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on Corporate Finance |
| By: | Martin Aragoneses; Young Soo Jang; Amir Sufi |
| Abstract: | Venture capital specializes in the financing of customer capital intensive firms—firms with higher sales and marketing expense to revenue ratios, a higher wage bill for sales and marketing employees, and a higher tendency to apply for trademarks—and they do so more than other financial intermediaries. Venture capitalists target high customer capital industries with low knowledge capital but avoid high knowledge capital industries that lack customer capital. Firms tilt investment toward customer capital leading up to the initial venture capital investment, after which their scale accelerates rapidly. Venture capitalists focus on financing customer capital because such investments require tolerance for substantial risks of failure in pursuit of extreme upside potential, as characterized by power law returns. This return profile fits customer capital investments more closely than investments in knowledge capital. Venture capitalists that sprinkle small investments across a large number of firms, colloquially referred to as the “spray and pray” strategy, target customer capital industries for investment, whereas venture capitalists that commit larger amounts to a small number of firms target knowledge capital industries. The venture capital focus on customer capital reflects a shift away from its traditional focus on knowledge capital intensive firms over the past 30 years. |
| JEL: | G2 G24 G3 G32 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35919 |
| By: | Kühle, Konstantin; Quick, Reiner |
| Abstract: | Corporate Governance (CG) reporting receives increasing attention. This study examines the impact of voluntary CG statement assurance on financial analysts’ and bankers’ decisions. An experiment with a 2 × 2 + 1 between-subject design was conducted. The independent variables comprise the assurance provider (Big Four statutory auditor vs. another Big Four audit firm) and assurance level (limited vs. reasonable). Additionally, a control condition without assurance provision is used. The participants’ reliance on the CG statement, their likelihood to recommend an investment in shares of the fictitious company, their credit risk assessment, and the likelihood to purchase shares of the fictitious company themselves served as dependent variables. Our results indicate that CG statement assurance increases the likelihood for investment recommendation. Moreover, they do not indicate a significant impact of the type of assurance provider. Reasonable assurance predominantly results in decisions of financial professionals which are more favorable for the fictitious company than limited assurance. |
| Date: | 2026–09–08 |
| URL: | https://d.repec.org/n?u=RePEc:dar:wpaper:162266 |
| By: | Oylum Sehvez Erguzel (Sakarya University, Turkey) |
| Abstract: | This paper reviews the empirical literature on performance persistence in private equity (PE). It argues that observed persistence reflects three interacting forces: managerial skill, structural advantages, and measurement artefacts. It compares findings across return metrics, units of analysis, datasets, geographies, and time periods, with attention to biases from cash flow timing, fund overlap, and selective reporting. The review finds a genuine skill component, especially in venture capital, but shows that persistence estimates often weaken under stricter methods and richer data. Implications are drawn for fund selection, performance evaluation, and future research design. |
| Keywords: | Private Equity; Performance; Performance Persistence; Managerial Skill; Buyout; Venture Capital |
| JEL: | G23 G24 O16 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:fau:wpaper:wp2026_03 |
| By: | Caitlin Hegarty; Matias Moretti; Pablo Ottonello; Diego J. Perez |
| Abstract: | We study how global financial conditions transmit to firms’ investment. We document that increases in risk premia are followed by large investment contractions, particularly among firms with higher default risk. We develop a quantitative heterogeneous-firm open-economy model where firms finance investment with defaultable debt priced by risk-averse global investors. We identify a strong risk channel linking changes in the global price of risk to financing costs through firms’ quantity of risk—the sensitivity of debt repayment to global shocks. This introduces a risk dimension to stabilization policy: smoothing cash flows reduces firms’ quantity of risk and dampens international financial transmission. |
| JEL: | E22 F00 F30 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35918 |
| By: | Hanft, David |
| Abstract: | Multilateral development banks (MDBs) face growing pressure to demonstrate that their activities support the Paris Agreement's (PA) goal of aligning financial flows with low-emission and climateresilient development pathways (as outlined in Article 2(1)(c)), while concerns remain about the accuracy and interpretability of reported climate finance. This paper examines how sustainableoriented climate finance standards are operationalized in the financing decisions and capital mobilization strategies of multilateral development banks, and what this implies for the effectiveness and comparability of reported climate finance. Using comparative case studies of the World Bank Group (WBG), the European Investment Bank (EIB), and the African Development Bank Group (AfDB), the analysis compares portfolio composition and allocation patterns and assesses private capital mobilization structures across financial instruments. The findings indicate that Paris-aligned finance is operationalized through different institutional pathways: scale and mobilization in High-Income Countries with deeper financial markets (EIB), a diversified mix of financial instruments (WBG), and concessional, risk-mitigating finance, prioritizing vulnerable, debt-constrained and adaptation-relevant contexts (AfDB). These results suggest that policy effectiveness depends not only on the volume of mobilization, but also on whether portfolios reflect adaptation needs and provide debt-sensitive support in vulnerable settings. |
| Keywords: | Multilateral Development Banks, Climate Finance, Paris Alignment, Private Capital Mobilization, Concessionality, Debt Sustainability, Sustainable Finance, Public Finance |
| JEL: | F34 F35 G21 G28 Q54 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ipewps:344090 |
| By: | Paolo Panteghini |
| Abstract: | The new view of dividend taxation bundles three logically distinct claims: capitalisation, that a permanent dividend tax is impounded in share values; the Auerbach prediction, that the firm's real retention and investment decision is unchanged; and the King criterion, that the tax does not enter the cost of capital. In a frictionless two-period general-equilibrium economy with an all-equity firm and a power production technology, we show that the three claims hold under progressively stronger conditions. Capitalisation always holds, since the tax cancels from the firm's investment first-order condition, and in partial equilibrium Fisher separation delivers the new view in full. The failures are general-equilibrium phenomena that sort by margin: a subsistence level of consumption in otherwise standard HARA preferences breaks the Auerbach prediction for any technology, whereas the King criterion fails only when returns to capital are also decreasing, with a magnitude proportional to the product of technological curvature and the subsistence level. These breaks are uncompensated income effects, not substitution distortions: a revenue-neutral lump-sum rebate restores neutrality for any preferences and any technology. No friction is needed, only the curvature of preferences and technology and the breakdown of Fisher separation when the firm is the sole store of value. The all-equity assumption is inessential; under risk, by contrast, an asymmetric loss offset distorts the price of risk, a substitution distortion that no lump-sum rebate can repair. |
| Keywords: | new view, dividend taxation, general equilibrium, preferences, decreasing returns, tax neutrality |
| JEL: | H24 H25 H32 E21 E62 G35 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_13055 |