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on Corporate Finance |
| By: | Andres Almazan; Nathan Swem; Sheridan Titman; Gregory Weitzner |
| Abstract: | We analyze firms' IPO decisions using detailed financial data on US private firms. We find that firms with higher external capital needs are more likely to go public. Following the IPO, firms increase their investment and debt issuance, resulting in leverage ratios close to their pre-IPO levels. Finally, newly public firms borrow from an expanded pool of lenders at improved terms, with a decrease in the within-firm dispersion in banks' private risk assessments. Our evidence is consistent with firms going public to improve their access to capital, which is facilitated by a reduction in asymmetric information. |
| Keywords: | Bank debt; Capital structure; Asymmetric information; IPOs |
| JEL: | G14 G32 |
| Date: | 2025–11–25 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedgfe:2025-102 |
| By: | Dhahri, Nourhen |
| Abstract: | This paper examines the impact of board characteristics on the variability of bank performance in the Middle East and North Africa (MENA) region. Based on a sample of 97 banks over the period 2016–2020, the study employed four corporate governance mechanisms to investigate their effect on two performance measures: ROA and ROE. In addition, three control variables were included to isolate the effect of corporate governance variables on bank performance. Using panel data regression, the results indicate that board size, CEO duality, and the presence of institutional directors on the board are the only corporate governance mechanisms that have a positive and significant effect on return on assets (ROA). Board size has a negative and significant effect on return on equity (ROE), while the presence of institutional directors on the board has a positive and significant impact on return on equity (ROE). |
| Keywords: | banks, board structure, performance, MENA |
| JEL: | G21 G32 G34 |
| Date: | 2025–11–19 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:126913 |
| By: | Suleyman Faruk Gozen; David Hong; Mehmet Furkan Karaca |
| Abstract: | We study how non-rival intangible capital interacts with borrowing structure and financial frictions to shape firm dynamics over business cycles. We show: (i) the positive and significant association between intangible-capital growth and labor productivity growth becomes smaller in recessions; (ii) the non-rivalry of intangible capital is evident such that intangible growth predicts faster sales growth and broader firm scope, yet this relationship declines in recessions; (iii) intangible-intensive firms carry less total and secured debt, and substitute toward earnings-based covenant (EBC) borrowing over asset-based covenant (ABC) borrowing; and (iv) intangible-intensive firms with EBC have tightening financially constraints in recessions, which mitigates the productivity payoff of non-rival intangibles. We rationalize these patterns in a general-equilibrium model in which firms draw EBC/ABC constraints at entry and intangibles are non-rival in the firm production technology. The model yields a creditamplification mechanism with heterogeneous borrowing types, reconciling the productivity slowdown despite rising intangibles |
| Date: | 2025–04–02 |
| URL: | https://d.repec.org/n?u=RePEc:bri:uobdis:25/815 |
| By: | Cristina Badarau (University of Bordeaux); Eleonora Cavallaro (Sapienza University of Rome); Stefania Stancu (University of Bordeaux,) |
| Abstract: | We analyse how corporate debt structure can shape the transmission of monetary policy in a general equilibrium model. We endogenise firms’ choice between bond and loan financing in a dynamic setting, building on the analytical framework of the financial accelerator and show that the corporate structure of firms is not irrelevant. We assume that banks have an informational advantage over other market participants in evaluating firms’ projects. This results in a lower cost of bank finance compared to market finance in a steady state, given institutional factors and market size. Over time, shocks to the cost of finance or liquidity shocks feed back into the dynamics of firms’ net worth, investment and output. In our framework, monetary policy can have asymmetric effects. On one hand, higher banks’ refinancing costs due to more stringent conventional monetary policies have a greater impact on firms that cannot easily substitute loans for bonds. Firms with easier access to the bond market have a competitive advantage over firms that can only rely on bank financing. On the other hand, shocks that increase the liquidity in the bond markets, such as unconventional monetary policies, benefit firms with a more diversified corporate debt structure. From this perspective, the development of bond markets can have important macroeconomic implications for building resilience. |
| Keywords: | Corporate debt structure, investment, monetary policy transmission |
| JEL: | E |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:inf:wpaper:2025.21 |
| By: | Mr. Damien Capelle; Eduardo Espuny Diaz; Mr. Divya Kirti; Mr. Germán Villegas-Bauer; Sharan Banerjee |
| Abstract: | This paper analyzes the effectiveness of green financial policies—green credit policies and free emissions allowances—at improving emission efficiency while supporting output. We develop a heterogeneous-firm model with financial constraints and endogenous adoption of cleaner capital. The model matches key targeted and untargeted moments from granular micro-data, including the facts that more financially constrained firms are less productive, more emission intensive, and respond less to carbon pricing. In counterfactual simulations in our model, credit policies without green bias raise output but also raise emissions, as firms become more capital and energy intensive. In contrast, well-targeted green credit policies—focusing on frontier technologies—cut emissions while boosting output. In the presence of financial frictions, free emissions allowances offset the output costs of carbon pricing, breaking the usual irrelevance of permits allocation. |
| Keywords: | Climate Change; Emissions; Financial Constraints; Financial Frictions; Productivity; Technology Adoption; Capital Vintages. |
| Date: | 2025–12–19 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2025/269 |
| By: | Ken Tabata (School of Economics, Kwansei Gakuin University) |
| Abstract: | Does reducing the corporate income tax while increasing the consumption tax to satisfy government budget constraints improve welfare? To address this question, this paper examines the welfare-maximizing consumption and corporate income tax rates within a Rivera-Batiz and Romer (1991)-type variety-expanding growth model with financial frictions and heterogeneous R&D productivity. We also explore how these welfare-maximizing tax rates change as financial constraints become less binding due to financial development. The results indicate that under mild and plausible levels of financial frictions, relaxing financial constraints on R&D investment lowers the optimal corporate income tax rate, while raising the optimal consumption tax rate. This finding implies that when financial constraints are eased, enhancing innovation at the expense of current production—by raising the consumption tax and reducing the corporate income tax—improves welfare. The underlying mechanism is that relaxing financial constraints induces entry into R&D only by highly productive entrepreneurs, thereby increasing the average efficiency of R&D investment. |
| Keywords: | Financial Frictions, Corporate Income Tax, Consumption Tax, R&D, Endogenous growth |
| JEL: | E62 H21 H25 O30 O38 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:kgu:wpaper:304 |