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on Corporate Finance |
| By: | Sabrina Pisano (PARTHENOPE - Università degli Studi di Napoli “Parthenope” = University of Naples); Luigi Lepore (PARTHENOPE - Università degli Studi di Napoli “Parthenope” = University of Naples); Raffaela Nastari (PARTHENOPE - Università degli Studi di Napoli “Parthenope” = University of Naples); Bakr Al‐gamrh (ESC [Rennes] - ESC Rennes School of Business) |
| Abstract: | This study investigates the relationship between corporate governance characteristics and environmental decoupling, that is, the misalignment between environmental disclosure and environmental performance. We analyze a sample of 728 European companies (3061 firm-year observations) belonging to 18 industries and 20 different countries from 2017 to 2023. The results show that companies tend not to disclose all the environmental actions implemented, indicating underreporting behavior. The results also reveal that board independence, board gender diversity, and the presence of a CSR committee mostly foster a reduction in environmental decoupling. Furthermore, these corporate governance characteristics are also found to be effective mechanisms in enhancing companies' environmental performance. However, only the presence of a CSR committee has a strong positive effect on the quantity of environmental information disclosed. Although companies tend to underreport environmental data, the level of environmental decoupling decreased in 2023, demonstrating that the introduction of more stringent requirements for environmental disclosure (i.e., the Corporate Sustainability Reporting Directive 2022/2464/EU) could promote better alignment between sustainability disclosure and performance. The findings provide important recommendations for companies, regulators, and standard setters on how to design and configure the board of directors to align environmental disclosure and performance.This is an open access article under the terms of the Creative Commons Attribution-NonCommercial License, which permits use, distribution and reproduction in any medium, provided the original work is properly cited and is not used for commercial purposes. |
| Keywords: | independent board member, disclosure-performance gap, CSR committee, Corporate social responsibility, Board gender diversity, Agency theory |
| Date: | 2025–05–19 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05245351 |
| By: | Yanran Wu; Xinlei Zhang; Quanyi Xu; Qianxin Yang; Chao Zhang |
| Abstract: | We build a 167-indicator comprehensive credit risk indicator set, integrating macro, corporate financial, bond-specific indicators, and for the first time, 30 large-scale corporate non-financial indicators. We use seven machine learning models to construct a bond credit spread prediction model, test their spread predictive power and economic mechanisms, and verify their credit rating prediction effectiveness. Results show these models outperform Chinese credit rating agencies in explaining credit spreads. Specially, adding non-financial indicators more than doubles their out-of-sample performance vs. traditional feature-driven models. Mechanism analysis finds non-financial indicators far more important than traditional ones (macro-level, financial, bond features)-seven of the top 10 are non-financial (e.g., corporate governance, property rights nature, information disclosure evaluation), the most stable predictors. Models identify high-risk traits (deteriorating operations, short-term debt, higher financing constraints) via these indicators for spread prediction and risk identification. Finally, we pioneer a credit rating model using predicted spreads (predicted implied rating model), with full/sub-industry models achieving over 75% accuracy, recall, F1. This paper provides valuable guidance for bond default early warning, credit rating, and financial stability. |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2509.19042 |
| By: | Ashvin Gandhi; YoungJun Song; Prabhava Upadrashta |
| Abstract: | This paper studies how product market competition shapes the impact of private equity (PE) acquisitions on consumers. We examine nursing home buyouts and observe that PE-owned facilities exhibit greater competitive sensitivity: competing more aggressively when competitive incentives are strong and exploiting market power more aggressively when competitive incentives are weak. We find that PE-owned facilities are more sensitive to local market competition—even when comparing effects only across facilities purchased as part of the same acquisition—and are more responsive to a pro-competitive policy helping consumers compare facilities. This suggests that the competitive sensitivity of acquirers and the concentration of markets where acquisitions occur are important factors contributing to the effects of a merger, as well as that pro-competitive polices can reshape the effects of PE ownership on consumers. |
| JEL: | G3 G32 G34 G38 I1 I11 I18 L1 L11 L15 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34306 |
| By: | Marisa Agostini (Venice School of Management, Università Ca' Foscari Venice); Daria Arkhipova (Venice School of Management, Università Ca' Foscari Venice); Marco Fasan (Venice School of Management, Università Ca' Foscari Venice); Silvia Panfilo (Venice School of Management, Università Ca' Foscari Venice) |
| Abstract: | This study examines the key drivers of ESG risk disclosure, focusing on stakeholders, shareholders, and management. While legitimacy theory suggests firms under scrutiny should disclose more ESG information to secure stakeholder support, findings show these firms often provide lower-quality disclosures, potentially reducing accountability. This indicates that companies may perceive ESG risk reporting as a threat rather than an opportunity. Shareholders, analyzed through agency theory, are expected to push for better ESG disclosures if aligned with financial interests or personal values. However, no significant relationship was found between board characteristics and ESG disclosures, suggesting limited shareholder influence. Management incentives play a notable role, as firms with sustainability-linked executive compensation disclose higher-volume ESG risk information, supporting evidence that such incentives enhance ESG performance. |
| Keywords: | Risks, Environmental Social Governance (ESG), Content analysis, Disclosure quality, Non-Financial Reporting Directive (NFRD), legitimacy theory, agency theory |
| JEL: | M41 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:vnm:wpdman:223 |
| By: | Anmol Bhandari; Paolo Martellini; Ellen McGrattan |
| Abstract: | We develop a theory of firm dynamics and capital reallocation in private firms and use it to study the taxation of business income, capital, and capital gains. Intangible assets—such as customer bases and trade names—are created using owners' time and are infrequently traded in bilateral meetings. We discipline the model with U.S. administrative data, which report purchase prices and counterparties in asset transfers, allowing us to calibrate the investment technology and output elasticity for otherwise unobservable intangible capital. The equilibrium features dispersion in marginal product of capital, transferable share of firm value, and return on business wealth. Introducing taxation, we find that capital gains taxes are most distortionary, primarily by discouraging entry and reallocation of capital, whereas income taxes are least distortionary. |
| JEL: | E22 E6 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34319 |
| By: | Takuma Kunieda (School of Economics, Kwansei Gakuin University); Kei Kuwahara (Kunieda Laboratory in School of Economics, Kwansei Gakuin University) |
| Abstract: | This paper empirically examines collateral constraints in the Kiyotaki and Moore [1997. Credit cycles. Journal of Political Economy 105(2), 211-248] model using land price data from three major prefectures in Japan: Tokyo, Osaka, and Hyogo. After confirming the stationarity of land prices, we estimate their dynamic equations and show that they follow a second-order autoregressive (AR(2)) process, consistent with the presence of binding collateral constraints. We further apply the supremum Wald test and identify structural breaks at the onset of the early 1990s asset price bubble collapse. These results suggest that financial frictions played a critical role in shaping land price dynamics in Japan's regional economies. Overall, our findings demonstrate that the Kiyotaki-Moore framework provides a useful tool for capturing the dynamic behavior of financially constrained economies. By providing new regional evidence, this study contributes to the literature on macroeconomics and financial market imperfections. |
| Keywords: | Collateral Constraints, Financial Frictions, Land Price Dynamics, Kiyotaki-Moore Model, Credit Cycles, Regional Economies. |
| JEL: | G12 E32 E44 R30 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:kgu:wpaper:300 |
| By: | Martin, Melissa; Timmermans, Oscar |
| Abstract: | Relative performance evaluation has become an increasingly common component of executive compensation contracts. We study how these incentive plans relate to corporate disclosure and predict that they introduce an incremental disclosure cost. This cost arises because disclosures can help competitors make better investment decisions, enhancing their performance and thereby reducing managers’ expected compensation. Consistent with this prediction, we find a negative association between relative performance plans and voluntary, value-relevant management forecasts, alongside a positive association with redactions in mandatory filings. This pattern is specific to plans with accounting-based metrics and absent for plans with price-based metrics. The results for price-based metrics are consistent with the idea that the incentive to reduce information asymmetry with market participants outweighs disclosure costs in these plans. The results for accounting-based metrics are more pronounced for managers whose plans provide stronger incentives and for those whose forecasts provide meaningful information spillovers to peers. Overall, this paper contributes the idea that relative performance plans can impose disclosure costs, thereby shedding light on contracting mechanisms that discourage disclosure—a less well-understood aspect of disclosure research. |
| Keywords: | information disclosure; capital markets; relative performance evaluation; proprietary costs |
| JEL: | D82 J33 L10 M12 |
| Date: | 2025–09–24 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:127506 |
| By: | Michael Waldman (Cornell University); Jan Zabojnik |
| Abstract: | Many models of the CEO market build on the classic analyses of Lucas (1978) and Rosen (1982) characterized by full information, a limited role for firm-specific human capital, and efficient allocation of workers across jobs and firms. But empirical evidence is not consistent with this approach. We explore an alternative focused on asymmetry of information between an executive's prospective employer and other potential employers, and an important role for firm-specific human capital. We show that our model better captures findings in the empirical literature concerning the CEO labor market than both the full information and efficient assignment approach and alternative models based on asymmetric information and inefficiencies. |
| Keywords: | CEOs, asymmetric employer learning, firm-specific human capital |
| JEL: | G14 G34 J62 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:qed:wpaper:1539 |
| By: | Petre Caraiani; Nazli Karamollaoglu; Cihan Yalcin |
| Abstract: | Using a novel and comprehensive database of Turkish firms that combines the Business Tendency Survey (BTS) with the Company Accounts Statistics, we analyze the determinants of expectation errors of Turkish manufacturing firms. We examine firm expectation errors for various variables, including those related to sales, exports, consumer and producer prices inflation rates. We investigate the impact of various firm characteristics and macroeconomic factors reflecting uncertainty (exchange rate volatility and Chicago Board Options Exchange Volatility Index- CBOE VIX) and monetary policy stance on firms’ absolute expectation errors. Using a fixed effects panel technique, we estimate that macro variables that control for uncertainty or volatility explain expectation errors better than firm-level variables. The rise in the exchange rate volatility and VIX is estimated to be associated with the worsening of the accuracy of expectations. The accuracy of expectations of sales improves with firm size while the accuracy of expectations errors for inflation rates declines with the share of short-term liabilities and liquidity ratio. |
| Keywords: | Expectation errors of firms, Firm heterogeneity, Sales, Exports and inflation rates, Macroeconomic uncertainty and volatility |
| JEL: | E31 D84 E37 G32 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:tcb:wpaper:2515 |
| By: | Cortina Lorente, Juan Jose; Raddatz, Claudio; Schmukler, Sergio; Williams, Tomas |
| Abstract: | This paper investigates how firms use green versus conventional debt and the associated firm- and aggregate-level environmental consequences. Employing a dataset of 127, 711 global bond and syndicated loan issuances by non-financial firms across 85 countries during 2012–23, the paper documents a sharp rise in green debt issuances relative to conventional issuances since 2018. This increase is particularly pronounced among large firms with high carbon dioxide emissions. Local projections difference-in-differences estimates show that, compared to conventional debt, green bond and loan issuances are systematically followed by sustained reductions in carbon intensity (emissions over income) of up to 50 percent. These reductions correspond to as much as 15 percent of global annual emissions. Green bonds contribute to reducing emissions by providing financing to large, high-emitting firms, whose improvements in carbon intensity have significant aggregate consequences. Syndicated loans do so by channeling a larger volume of financing to a wider set of firms. |
| Date: | 2025–10–02 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:11226 |
| By: | Masashige Hamano (Waseda University); Philip Schnattinger (Bank of England); Mototsugu Shintani (The University of Tokyo); Iichiro Uesugi (Hitotsubashi University); Francesco Zanetti (University of Oxford and CEPR) |
| Abstract: | We develop a simple model of financial intermediation with search and matching frictions between banks and firms. The model links credit market tightness -encapsulating the abundance of credit- to the search and opportunity costs of credit intermediation. Search costs generate lending to unprotable firms (i.e., zombies) and the opportunity costs of searching exert countervailing forces on the incentives for banks and firms to participate in zombie lending, generating an inverted U-shaped relationship between credit market tightness and the share of zombie lending. High bargaining power of firms decreases the opportunity cost of firms foregoing credit relationships, reduces the share of zombie firms and increases the efficacy of capital injections to reduce zombie lending. Using data for 31 industries in Japan over the period 2000-2019, we test and corroborate our theoretical predictions by constructing theory-consistent measures of credit market tightness and bargaining power. Consistent with our theory, the findings reveal that capital injections are more effective in industries with higher credit market tightness and greater bargaining power of firms. |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:cfi:fseres:cf597 |