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on Corporate Finance |
| By: | Burkart, Mike; Lee, Samuel; Petri, Henrik |
| Abstract: | We study the structure of public firm buyouts in a model that features the Berle-Means problem (lack of incentives) and the Grossman-Hart problem (holdout). We find that bootstrapping, debt in excess of funding needs, and upfront fees to bidders are socially optimal and increase buyout premiums. These elements make LBO financing tantamount to a “management contract” arranged by an outside manager to receive cash and incentives to manage a firm—except the cash is funded by excess debt imposed on the firm. Our model also rationalizes why PE firms collect fees from their equity partnerships and directly from target firms. |
| JEL: | G34 G32 |
| Date: | 2026–01–29 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:129543 |
| By: | Kaila, Matias; Pajarinen, Mika; Rouvinen, Petri; Ylhäinen, Ilkka |
| Abstract: | Abstract We analyze recent shifts in the financial conditions of Finnish enterprises, utilizing the European Central Bank’s survey data that captures the perspectives of both financial providers and targets. Our findings indicate that the financial environment for enterprises operating in Finland has recently tightened, both in absolute terms and relative to Nordic and European peers. These shifts have disproportionately affected growth-oriented and innovative enterprises that are pivotal to the structural renewal of the economy. The primary drivers of this contraction include Finland’s sluggish economic performance relative to its peers, a shift in risk appetite concerning future outlooks, and the realization of geopolitical risk following Russia’s war of aggression in Ukraine. Even by European standards, the Finnish business finance system remains exceptionally bank-centric. It is ill-suited for financing a future-facing economy rooted in intangible capital, high-risk ventures, and active ownership. To safeguard long-term renewal, the financial system must evolve toward a more market-driven structure with a greater emphasis on equity-based finance. |
| Keywords: | Business finance, Financial constraints, Banks, Creative destruction |
| JEL: | G21 G32 O16 G18 |
| Date: | 2026–03–06 |
| URL: | https://d.repec.org/n?u=RePEc:rif:briefs:176 |
| By: | Ambler, Kate; Bakhtiar, M. Mehrab; de Brauw, Alan; Uddin, Mohammad Riad |
| Abstract: | Credit market failures may reflect voluntary withdrawal by risk-averse borrowers in addition to supply-side constraints. We conduct a randomized trial with 1, 517 Bangladeshi households, offering cattle financing through conventional loans or profit-sharing contracts that spread risk between the farmer and the financial partner. Overall, interest in and take-up of the profit-sharing contracts were modestly higher than the conventional loans. However, conventional loan take-up was much lower among risk-averse farmers, and profit-sharing eliminated the take-up gap between risk-averse and non-risk-averse farmers. We find that it is male risk preferences that are associated with these decisions even when contracts explicitly target women. Livestock investment increases under both contracts with no evidence of moral hazard under profit-sharing. |
| Keywords: | gender; credit; financing; livestock; loans; smallholders; financial innovation; access to finance; risk; risk coping strategies; Bangladesh; Southern Asia; Asia |
| Date: | 2026–02–17 |
| URL: | https://d.repec.org/n?u=RePEc:fpr:gsspwp:181679 |
| By: | William N. Goetzmann; K. Geert Rouwenhorst |
| Abstract: | We use security-level data from the Investors Monthly Manual (IMM) to construct capital-weighted return indexes for the London Stock Exchange over the period 1870–1929. We find a significant and persistent equity risk premium of 3.7% over commercial paper and 4.5% over long-term government bonds, with significant co-movement with GDP growth. Returns decline monotonically with claim seniority: common stocks earn more than preferred shares, which earn more than corporate bonds. Both equity risk premia are highly significant, and the rolling 10-year return spread for stocks minus bonds is positive for every interval in the 60-year sample period. |
| JEL: | G1 G10 G12 G30 G32 N20 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34899 |
| By: | Wenli Li; Xiaoqing Zhou |
| Abstract: | The adoption of new technologies is widely viewed as a key driver of the rapid growth of nonbanks in the U.S. mortgage market after the Global Financial Crisis (GFC). This paper studies technology investment by mortgage lenders and its implications for post-GFC market structure. Using a new dataset on lender-level technology investment merged with loan origination records and balance-sheet information, we document that technology-related human capital investment has risen over time, driven disproportionately by banks and larger lenders, and that such investment predicts higher subsequent productivity. We then estimate lenders’ investment responses to two major shocks: the expansion of FinTech lending and monetary policy-driven demand shocks. Our instrumental-variable estimates suggest that banks increase technology investment in response to FinTech growth, whereas nonbanks respond weakly or even negatively; in contrast, nonbanks respond more strongly to positive demand shocks. To quantify the relative contributions of these shocks to changes in market structure, we build a heterogeneous-firm model consistent with the empirical evidence. The model implies that the post-GFC nonbank expansion was largely driven by a combination of favorable shocks—strong demand and tighter bank regulation—rather than broad-based technological advantages among nonbanks. Consequently, in a prolonged high-interest-rate environment with relaxed bank regulation, as may characterize the post-2025 policy environment, the model predicts a decline, rather than continued growth, in nonbanks’ market share. |
| Keywords: | fintech; mortgage; financial intermediation; firm dynamics; investment; labor |
| JEL: | D22 D25 E22 E24 E44 G21 G23 |
| Date: | 2026–02–23 |
| URL: | https://d.repec.org/n?u=RePEc:fip:feddwp:102859 |
| By: | Ozili, Peterson K |
| Abstract: | Social finance is an emerging concept that seeks to increase financial flows to activities and projects that improve society and the world while generating financial returns. This chapter examines the link between digital finance, green finance, and social finance. It also explores the empirical link between people's interest in information about these three types of finance. The empirical analyses show a strong positive correlation between people's interest in digital, green, and social finance information. A unidirectional causality exists between interest in social and green finance information. People's interest in social finance information significantly negatively impacts their interest in digital finance information.In contrast, interest in social finance information significantly positively affects green finance information. The findings imply that social finance is linked to digital and green finance. Thus, policymakers should not explore social finance opportunities in isolation. Instead, they should investigate the intersection between digital, green, and social finance. |
| Keywords: | Digital finance, green finance, social finance, information, investment, society, environment. |
| JEL: | G21 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:127374 |
| By: | Chia Yean Lim (School of Computer Sciences, Universiti Sains Malaysia, 11800, Minden, Malaysia Author-2-Name: Wenchuan Sun Author-2-Workplace-Name: School of Computer Sciences, Universiti Sains Malaysia, 11800, Minden, Malaysia Author-3-Name: Fengqi Guo Author-3-Workplace-Name: CITIC Securities, 150000, Harbin, China Author-4-Name: Sau Loong Ang Author-4-Workplace-Name: Department of Computing and Information Technology, Tunku Abdul Rahman University of Management and Technology, Penang Branch, 11200, Tanjung Bungah, Malaysia Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:) |
| Abstract: | " Objective - As the investment environment improves, individuals are increasingly eager to invest their idle funds. Securities companies have become the preferred choice for buying financial products. The current accuracy of stock predictions relies on the comprehensive models used by each securities company, including stock market trading, data, and stock pricing models. However, securities companies have not adequately explored a single suitable model for stock predictions and have rarely assessed the effectiveness of stacking and ensemble methods in improving these predictions. Methodology - This research first explored and proposed the best single-stock prediction model. Next, it combined four individual prediction models to create a stacking model. Findings - The comparison between the single and stacking models demonstrated that the stacking model's prediction accuracy exceeded that of the single model. Therefore, it is recommended that securities companies adopt a stacking-type prediction model to forecast share prices for their investment customers. Novelty - Using a stacking model could improve the accuracy of stock price predictions for investment managers, help users make better decisions, and ultimately enhance the company's earnings by delivering more accurate investment outcomes. Type of Paper - Empirical" |
| Keywords: | Long short-term memory, random forest model, stacking model, stock prediction, support vector machine, XGBoost model. |
| JEL: | F17 F47 |
| Date: | 2026–03–31 |
| URL: | https://d.repec.org/n?u=RePEc:gtr:gatrjs:gjbssr674 |