|
on Corporate Finance |
| By: | Hutschenreiter, Dennis; Liu, Qianshuo |
| Abstract: | This paper examines whether common institutional ownership is associated with CEO connectedness across firms. We document that higher common ownership between two same-industry firms predicts a greater likelihood that a newly appointed CEO has preexisting social ties to the incumbent CEO of the peer firm. To address endogeneity, we use mergers among institutional investors in a stacked difference-in-differences design. In a hiring-firm-peer panel that carries connection status forward from the most recent appointment, exposure to a merger-induced common blockholder approximately doubles the probability that the pair is observed in a connected-CEO state. In a broader firm-pair panel, it increases the probability of CEO connections by 48.7%. We further document that gaining CEO connections through another firm's CEO appointment is associated with improvements in peer firms' returns on assets and Tobin's Q, in both OLS and IV specifications. Peer firms that gain such a connection also experience positive abnormal returns around other firms' CEO hiring announcements, corresponding to an average increase of $112.5 million in shareholder value. These performance patterns suggest that CEO connections may be valuable from a portfolio-level perspective. Consistent with this interpretation, the association between common ownership and CEO connections is concentrated among product-similar and organizationally complex firms and strengthens after the 2008-2009 financial crisis, when connections appear more valuable. Our findings point to CEO connection as a potential governance channel through which common institutional ownership is linked to firm outcomes, complementing prior work on executive compensation, shareholder voting, and board interlocks. |
| Keywords: | CEO connections, CEO selection, common ownership, corporate governance, firm performance |
| JEL: | G23 G32 G34 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:iwhdps:341627 |
| By: | OECD |
| Abstract: | This paper evaluates the Small Credit Fund (Fondo Piccolo Credito), a regional financial instrument introduced by the Lazio Region (Italy) to address credit market gaps faced by micro and small enterprises. Using administrative data for 2017–2023 and a difference in differences approach, the evaluation finds strong financial additionality: subsidised loans increased long term debt without crowding out other financing. The programme improved firm survival and supported higher investment, particularly among smaller and more financially constrained firms. Short term declines in profitability and credit ratings highlight temporary trade offs during the investment and repayment phase. The paper concludes with recommendations to refine programme design, targeting and monitoring, with lessons for similar instruments across OECD countries. |
| Keywords: | credit constraints, Italy, Lazio, policy evaluation, regional development, Small business finance |
| JEL: | G21 G28 H81 L26 O16 |
| Date: | 2026–06–15 |
| URL: | https://d.repec.org/n?u=RePEc:oec:cfeaaa:2026/08-en |
| By: | Naoyuki Yoshino (Keio University); Farhad Taghizadeh-Hesary (Tokai University Research Institute for Environment and Sustainability); Shigehiro Shinozaki (Asian Development Bank) |
| Abstract: | As in many Asian economies, Malaysia’s micro, small, and medium-sized enterprises (MSMEs) account for the vast majority of firms and large shares of economic output and employment. Their significant carbon footprint makes them pivotal for achieving carbon neutrality. In bank-dominated financial systems such as Malaysia’s, credit guarantees help facilitate lending to MSMEs. This paper proposes a way to both ease MSME access to finance and incentivize decarbonization and sustainability. It develops a risk-based and sustainability-adjusted credit guarantee pricing framework that integrates an MSME’s financial health, environmental footprint, and the macroeconomic conditions it faces. Using financial data from 2, 000 Malaysian MSMEs, principal component analysis is used to construct a financial health index, followed by K-means clustering to classify firms by risk. A countercyclical pricing model produces a firm‑level credit guarantee fee ranging from 1.08% for the healthiest firms during a recession to 2.58% for the riskiest firms during economic expansion. Firm-level sustainability survey data are used to build a composite performance score which reduces guarantee fees by an average of 0.13 percentage points, with a reduction up to 0.23 percentage points for top-performing firms. |
| Keywords: | optimal credit guarantee;sustainability;access to finance;SME finance;Malaysia |
| JEL: | D22 G20 L20 L50 |
| Date: | 2026–06–17 |
| URL: | https://d.repec.org/n?u=RePEc:ris:adbewp:022917 |
| By: | Majeed, Rafaqat; Audi, Marc; Ali, Amjad |
| Abstract: | The study investigates the impact of environmental, social, and governance disclosure on Pakistani listed companies' ability to engage in earnings management. The study uses panel data from Pakistan Stock Exchange-listed 45 companies from 2020 to 2024, which represents a period when Pakistan's corporate sector began to adopt sustainability reporting and governance reforms. The study assesses environmental, social, and governance disclosure through Refinitiv environmental, social, and governance scores, which include aggregate and pillar-level measurements of environmental, social, and governance disclosure dimensions. The data was gathered from financial and governance information by examining the audited annual reports and corporate governance disclosures of the selected firms. The study uses ordinary least squares regression models, which include standard firm-level control variables that already contain profitability, leverage, and firm size, market-to-book ratio, and board size and board independence as standard controls. The study establishes a negative connection between environmental, social, and governance disclosure, both at the total and pillar levels, and accrual-based earnings management through the application of stakeholder theory, legitimacy theory, and agency theory. The findings from the empirical research show that there exists no statistically significant link between total environmental, social, and governance disclosure and its separate disclosure pillars and earnings management across all tested models. The results demonstrate that Pakistani listed companies' sustainability disclosure practices currently lack sufficient strength to operate as effective governance systems, which would restrict managerial freedom in financial reporting. Firm profitability and firm size emerge as the most influential determinants of discretionary accrual behavior, while the market-to-book ratio demonstrates significance within the signed discretionary-accrual models. The result provides one of the first studies that assesses environmental, social, and governance disclosure at both firm and pillar levels, which shows its impact on earnings management in Pakistan while delivering important insights for regulators, investors, and corporate governance policymakers. |
| Keywords: | Environmental, Social, and Governance Disclosure, Earnings Management, Corporate Governance, Pakistan Stock Exchange |
| JEL: | G34 M14 M41 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:129347 |
| By: | Alvarez, Lourdes; Broncano, Marlon |
| Abstract: | This study investigates the impact of factoring—implemented through electronic negotiable invoices—on the growth and performance of firms in Peru between 2015 and 2023. Using administrative panel data and a quasi-experimental design based on the difference-indifferences (DiD) method, the analysis compares firms that adopted this financial instrument with those that did not. The findings reveal that factoring adoption significantly increased firm survival rates. In the short term, it also enhanced access to credit, although this effect gradually diminished over time. The results on sales and employment show a heterogeneous pattern: while some firms experienced initial adverse effects, those that consistently utilized factoring reported sustained improvements. These findings contribute to the understanding of alternative financing mechanisms in developing economies and their role in fostering firm resilience and long-term development. The paper provides empirical evidence to inform financial policy and support instruments for micro, small, and medium-sized enterprises (MSMEs) in Peru. |
| Keywords: | factoring; electronic invoices; access to credit; firm survival; SME development |
| JEL: | G2 G3 |
| Date: | 2025–10–16 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:129106 |
| By: | OECD |
| Abstract: | Micro and small enterprises (MSEs) often face persistent difficulties in accessing external finance, particularly small scale, long term loans. In many regions, including Lazio, private banks are reluctant to supply this segment of the market because the fixed administrative costs of small loans are high relative to expected returns. As a result, even creditworthy firms with viable investment projects may encounter credit rationing and higher borrowing costs. Over time, this can lead to adverse selection, where riskier firms have stronger incentives to ask for credit, further reinforcing the lenders’ reluctancy to serve the market.The Small Credit Fund (Fondo Piccolo Credito, FPC) was introduced to address this market failure by providing zero interest loans to micro and small firms that fall below standard banking thresholds but are not inherently risky. The key policy issue is whether such public financial instruments genuinely relax binding credit constraints and support firm development, or whether they merely substitute for private finance and expose beneficiaries to new financial risks without delivering sustained economic benefits. |
| Date: | 2026–06–15 |
| URL: | https://d.repec.org/n?u=RePEc:oec:cfeaaa:2026/11-en |