the importance of managerial ability on crude oil price uncertainty firm performance relationship abstract this paper investigates the effect of crude oil price uncertainty on firm performance and how the managerial ability impacts on this relationship using a large sample of 13 610 u s firms from 1983 to 2016 we reveal two main findings consistent with our hypothesis we find strong evidence for a negative effect of crude oil price uncertainty on firm performance at both aggregate market and sectoral levels however managerial ability helps firms dampen a significant proportion approximately 20 50 of the negative effect these findings are consistent in several robustness tests

financial shocks and corporate investment in emerging markets we examine how cross firm and cross country heterogeneity shapes the responses of corporate investment in emerging markets to changes in u s monetary policy and financial market volatility the latter proxying for uncertainty we find that in response to increases in u s monetary policy rates or financial market volatility financially weaker firms reduce investment by more than financially strong firms we also show that firms with stronger balance sheets delay investment voluntarily when faced with higher uncertainty finally we find that stronger macroeconomic fundamentals lower public debt or higher international reserves help to buffer corporate investment from increases in u s monetary policy rates

political connections and corporate investments evidence from the recent anti corruption campaign in china abstract taking advantage of corruption scandals in china we construct a natural experiment and identify the ousting of corrupt politicians and firms connected with them through bribery and personal relationships event firms we find that the investment expenditure of event firms declines significantly after the ousting of the politicians compared with that of non event firms especially for non soes we also find that after the ousting of the politicians investment efficiency improves for event soes but declines for event non soes compared with their non event counterparts we also document that the ousting of the politicians influences firm investment decisions more after the recent anti corruption campaign for bribing firms and for firms in more corrupt regions these results are robust to alternative measurements of key variables and specifications

asymmetric effects of oil price uncertainty on corporate investment abstract using a comprehensive data set of a large panel of us firms over 1984 2017 we show that the negative effect of crude oil price return uncertainty on investments is asymmetric in particular we show that investment is more significantly reduced following the volatility of positive oil price changes than that of negative changes and this asymmetric effect is more pronounced in small firms in addition we find that the asymmetric effect is stronger in the crude oil and gas producing companies where the effect of the volatility of negative oil price changes is greater than that of positive oil price changes we also find that the impact of positive or negative oil price change uncertainty on investments substantially differs across different industries the results are quite robust to the way in which we measure the investment and oil price uncertainty and to alternative regression methods

trade credit the financial crisis and sme access to finance mounting evidence indicates that firms particularly smes suffered from a significant credit crunch during this crisis we analyze for the first time whether trade credit provided an alternative source of external finance to smes during the crisis using firm level spanish data we find that credit constrained smes depend on trade credit but not bank loans and that the intensity of this dependence increased during the financial crisis unconstrained firms in contrast are dependent on bank loans but not on trade credit

how does the stock market respond to changes in bank lending standards i investigate the industry level responses of u s stock returns to unanticipated changes in bank lending standards exploiting cross industry variation in the levels of dependence on external finance i document that on average cumulative stock returns fall significantly by 1 36 percentage points two years after an unexpected one standard deviation tightening in lending standards moreover moving from an industry at the 10th percentile of financial dependence to one at the 90th percentile adds between 1 24 and 2 19 additional percentage points to this effect

costly external finance corporate investment and the subprime mortgage credit crisis abstract we study the effect of the recent financial crisis on corporate investment the crisis represents an unexplored negative shock to the supply of external finance for non financial firms corporate investment declines significantly following the onset of the crisis controlling for firm fixed effects and time varying measures of investment opportunities consistent with a causal effect of a supply shock the decline is greatest for firms that have low cash reserves or high net short term debt are financially constrained or operate in industries dependent on external finance to address endogeneity concerns we measure firms financial positions as much as four years prior to the crisis and confirm that similar results do not follow placebo crises in the summers of 2003 2006 nor do similar results follow the negative demand shock caused by september 11 2001 the effects weaken considerably beginning in the third quarter of 2008 when the demand side effects of the crisis became apparent additional analysis suggests an important precautionary savings motive for seemingly excess cash that is generally overlooked in the literature

safety net losses from abandoning glass steagall restrictions this paper evaluates the redistribution of gains surrounding regulatory relaxations in 1996 and 1997 and ultimate passage of the financial services modernization act fsma of 1999 gains in financial institution stocks may come from projected increases in efficiency increases in the bargaining power of financial institutions or greater access to the federal safety net for customers seeking improved access to capital markets gains in efficiency should result in increased benefits but increases in bank bargaining power could increase funding costs and or decrease capital market access customers may also lose as taxpayers who support the federal safety net this paper finds evidence of potential taxpayer losses and increased bank bargaining power especially vis a vis credit constrained customers for whom safety net subsidies are unlikely to be shifted forward the stock prices of credit constrained customers declined during fsma event windows and in event windows associated with regulatory relaxations

the impact of institutional investors on mergers and acquisitions in the united kingdom abstract in this paper we investigate the impact of institutional ownership on uk mergers and acquisitions we employ a comprehensive sample of m as conducted by uk acquirers from 2000 to 2010 thus including a full cycle of peak and trough in m a waves we find that institutional investors increase the likelihood of an m a to be a large cross border deal opting for full control moreover institutional ownership concentration and foreign institutional ownership increase the likelihood of cross border m as in addition we assess the influence of institutional shareholders investment horizon and find that while investment horizon have a negative influence in encouraging cross border m as the presence of long term investors encourages larger m as finally even after controlling for the 2007 08 financial crisis the market reacts negatively to the announcement of cross border m as

r d and internal finance a panel study of small firms in high tech industries since joseph schumpeter economists have argued that internal finance should be an important determinant of r d expenditures yet almost without exception previous empirical studies have not found evidence of such a relation using newly available data the authors investigate this puzzle with a panel of 179 small firms in high tech industries under each estimation strategy they employ the authors find an economically large and statistically significant relationship between r d investment and internal finance their results are consistent with the view that because of capital market imperfections the flow of internal finance is the principal determinant of the rate at which small high tech firms acquire technology through r d copyright 1994 by mit press

foreign banks financial crises and economic growth in europe abstract using industry data from eurostat and applying the rajan zingales methodology we investigate the short run real growth effects of foreign bank presence in the european union our sample stretches from 2000 until 2012 and includes the phase of rapid financial integration before the global financial crisis as well as the following phase of financial fragmentation and bank deleveraging we find evidence that foreign bank presence had a more than four times stronger growth effect during the crisis than in normal times growth effects are also stronger in times of domestic bank deleveraging in light of these results we conclude that a reintegration of the european banking sector is an important building block of future growth perspectives in the european union

the role of financial factors for european corporate investment abstract motivated by the debate about the reasons behind the weak investment dynamics in europe we provide new evidence on the sensitivity of investment to financial factors and fundamentals before and during the financial and sovereign debt crises specifically controlling for firm level fundamentals we evaluate whether european firms cash holdings and indebtedness affected their investment decisions over the 2006 q3 2012 q2 period and whether their influence changed with the onset of the two crises our findings obtained using a correlated random coefficient panel data model suggest that investment was primarily determined by firm level fundamentals over this period contrary to earlier studies we also find that neither cash reserves nor short term debt considered separately were significant determinants of investment prior and during the two crises however there is some evidence of a negative conditional dependence between corporate investment and short term debt net of cash reserves during the financial crisis suggesting that firms simultaneously sought to avoid liquidity problems and preserve debt capacity

tolerance and growth modeling the empirical relationship we showed in berggren and elinder 2012 that tolerance toward homosexuals is negatively and quite robustly related to economic growth in a comment bornhoff and lee this issue question this finding on model specification grounds by undertaking three changes they purport to show that our main result does not hold in this article we demonstrate that one of these changes is inconsequential replacing gdp per capita by its logarithm in controlling for conditional convergence and argue that two of them are questionable first the removal of certain central control variable risks introducing omitted variable bias and inconsistent estimates second regional dummy variables are added on arbitrary grounds for example by using regional dummy variables that are just as reasonable as the baltic dummy used by bornhoff and lee we find that significance for tolerance toward homosexuals reappears in our empirical model in all this implies that there are good grounds for considering the negative relationship between tolerance towards homosexuals and growth valid bornhoff and lee s claims notwithstanding

long term debt maturity and financing constraints of smes during the global financial crisis we use the recent financial crisis to investigate financing constraints of private small and medium sized enterprises smes in belgium we hypothesize that smes with a large proportion of long term debt maturing at the start of the crisis had difficulties to renew their loans due to the negative credit supply shock and hence could invest less we find a substantial variation in the maturity structure of long term debt firms which at the start of the crisis had a larger part of their long term debt maturing within the next year experienced a significantly larger drop in investments in 2009 this effect is driven by firms which are ex ante more likely to be financially constrained consistent with a causal effect of a credit supply shock to corporate investments we find no effect in placebo periods without a negative credit supply shock

survive another day using changes in the composition of investments to measure the cost of credit constraints abstract we introduce a novel empirical strategy to measure the size of credit shocks theoretically we show that credit shocks reduce the value of long term relative to short term investments empirically we can therefore compare the reduction of long term relative to short term investments within firms allowing for firm times year fixed effects using spanish firm level data we estimate the credit crunch to be equivalent to an additional tax rate of around 11 on the longest lived capital to pin down credit constraints as the underlying cause we apply triple differences strategies using foreign ownership or precrisis debt maturity

the effect of recessions on firms boundaries the economic theory of the firm offers conflicting predictions of how the two major effects of recessions changes in demand and access to credit affect firm boundaries using data on norwegian firms in the recent recession we find support for both increased and reduced vertical integration of core activities in response to a recessionary shock further we find a negative interaction effect between reductions in access to credit and reductions in demand on insourcing of core activities but no such effect on outsourcing of core activities we argue that this finding may highlight a possible explanation for the conflicting theoretical predictions regarding vertical integration in response to demand and credit shocks

all for one or all for three empirical evidence of paradox theory in the triple bottom line abstract we empirically examine the triple bottom line of a sample of 746 firms from 2003 to 2013 the business case for sustainability advocates for corporate responsibilities only if they strengthen profits in contrast paradox theory states that managers should embrace the tensions between multiple bottom lines seeking simultaneous benefits combining data from kld and compustat we find strong supporting evidence for paradox theory first the findings suggest that the three components of the triple bottom line move in tandem rather than being mutually exclusive where high poor performance in one dimension relates to high poor performance in the other two dimensions regardless of the economic conditions second using the great recession as an exogenous shock we find supporting evidence for paradox theory lastly we link paradox theory and its implication on market valuation we find that the more components achieved at a high level the higher the market valuation with the valuation increasing per component achieved we conclude that the traditional focus on scarcity and the mutual exclusivity of sustainability goals is not empirically supported in our study instead we find compelling evidence for the abundance perspective of paradox theory and the simultaneous achievement of sustainability goals our results highlight that in viewing three bottom lines managers should embrace any ostensible tensions to find creative ways to address all three instead of all for one

global transmission channels for international bank lending in the 2007 09 financial crisist abstract during a financial crisis credit provision by international banks may be affected by three global channels changes in willingness to lend from increased economic uncertainty in funding availability from interbank liquidity markets and in solvency from weakened balance sheets in this paper we examine the extent to which each channel affected bank lending in developing countries during the global financial crisis of 2007 09 we find evidence that the liquidity and uncertainty channels were important although lending sensitivity to these channels remained unchanged during the crisis we also find heterogeneity in the lending behavior of european versus u s banks

repeated games with general discounting we introduce a general class of time discounting which includes time inconsistent ones into repeated games with perfect monitoring a strategy prole is called an agent

when arm s length is too far relationship banking over the credit cycle we conduct face to face interviews with bank ceos to classify 397 banks across 21 countries as either relationship or transaction lenders we then use the geographic coordinates of these banks branches and of 14 100 businesses to analyze how the lending techniques of banks in the vicinity of firms are related to credit constraints at two contrasting points of the credit cycle we find that while relationship lending is not associated with credit constraints during a credit boom it alleviates such constraints during a downturn this positive role of relationship lending is stronger for small and opaque firms and in regions with a more severe economic downturn moreover our evidence suggests thatrelationship lending mitigates the impact of a downturn on firm growth and does not constitute evergreening of loans

tolerance and economic growth revisited a note berggren and elinder be in this journal write on the relationship between the degree of tolerance in a nation and its rate of economic growth they are disturbed to find in their cross sections that faster economic growth statistically goes together with intolerance of homosexuals in this comment we revisit the issue and demonstrate that the concern expressed by be is unwarranted if we properly account for conditional convergence in the regressions for economic growth other things being equal a country grows faster if it starts from a poorer initial position in the be dataset china since the deng reforms is a prime example at about the same time another group of countries managed to accelerate their economic growth after a long period of stagnation the ex communist countries in central and eastern europe many of these nations also grew exceptionally fast for a number of years once freedom had been regained and the initial chaos overcome with simple modeling of these historical initial conditions we find no statistical pattern that associates bias against homosexuals with weaker economic growth our results are robust under alternative specifications

got rejected real effects of not getting a loan using a lender cutoff rule that generates plausibly exogenous variation in credit supply i investigate a new channel through which funding shocks are transmitted to the real economy based on a sample of more than 15 000 loan applications from small and medium sized enterprises i find that precautionary savings motives can aggravate real effects low liquidity firms whose loan applications were rejected increase cash holdings and cut noncash assets in excess of the requested loan amount these results point to the amplifying effect of precautionary savings motives in the transmission of credit supply shocks received december 11 2016 editorial decision february 22 2018 by editor philip strahan

do mispricing and financial constraints matter for investment decisions this study investigates how mispricing and financing constraints affect rms future capital investments we find that when the financing constraints are high overpriced underpriced firms invest

export market exit and financial health in crises periods abstract this paper uses rich firm level data for the uk to investigate the link between firms financial health and export exit paying attention to the erm currency crisis and the global financial crisis our results show that deterioration in the financial position of firms has increased the hazard of export exit during the 2007 09 crisis but has no significant effect on the early 1990s crisis we also explore the extent to which firms in financially vulnerable industries face greater sensitivity of export exit to financial conditions we conclude that firms in sectors with great reliance on external finance experience higher hazards of exiting the export market during the 2007 09 crisis

employment corporate investment and cash flow risk we highlight the role of cash flow uncertainty on corporate employment and investment we find that a 1 increase in cash flow uncertainty leads to a 0 62 decrease in tangible investment a 1 39 decrease in intangible investment and a 3 67 decrease in corporate employment growth our results are statistically and economically significant we further find that these relationships are stronger during economic recessions our findings have significant policy implications to wit if policy makers would like corporations to increase their employment and investment they should focus on policies that decrease corporate cash flow uncertainty

why are us firms using more short term debt abstract we show that corporate use of long term debt has decreased in the us over the past three decades and that this trend is heterogeneous across firms the median percentage of debt maturing in more than 3 years decreased from 53 in 1976 to 6 in 2008 for the smallest firms but did not decrease for the largest firms the decrease in debt maturity was generated by firms with higher information asymmetry and new firms issuing public equity in the 1980s and 1990s finally we show that demand side factors do not fully explain this trend and that public debt markets supply side factors play an important role our findings suggest that the shortening of debt maturity has increased the exposure of firms to credit and liquidity shocks

who benefits from financial development new methods new evidence abstract this paper takes a fresh look at the impact of financial development on economic growth by using recently developed kernel methods that allow for heterogeneity in partial effects nonlinearities and endogenous regressors our results suggest that while the positive impact of financial development on growth has increased over time it is also highly nonlinear with more developed nations benefiting while low income countries do not benefit at all we also conduct a novel policy analysis that confirms these statistical findings in sum this set of results contributes to the ongoing policy debate as to whether low income nations should scale up financial reforms

the use of bank lines of credit in corporate liquidity management a review of empirical evidence abstract this paper reviews empirical evidence on the use of bank lines of credit as a source of corporate liquidity traditional explanation for lines of credit is that they provide insurance against liquidity shocks in much the same as way hoarding cash does however recent empirical research suggests that access to lines of credit is contingent on the credit quality of the borrower as well as the financial condition of the lender these findings suggest that lines of credit are an imperfect substitute for cash as a source of corporate liquidity

corporate investment and bank dependent borrowers during the recent financial crisis abstract we use the recent financial crisis period to analyse the effect of bank credit tightening on firm investment we derive a new set of credit tightening indexes from the ecb bank lending survey combining these with annual balance sheet data from germany france italy spain belgium and portugal we exploit the heterogeneity in the dependence on bank finance of different industries to identify real effects of credit tightening we show that in response to tightening investment falls substantially more in bank dependent industries

working capital and fixed investment new evidence on financing constraints this article presents new tests for finance constraints on investment by emphasizing the often neglected role of working capital as both a use and a source of funds the coefficient of endogenous working capital investment is negative in a fixed investment regression as expected if working capital competes with fixed investment for a limited pool of finance this finding addresses a criticism of previous research on finance constraints that cash flows may simply proxy shifts in investment demand in addition previous studies may have underestimated the impact of finance constraints on growth and investment because firms smooth fixed investment in the short run with working capital

trust in the monetary authority abstract trust in policy makers fluctuates significantly over the cycle evaporating during crises and affecting the transmission mechanism despite this it is absent from the literature we build a monetary model where trust emerges endogenously as an equilibrium of a strategic interaction moral hazard with uncertainty on policy actions between betrayal averse agents and policy makers with stochastic incentives to deviate conditioned on past policy outcomes as signals a fall in trust due to shocks or policy actions increases the price that agents attach to future contingencies amplifies fluctuations and steepens the sacrifice ratio we test the transmission of shocks through var analyses where trust is proxied by answers to the eurobarometer surveys

corporate structure liquidity and investment evidence from japanese industrial groups this paper presents evidence suggesting that information and incentive problems in the capital market affect investment we come to this conclusion by examining two sets of japanese firms the first set has close financial ties to large japanese banks that serve as their primary source of external finance and are likely to be well informed about the firm the second set of firms has weaker links to a main bank and presumably faces greater problems raising capital investment is more sensitive to liquidity for the second set of firms than for the first set the analysis also highlights the role of financial intermediaries in the investment process

asymmetric timely loss recognition adverse shocks to external capital and underinvestment evidence from the collapse of the junk bond market abstract using the collapse of the junk bond market in the early 1990s as an exogenous shock to external capital i document in both difference in differences and triple difference designs that speculative grade firms that recognize economic losses in a timely manner experience a smaller reduction in investment following the collapse the effect is more pronounced for speculative grade firms with a low level of asset liquidation value using the excess bond premium as a proxy for fluctuations in the supply of capital i also extend the generalizability of my findings to a broader sample of 84 421 firm years over the 1972 2011 period

crude oil price uncertainty and corporate investment new global evidence abstract using a comprehensive dataset of more than 33 000 firms from 54 countries in the period 1984 2015 we show that crude oil price uncertainty negatively influences corporate investment more importantly the effect is dependent on the market and stock characteristics of the firms in addition we discover that the effect is stronger in the crude oil producers group than for crude consumers our analysis reveals that the global financial crisis and market volatility phases significantly affect this relationship our results survive a range of robustness tests

does the source of capital affect capital structure prior work on leverage implicitly assumes capital availability depends solely on firm characteristics however market frictions that make capital structure relevant may also be associated with a firm s source of capital examining this intuition we find firms that have access to the public bond markets as measured by having a debt rating have significantly more leverage although firms with a rating are fundamentally different these differences do not explain our findings even after controlling for firm characteristics that determine observed capital structure and instrumenting for the possible endogeneity of having a rating firms with access have 35 more debt copyright 2006 oxford university press

to what extent did the economic stimulus package influence bank lending and corporate investment decisions evidence from china abstract using a panel of chinese firms over the period 2003 2013 we show that from the supply side perspective as a result of the implementation of the economic stimulus package in china state owned enterprises soes received more bank loans and invested more than non soes we further find that after the implementation of the economic stimulus package bank lending became less responsive to firm profitability and firm investments became less responsive to investment opportunities for soes non soes from favoured industries and regions and non soes with political connections overall our findings support the view that the stimulus package and the associated increase in bank loan supply in china resulted in more resources being allocated to soes

saving the euro mitigating financial or trade spillovers this paper analyzes through what channels the euro crisis affected firms and the efficacy of policies to mitigate the crisis it analyzes stock price responses for 3 045 nonfinancial firms in 16 countries to four key policy events during 2010 11 using precrisis benchmarks it separates financial effects from trade effects and examines how bank and trade linkages propagated shocks it finds that policy measures affected financially dependent firms more particularly in creditor countries with greater bank exposure to peripheral euro countries in statistically and economically significant ways trade linkages with peripheral countries played little role although euro movements meant some differential effects

is tolerance good or bad for growth we investigate how tolerance as measured by attitudes toward different types of neighbors affects economic growth in a sample of 54 countries unlike previous studies by richard florida and others we find that tolerance toward homosexuals is negatively related to growth for tolerance toward people of a different race we do not find robust results but the sign of the estimated coefficients is positive suggesting that inclusion of people irrespective of race makes good use of productive capacity we propose mechanisms to explain these divergent findings which clarify why different kinds of tolerance may be of different economic importance