions following deglobalization shocks can imply negative real effects, firms integrated into global networks mitigate these impacts through internal capital markets. |
| Keywords: | bank lending, deglobalization shock, policy uncertainty, real-financial linkages, internal capital markets |
| JEL: | F23 F34 F36 G21 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11775 |
| By: | Arnemann, Laura; Buhlmann, Florian; Ruf, Martin; Voget, Johannes |
| Abstract: | In this paper, we investigate the effect of higher personal income taxes on CEO and firm performance in publicly traded US firms. In response to higher taxes on compensation, CEOs are less likely to reach performance goals and spend more time working in boards outside of their firm. At the same time, firm performance drops before eventually recovering as investment projects with below average profitability are disregarded and due to adjustments in CEO compensation. |
| Keywords: | Executive Compensation, Personal Income Taxation, Firm Performance |
| JEL: | H24 M12 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:zewdip:313010 |
| By: | Johannes Fuchs; Paul P. Momtaz |
| Abstract: | After initial coin offerings (ICOs), decentralized digital platforms (DDPs) decide whether to go public or remain private. We explore the implications of the public-versus-private decision for the growth and decentralization of DDPs. Employing a difference-in-differences framework, we find that public DDPs scale faster post-listing relative to matched private DDPs. An important driver behind public DDPs’ superior growth is a spillover effect of financial speculation on fundamental platform activity, especially when DDPs are undervalued, hastening network effects. The going-public decision also facilitates DDP decentralization, although this stems mostly from the left tail of the token ownership distribution, while blockholders largely remain in control. Exploring the trade-off between going public through token exchange listings and remaining private with the help of institutional investors, we find that crypto fund-endorsed token listings yield more platform growth than unendorsed listings, while crypto fund backings without listings create the least value. Overall, our study suggests that early-stage startups may economically benefit from tokenization and creating liquid markets for venture tokens. |
| Keywords: | entrepreneurial finance, decentralized platforms, tokenization, blockchain technology |
| JEL: | G24 G32 K22 L26 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11760 |
| By: | Kazakis, Pantelis |
| Abstract: | The rapid adoption of artificial intelligence (AI) in the corporate world has raised important questions about its impact on firm performance. This paper examines whether investments in AI—measured by the share of AI-skilled workers—are associated with improvements in firm efficiency. The analysis reveals that AI investment alone does not lead to higher efficiency. That is, firms employing more AI-skilled labor do not, on average, perform more efficiently than others. However, the results show that this relationship depends on firm context. Firms operating in more competitive markets appear to benefit more from AI investment. Additionally, firms that engage more heavily in tax avoidance also realize greater efficiency gains from AI, possibly due to their more aggressive or strategic resource allocation practices. |
| Keywords: | artificial intelligence (AI), firm efficiency, market power, tax avoidance |
| JEL: | D40 E22 G30 H26 L11 |
| Date: | 2025–04–02 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:124246 |
| By: | Ferri, Valentina; Gallo, Giovanni; Scicchitano, Sergio |
| Abstract: | The COVID-19 pandemic triggered widespread economic disruptions, raising concerns about surging bankruptcy rates globally. Italy, one of the hardest-hit countries, faced significant risks of business insolvency. This paper empirically investigates the short-term impact of government interventions on bankruptcy rates in Italy during the initial phase of the pandemic. Using a national dataset of Italian firms and employing interrupted-time-series analysis, we find that bankruptcy rates declined significantly following the introduction of extensive economic support measures, including loan moratoria, guaranteed credit schemes, and direct grants. Our results suggest that these interventions mitigated liquidity constraints and prevented the immediate insolvency of firms, averting a sharp rise in bankruptcies despite severe economic contractions. However, we also highlight potential concerns regarding the postponement of insolvencies, contributing to the "zombification" of non-viable firms. The findings provide critical insights for policymakers regarding the balance between short-term economic stabilization and long-term market efficiency in crisis management. |
| Keywords: | Bankruptcy, COVID-19, Government interventions, Interrupted-time-series |
| JEL: | E65 G33 H12 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:glodps:1601 |
| By: | Keil, Samuel; Rahn, Robin; Saal, Konstantin; Schiereck, Dirk |
| Abstract: | With increasing competition among European stock exchanges, foreign listing is becoming an increasingly attractive option for German companies when Going Public. Some of them already decided for an IPO in the Scandinavian countries. Against this background, this study examines the success of such IPOs on the Nasdaq Nordic stock market, focusing on underpricing and firm-specific factors of short- and long-term performance. |
| Date: | 2025–03–28 |
| URL: | https://d.repec.org/n?u=RePEc:dar:wpaper:153930 |