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on Corporate Finance |
| By: | Antonia Manzini (Bank of Italy); Diego Scalise (Bank of Italy) |
| Abstract: | Technological innovation has profoundly transformed financial services. This paper examines the diffusion of technology-intensive firms operating in the financial sector (fintech) and the pivotal role of venture capital in supporting their development. The analysis reveals an ecosystem predominantly consisting of small fintech firms, which cluster in the financial centres of countries with more developed capital markets. These locations are home, in particular, to business-to-business (B2B) firms, which frequently develop digital solutions for financial institutions. In this environment, incumbent financial intermediaries become the natural acquirers of the most promising fintech start-ups, integrating their technologies and capabilities into their value chains. Access to diversified sources of finance is a key determinant of these firms' growth. Venture capital acts as a catalyst by fostering strategic partnerships and facilitating the integration of innovative technologies, thereby contributing to the transformation of traditional financial intermediation. The distribution of fintech firms and the evolution of their financing cycle portray a sector undergoing a transition from an initial phase of rapid expansion to one of gradual consolidation. |
| Keywords: | fintech concentration, fintech venture capital |
| JEL: | G15 G24 G34 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:bdi:opques:qef_1055_26 |
| By: | Hozova, Karolina; Havranek, Tomas; Irsova, Zuzana |
| Abstract: | Appointing more women to corporate boards is widely expected to also raise firms' environmental, social, and governance (ESG) performance. We provide the first meta-analysis of this relationship, drawing on 533 estimates from 106 studies that measure ESG performance with Bloomberg or LSEG ratings. The average reported effect of a one-percentage-point increase in board gender diversity is about 0.28 ESG points, but much of it does not survive scrutiny. Correcting for publication bias with a battery of linear and non-linear methods lowers the effect to between roughly 0.08 and 0.17 points. A best-practice estimate that also imposes sound study design puts it near 0.12 for most of the world, markedly higher for the Middle East, and near -0.11 for the Southeast Asian markets that dominate the Asian evidence. The differences that remain across studies are systematic, driven mainly by geography and by the choice of estimation method rather than by the ESG-rating provider or the controls a study includes. Board gender diversity may be well worth pursuing on its own merits, but the evidence that it reliably raises ESG scores is weaker than the published record suggests. |
| Keywords: | board gender diversity, ESG ratings, meta-analysis, publication bias, corporate governance, female directors |
| JEL: | G34 M14 J16 C11 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:esprep:343305 |
| By: | Craig A. Chikis (University of Chicago); Jonathan Goldberg (Board of Governors of the Federal Reserve System); David López-Salido (Banco de España) |
| Abstract: | Firms' hurdle rates exceed their financial cost of capital. This gap varies across firms and has widened in the aggregate. In our Schumpeterian model, two frictions drive this gap: firm decision-makers require an innovator's risk premium for undiversifiable innovation risk, and innovation profits are imperfectly pledgeable. Higher undiversifiable risk lowers the financial cost of capital while hurdle rates remain sticky or even rise. Widening gaps weaken creative destruction; profits and superstar valuations rise despite firms forgoing positive-NPV projects. The calibrated model matches cross-sectional patterns in gaps, R&D, market power and firm dynamics, and explains weak productivity growth and declining dynamism. |
| Keywords: | hurdle rates, cost of capital, idiosyncratic risk, innovation, market power, firm valuations |
| JEL: | E43 G12 G31 G32 O31 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:bde:wpaper:2628e |
| By: | Marco Albori (Bank of Italy); Andrea Zaghini (Bank of Italy) |
| Abstract: | We study how the emergence of generative artificial intelligence (AI) affected corporate bond pricing. Using bond-level issuance data for U.S. non-financial corporations and a difference-in-differences design centered on the launch of ChatGPT, we examine whether debt investors differentiate firms according to their position in the AI value chain. We find that hyperscalers experienced a significant decline in borrowing costs relative to comparable issuers, while software firms faced less favorable financing conditions. The results suggest that credit markets rapidly incorporated expectations regarding the distribution of gains and losses from generative AI. More broadly, the evidence indicates that technological shocks affect not only firm valuations but also the cost of external finance, thereby influencing the allocation of capital across firms during periods of technological transition. |
| Keywords: | artificial intelligence, asset pricing, bonds, corporate finance |
| JEL: | G12 G32 C23 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:bdi:opques:qef_1057_26 |
| By: | Michi Nishihara (UOsaka - The University of Osaka); Takashi Shibata (Hosei University); Benoît Chevalier-Roignant (EM - EMLyon Business School) |
| Abstract: | This paper develops a capital structure model with a financial covenant that imposes a lower limit on a firm's interest coverage ratio. Shareholders reduce their debt level or default whenever this ratio falls below the limit. In the model, firm value, debt repayment policy, and capital structure are derived explicitly. For low levels of the limit, shareholders prefer to reduce their debt every time the ratio reaches the limit. In other words, the covenant acts as early pressure on shareholders and eliminate their incentives to default. Then, it decreases the cost of debt but also lowers equity value by constraining shareholders. Because of this trade-off, the covenant can improve firm value. With the covenant, the firm can begin with high leverage to take advantage of the decreased cost of debt. The covenant tends to improve firm value for higher bankruptcy cost and volatility because these conditions lead to high expected default costs without a covenant. It can also improve firm value for higher growth and tax rates by easing the restriction on future debt issuance. These results are consistent with empirical evidence and support the optimal contracting hypothesis for covenants. |
| Keywords: | Corporate finance, Agency problem, Real options, Capital structure, Debt covenant |
| Date: | 2026–10–01 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05724500 |