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on Corporate Finance |
| By: | Yoshiki Ando |
| Abstract: | Motivated by the substantial growth and upfront investments of venture capital (VC) backed firms observed in administrative US Census data, this paper develops a firm dynamics model over the life cycle. In the model, startups choose the source of financing from VC, Angel investors, or banks, depending on their growth potential, and invest in innovation. The calibrated model explains the life-cycle dynamics of firms with different sources of financing and implies that venture capitalists’ advice accounts for around 22% of the growth of VC-backed firms. A counterfactual economy without VC financing would lose aggregate consumption by around 0.4%. |
| Keywords: | Venture capital, firm dynamics, innovation, upfront investment, defaultable debt, endogenous sorting |
| JEL: | D22 D25 E22 G24 G30 O32 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:cen:wpaper:25-38 |
| By: | Galinoma Lubawa (The Open University of Tanzania); Saganga Mussa Kapaya (The Open University of Tanzania) |
| Abstract: | While family business studies on socioemotional wealth and family-owned firms' financial performance are growing globally, most have focused on European, Asian and American family firms, where economic and cultural changes have altered traditional family structures. These prior studies have predominantly examined private family-owned firms with diverse ownership structures, with limited attention paid to single-family-owned firms. Therefore, to address the identified research gap, this study analysed 267 Tanzanian single-family-owned food processing firms to assess the influence of family firm culture on socioemotional wealth and firms' financial performance using generalised structural equation modelling. The study's findings indicate that family firm culture significantly influenced the socioemotional wealth dimensions of family continuity, family prominence and family enrichment, positively affecting firms' financial performance. This study recommends that family business owners prioritise family firm culture in their socioemotional wealth and financial performance strategies. The study suggests that future research should develop qualitative instruments for measuring socioemotional wealth dimensions. |
| Keywords: | Socioemotional wealth, Family firm culture, Financial performance, Family-owned firms, Food processing firms |
| Date: | 2025–06–30 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05096004 |
| By: | Tarik Alperen Er; Burak Deniz; Ibrahim Yarba |
| Abstract: | This paper investigates the firm heterogeneity in the evolution of loan spreads over the credit cycle in Türkiye. Using the combination of credit registry and administrative datasets, our bankfirm level analysis shows that small- and medium-sized enterprises (SMEs) and firms that are riskier and more prone to financial frictions pay higher loan interest rates. The results also reveal that loan spreads of these firms decrease and converge to the spreads of large and financially sound firms during expansion periods. Our firm-level analysis indicates that these findings persist at the firm level. Our results suggest that SME loan spreads rise more than those of larger firms during tightening periods. This reveals the asymmetric deterioration in SMEs’ lending conditions relative to large firms. On the other hand, the significant role of firm riskiness on loan spreads weakens during expansion periods. However, these findings are valid only for loans extended by private banks but not state-owned banks. Our findings lend support to policy makers’ prudent approaches over the credit cycle. |
| Keywords: | Loan Spreads, Credit Cycle, SMEs, State-Owned Banks |
| JEL: | E32 E5 G21 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:tcb:wpaper:2510 |
| By: | Davide Consoli; Francesco Lelli; FSandro Montresor; Francois Perruchas; Francesco Rentocchini |
| Abstract: | Given the crucial role of Venture Capital (VC) in financing the green transition, and its uneven geographical distribution, we examine how the proximity of VC investors to green start-ups influences the success of their deals. Considering the intrinsically higher risk profile of start-ups in the greensector, we maintain that their spatial proximity to VC investors will have a larger effect here than in other sectors. Furthermore, considering recent advancements in the digitalization of VC, we also argue that a digital kind of proximity between investors and green investees in accessing digital technologies (platforms) could matter for that, by also reducing the binding effect of spatial proximity on the success of VC green deals. Using data from Dealroom, and combining them with the SpeedTest open dataset by Ookla, we test for these arguments with respect to a large sample of about 12, 000 green start-ups, originally identified by combining multiple methods (text scraping, topic modelling, and machine learning), located in 27 EU (+3) countries from 2000 to 2020. Econometric estimates at the level of realised vs. potential VC green deals confirm that spatial proximity is more relevant for green than for non-green start-ups. The new quasi- dyadic indicator of digital proximity that we propose does also significantly and positively correlates with the actual occurrence of green deals, and negatively moderate the effect of spatial proximity, supporting our argument of a substitution relationship between the two. Policy implications are drawn accordingly. |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:egu:wpaper:2521 |
| By: | Dylan Hogg; Hossein Jebeli |
| Abstract: | Assessing insolvency dynamics is essential for evaluating the financial health of non-financial corporations and mitigating macroeconomic and financial stability risks. This study leverages a newly created Statistics Canada dataset linking insolvency records with firm-level financial data to develop a robust framework for monitoring insolvency risk. We employ two complementary approaches: a univariate threshold method that establishes critical financial ratio benchmarks and a multivariate econometric model that accounts for interactions among financial indicators. These methods produce debt-at-risk measures that enhance risk assessment by combining simplicity with analytical depth. Finally, we apply these metrics to timely firm-level data, enabling continual monitoring of financial vulnerabilities. |
| Keywords: | Credit and credit aggregates; Econometric and statistical methods; Financial stability; Firm dynamics |
| JEL: | D22 G33 L20 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:bca:bocadp:25-10 |
| By: | Ferreira, Daniel; Kirchmaier, Tom; Metzger, Daniel; Ye, Shiwei |
| Abstract: | Bank board directors are highly independent but possess limited prior banking experience. Using a sample of banks from 90 countries between 2000 and 2020, we find that country-specific characteristics explain most of the cross-sectional variation in bank board independence. In contrast, country characteristics have little explanatory power for boards’ banking experience. While we document evidence of international convergence in bank board independence, U.S. banks lag behind their global counterparts in director banking experience. The data suggest that country-specific laws and regulations primarily shape bank board composition through requirements for director independence. |
| Keywords: | boards; directors; bank governance |
| JEL: | F3 G3 |
| Date: | 2025–07–15 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:128809 |
| By: | Zhang, Yi; Silva, Beatriz; Moreau, Élodie; Tāne, Hinewera |
| Abstract: | Financial ratio analysis remains an indispensable tool in corporate finance for assessing firm performance, comparing industry benchmarks, and informing strategic decision-making. This literature review critically examines the evolution and application of financial ratios, highlighting both their enduring relevance and inherent limitations. Drawing on recent works, including Gazilas (2024) and studies by Covar (2024, 2025), Ferreira et al. (2025), and Shvekens (2024, 2025), this paper explores how ratios have been applied to evaluate organizational resilience during the COVID-19 pandemic, sector-specific dynamics, and broader socio-economic impacts. While traditional ratio analysis offers standardized, comparable metrics, its backward-looking nature and sensitivity to data inconsistencies can limit predictive accuracy. Emerging research emphasizes integrating ratio analysis with panel data methods, big data, ESG metrics, and scenario planning to enhance its utility in turbulent environments. The review concludes that future studies should expand geographic and sectoral coverage, adopt hybrid analytical frameworks, and leverage technological advancements to maintain ratio analysis as a vital element of strategic financial assessment in an increasingly complex global economy. |
| Keywords: | Financial Ratio Analysis, Corporate Resilience, Crisis Management, Panel Data |
| JEL: | M4 M40 |
| Date: | 2025–07–05 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:125289 |
| By: | Buehren, Niklas; Papineni, Sreelakshmi |
| Abstract: | This paper examines implicit gender bias in entrepreneurial financing by randomizing screenings of business investment ideas pitched in the format of the reality television show Chigign Tobiya. Keeping business idea and pitch quality constant, the experiment randomizes whether a female or male entrepreneur delivers the pitch across three different business sectors. The findings suggest that, on average, gender does not affect recommended investment; however, the sector matters. Some sectors attract greater investment than others. Our findings are consistent with discrimination against women in traditionally male-dominated sectors and discrimination against men in female-dominated sectors. Men are perceived as better negotiators and leaders in sectors that attract higher investment. These are also the sectors in which women are typically underrepresented. Exposure to women in leadership positions and information provided during the screenings can increase investment in women’s businesses. |
| Date: | 2025–06–24 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:11152 |