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Author : Charles Patrick Himmelberg
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (717 download)
Download or read book Essays on the Relationship Between Investment and Internal Finance written by Charles Patrick Himmelberg and published by . This book was released on 1990 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Tae-Nyun Kim
Publisher :
ISBN 13 :
Total Pages : 111 pages
Book Rating : 4.:/5 (752 download)
Download or read book Two Essays on Corporate Finance written by Tae-Nyun Kim and published by . This book was released on 2011 with total page 111 pages. Available in PDF, EPUB and Kindle. Book excerpt: The first essay looks at the impact of dynamic financial constraints and corporate cash holdings on investment-cash flow sensitivity. In this essay, I find that a firm increases its investment-cash flow sensitivity when it has higher level of financial constraints than previous period. In addition, I find that financially constrained firms have significantly bigger impact of corporate cash holdings on investment-cash flow sensitivity than unconstrained firms. Moreover, I show that cash holdings of a firm has a negative relationship with its investment-cash flow sensitivity if the level of its investment does not exceed internal financing sources, where the level of internal financing is defined as the sum of the previous period's cash holdings and the current period's cash flow. Lastly, I find that bank-dependent firms experience higher increase in investment-cash flow sensitivity than non-bank-dependent firms during the IT bubble burst period in the early 2000s and the subprime mortgage crisis in the late 2000s, which suggests that firms facing financial constraints increase investment-cash flow sensitivity. The second essay investigates the influence of the external shock on the speed of adjustment (SOA) toward several target ratios of firms. To look at the impact of an exogenous shock on SOA, I employ mandatory contributions (MCs) of defined benefit (DB) pension plans as a measure of the external shock, and I find a negative impact of the exogenous shock on the level of leverage and SOA toward target leverage. This result is robust when including firm and year fixed effects, when using GMM or long differencing estimation to reduce the biases in estimation, and when assuming that mandatory contributions are endogenously determined. The negative impact of MCs on SOA is especially bigger for firms which have volatile historical leverage or stronger governance structure. Though the total liability level of DB pension plans has a negative impact on both the level of leverage and SOA toward target leverage, it becomes statistically insignificant or trivial in magnitude after including firm fixed effects and year dummies in the model. When examining the impact of MCs on SOA toward other target ratios of firms, I find a negative impact of MCs on SOA toward the target investment level.
Author : Rita Biswas
Publisher : Emerald Group Publishing
ISBN 13 : 1789733898
Total Pages : 168 pages
Book Rating : 4.7/5 (897 download)
Download or read book Essays in Financial Economics written by Rita Biswas and published by Emerald Group Publishing. This book was released on 2019-10-24 with total page 168 pages. Available in PDF, EPUB and Kindle. Book excerpt: This volume, dedicated to John W. Kensinger, explores a variety of topics in financial economics, including firm growth, investment risks, and the profitability of the banking industry. With its global perspective, Essays in Financial Economics is a valuable addition to the bookshelf of any researcher in finance.
Author : Cherian Samuel
Publisher :
ISBN 13 :
Total Pages : 40 pages
Book Rating : 4.:/5 (318 download)
Download or read book Internal Finance and Investment written by Cherian Samuel and published by . This book was released on 1996 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Klaus Hammes
Publisher : Department of Economics School of Economics and Commercial Law Go
ISBN 13 :
Total Pages : 188 pages
Book Rating : 4.3/5 (91 download)
Download or read book Essays on Capital Structure and Trade Financing written by Klaus Hammes and published by Department of Economics School of Economics and Commercial Law Go. This book was released on 2003 with total page 188 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Jie Zhu
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (136 download)
Download or read book Two Essays on Investments written by Jie Zhu and published by . This book was released on 2017 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: In my dissertation, I study factors that influence investments from either corporate or institutional perspective. First, I examine the sensitivity of corporate investment to internally generated cash flow and its pattern of change over time across countries. Second, I investigate how a firm's customer profile can shape its ownership structure of institutional investors. Existing studies have documented a puzzling disappearance of investment-cash flow (ICF) sensitivity in the U.S.. In the first chapter, I explore whether economic and financial development can explain the extent of a country's ICF sensitivity and its evolution through time. I find that, in aggregate, ICF sensitivity has also faded around the world; yet it has remained high in countries with low economic and financial development. Further, I find that the access to external finance, especially equity finance, is a key channel through which country-level development affects the sensitivity of investment to internal cash flow. In more developed countries, external finance has become more accessible for firms when their internal cash flow is insufficient, thereby reducing their reliance on internal cash flow. The results indicate that once a country advances to a certain degree of financial and economic development, it becomes more efficient in allocating resources and therefore financial constraints at the individual firm level become less binding. A growing literature has documented different financial implications of a concentrated customer base. In the second chapter, I examine how customer concentration affects institutional investors' investment decisions. I find that a firm's customer concentration tends to attract different groups of institutional investors, depending upon their investment horizons. Specifically, those institutions who trade actively (short-term) would buy the stocks of firms with a more concentrated customer base. Conversely, those institutions who trade less actively (long-term) would buy the stocks of firms with a less concentrated customer base. While the preference of long-term investors is supported by the increased risk associated with the dependency on a few large customers, I find that the improved stock liquidity is the channel through which a concentrated customer base attracts short-term investors. Further, my findings cannot be explained by information transfer along the supply chain.
Author : My Dieu CaoHuy
Publisher :
ISBN 13 :
Total Pages : 294 pages
Book Rating : 4.:/5 (34 download)
Download or read book Essays on Corporate Financing Behavior written by My Dieu CaoHuy and published by . This book was released on 1996 with total page 294 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Charl Kengchon
Publisher :
ISBN 13 :
Total Pages : 334 pages
Book Rating : 4.:/5 (89 download)
Download or read book Three Essays on Financial Relationships in Credit Markets with Adverse Selection written by Charl Kengchon and published by . This book was released on 1989 with total page 334 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Ben Bernanke
Publisher : MIT Press
ISBN 13 : 9780262522564
Total Pages : 438 pages
Book Rating : 4.5/5 (225 download)
Download or read book NBER Macroeconomics Annual 1998 written by Ben Bernanke and published by MIT Press. This book was released on 1999 with total page 438 pages. Available in PDF, EPUB and Kindle. Book excerpt: The goals of the annual NBER Macroeconomics Conference are to present, extend, and apply frontier work in macroeconomics and to stimulate work by macroeconomists in policy issues. Each paper in the Annual is followed by comments and discussion.
Author : Zhikun Li
Publisher :
ISBN 13 :
Total Pages : 312 pages
Book Rating : 4.3/5 (129 download)
Download or read book Essays on Corporate Investment Decisions written by Zhikun Li and published by . This book was released on 2004 with total page 312 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Jingbo Yu
Publisher :
ISBN 13 :
Total Pages : 91 pages
Book Rating : 4.:/5 (128 download)
Download or read book Essays on Corporate Finance written by Jingbo Yu and published by . This book was released on 2016 with total page 91 pages. Available in PDF, EPUB and Kindle. Book excerpt: Much of the literature on investment-cash flow sensitivity examines only manufacturing firms, uses capital expenditure as a measure of investment, and uses operating cash flow as a measure of internal funds. Over the last several decades, due to outsourcing, the importance of manufacturing firms in the U.S. economy and the importance of capital expenditure as the primary type of investment have declined. The introduction of the Nasdaq exchange allowed smaller, less-profitable, and more human-capital intensive firms to become public, lowering the importance of operating cash flow as the primary source of internal funds. To take into account these trends, I introduce three innovations to the prior literature. (i) I include non-manufacturing firms. (ii) I broaden the definition of investment to include R&D and SG&A (which are both investments in human capital required at the innovation and marketing stages of the product life cycle), cash investment in subsidiaries and joint ventures, and the cash used to finance acquisitions. (iii) I broaden the definition of internal funds to include cash holding available at the beginning of the year. Empirically, non-manufacturing firms are more capital intensive than non-manufacturing firms, and hence excluding these firms could understate the true investment-cash flow sensitivity. Capital expenditure understates true investment, and hence excluding other forms of investment could also understate the true investment-cash flow sensitivity. Finally, operating cash flow understates true internal funds, and excluding cash holdings could overstate the true investment-cash flow sensitivity. The net effect of my proposed changes on the sensitivity is, therefore, an empirical issue. Overall, I document that investment is highly sensitive to cash flow--it is 570% higher than what I estimate using the definitions in prior literature--and this higher sensitivity is primarily caused by broadening the definition of investment. Further, though the sensitivity declines over time, the decline is modest and, importantly, the sensitivity is still economically and statistically significant in recent years. I identify three factors that have contributed to this decline: (i) the decline in Fed Funds rate (ii) changing firm characteristics and, (iii) changing firm composition. The changing characteristics and changing composition of firms are possibly due to macro trends such as outsourcing and the introduction of Nasdaq exchange. While outsourcing reduced firms' capital expenditure, the introduction of the Nasdaq facilitated listing of less profitable and more human-capital intensive firms. Such firms are likely to invest more in R&D and SG&A and are less reliant on operating cash flow for their investment. These macro trends altered firms' investment and cash flow mix, specifically decreasing the investment-cash flow ratio, which, in turn, contributed to the decrease in investment-cash flow sensitivity.
Author : Yao Yao
Publisher :
ISBN 13 : 9781361315545
Total Pages : pages
Book Rating : 4.3/5 (155 download)
Download or read book Essays on the Investment Effect written by Yao Yao and published by . This book was released on 2017-01-26 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation, "Essays on the Investment Effect" by Yao, Yao, 姚瑶, was obtained from The University of Hong Kong (Pokfulam, Hong Kong) and is being sold pursuant to Creative Commons: Attribution 3.0 Hong Kong License. The content of this dissertation has not been altered in any way. We have altered the formatting in order to facilitate the ease of printing and reading of the dissertation. All rights not granted by the above license are retained by the author. Abstract: The thesis consists of two essays on the investment effect. The first essay is an international examination of the investment effect, and the second essay explores the rationale behind the investment effect based on U.S. data. A growing body of finance literature has documented an investment effect that firms making larger investments earn lower future stock returns. While the negative relation between corporate investments and future stock returns is well accepted, it is in a great debate for why an investment effect exists. Two major hypotheses are proposed to account for the investment effect, mispricing and rational pricing. The mispricing hypothesis focuses on market participants' irrational behavior, including managerial overinvestment and investors' extrapolation of past firm performance. The rational pricing hypothesis, however, centers on examinations of the q theory. Under the q theory, the net present value of potential projects can be high if either the future marginal productivity is high or the future discount rate is low. As a result, for a given level of future profitability, firms making large (small) investments are likely to be those with low (high) discount rates. This predicts low (high) stock returns following large (small) capital investments. The first essay tests the q theory explanation for the investment effect using international data. I show that the investment effect exists across international markets and differs substantially across countries. I find a stronger investment effect in countries with better corporate governance, lower limits to arbitrage, and more developed equity markets. I construct a composite Q index, based on corporate governance, limits to arbitrage and market development, to separate countries with a strong investment effect from the rest. The empirical results are consistent with the q theory explanation for the investment effect. The second essay investigates the relation between the investment effect and intangible returns, as well as external financing, in the U.S. market. Extending the model in Daniel and Titman (2006), I operationalize an empirical design of log-linear decomposition of the book-to-market ratio. Using a three-period empirical model, I examine the relations among intangible returns in period one, real investments and external financing in period two, and stock returns in period three. The empirical evidence suggests no additional explaining power of investments for future stock returns, when contemporaneous external financing and prior intangible returns are controlled for. The abnormal return patterns associated with real investments documented in prior studies are consistent with, and part of, the broader return pattern that characterizes the value/growth anomaly. I show that these findings are consistent with the q theory, but inconsistent with the mispricing story. DOI: 10.5353/th_b5043432 Subjects: Investments
Author : El Bachir Boukherouaa
Publisher : International Monetary Fund
ISBN 13 : 1589063953
Total Pages : 35 pages
Book Rating : 4.5/5 (89 download)
Download or read book Powering the Digital Economy: Opportunities and Risks of Artificial Intelligence in Finance written by El Bachir Boukherouaa and published by International Monetary Fund. This book was released on 2021-10-22 with total page 35 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper discusses the impact of the rapid adoption of artificial intelligence (AI) and machine learning (ML) in the financial sector. It highlights the benefits these technologies bring in terms of financial deepening and efficiency, while raising concerns about its potential in widening the digital divide between advanced and developing economies. The paper advances the discussion on the impact of this technology by distilling and categorizing the unique risks that it could pose to the integrity and stability of the financial system, policy challenges, and potential regulatory approaches. The evolving nature of this technology and its application in finance means that the full extent of its strengths and weaknesses is yet to be fully understood. Given the risk of unexpected pitfalls, countries will need to strengthen prudential oversight.
Author :
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (86 download)
Download or read book Essays in Corporate Investment, Financing, and Product Market Competition written by and published by . This book was released on 2013 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: The dissertation seeks to understand the importance of financial fictions and imperfect product market competition to corporate investment. It examines the ways in which competitive pressures in product markets, either from domestic or international rivals, affect a firm's investment and financing decisions. The dissertation first explores the empirical investment behavior of firms in the presence of imperfect product market competition and financial constraints. Firms with market power have incentive to overinvest to block potential rivals. As cash flow reflects the information about expected monopoly profits, the investment by firms with greater market power responds more to cash flow. But monopolists have a lower sensitivity of investment to cash flow than firms with medium market power. This is because cash flow compensates for the increased negative effect of monopoly rents on investment. Financial constraints can cause excess investment sensitivity to cash flow after accounting the effect of imperfect competition in product market. The dissertation also studies the interplay between globalization, product market competition, and corporate investment. Imports and foreign direct investment adversely affect domestic firms' market power, but the effect of imports is more pronounced. Firms with stronger market power cut more capital expenditures and increase less spending on R&D when they lose market power. Internal funds and market power show a complementary effect on corporate investment. Globalization appears linked to firms' abilities to get financing, as well as to their competitive product market positions and industry concentrations. Lastly, the dissertation connects globalization to the investment-cash flow sensitivity. The response of investment to cash flow increasingly declines with the impact of import competition on firms' market power. This is because intensified globalization reduces the market power of local U.S. manufacturing firms and the investment by firms with greater market power tends to depend more on the availability of internal funds. Beside through the channel of product market competition, the integration of global economy directly and negatively affects investment-cash flow sensitivity. Temporal globalization reversals are associated with the increase in the dependence of investment on cash flow.
Author : Guy V. G. Stevens
Publisher :
ISBN 13 :
Total Pages : 44 pages
Book Rating : 4.:/5 (318 download)
Download or read book Internal Funds and the Investment Function written by Guy V. G. Stevens and published by . This book was released on 1993 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Pavel Zryumov
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (911 download)
Download or read book Essays in Corporate Finance written by Pavel Zryumov and published by . This book was released on 2015 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This thesis studies the investment and financing decisions of firms in dynamic markets with asymmetric information. In the first chapter I analyze the effects of time-varying market conditions and endogenous entry on the equilibrium dynamics of markets plagued by adverse selection. I show that variation in gains from trade, stemming from market conditions, creates an option value and distorts liquidity when gains from trade are low. An improvement in market conditions triggers a wave of high-quality deals due to the preceding illiquidity and lack of incentives to signal quality. When gains from trade are high, the market is fully liquid; high prices and no delay in trade attract low-grade assets, and the average quality deteriorates. My analysis also reveals that illiquidity can act as a remedy as well as a cause of inefficiency: partial illiquidity allows for screening of assets and restores efficient entry incentives. I demonstrate model implications using several applications: early stage financing, initial public offerings, and private equity buyouts. Chapter 2, which is a joint work with Ilya Strebulaev and Haoxiang Zhu, reexamines the classic yet static information asymmetry model of Myers and Majluf (1984) in a fully dynamic market. A firm has access to an investment project and can finance it by debt or equity. The market learns the quality of the firm over time by observing cash flows generated by the firm's assets in place. In the dynamic equilibrium, the firm optimally delays investment, but investment eventually takes place. In a ``two-threshold'' equilibrium, a high-quality firm invests only if the market's belief goes above an optimal upper threshold, while a low-quality firm invests if the market's belief goes above the upper threshold or below a lower threshold. However, a different ``four-threshold'' equilibrium can emerge if cash flows are sufficiently volatile. Relatively risky growth options are optimally financed with equity, whereas relatively safe projects are financed with debt, in line with stylized facts. Finally, Chapter 3, which is based on an ongoing work with Ilya Strebulaev and Haoxiang Zhu, extends the analysis of Chapter 2 by allowing cash accumulation within the firm. We consider a firm whose managers possess superior information about the firm's value relative to the rest of the market and analyze the optimal timing of equity issuance. We show that equilibrium features socially inefficient, but privately optimal, delay of investment and equity financing of positive NPV projects. Waiting allows high quality firms to accumulate internal cash and increase investors' beliefs, therefore, reducing the cost of adverse selection. In the dynamic equilibrium low quality firms delay investment as well in hope of being mistaken for the high quality ones. However, when market beliefs are sufficiently low and/or internally accumulated level of cash is sufficiently high the low quality firm prefers to reveal itself.
Author : Ward R. Kangas
Publisher : Universal-Publishers
ISBN 13 : 1581120044
Total Pages : 144 pages
Book Rating : 4.5/5 (811 download)
Download or read book Two Essays in Finance written by Ward R. Kangas and published by Universal-Publishers. This book was released on 1997-10 with total page 144 pages. Available in PDF, EPUB and Kindle. Book excerpt: Based on data on publicly traded insurance firms, the first essay examines questions about the effect of large catastrophic events on insurance firms. Rather than looking at a single event, thirty catastrophic events were aggregated into quintiles and the cumulative abnormal returns around these events were found to be significantly positive over a 25 day trading window. There is no significant evidence that post-catastrophic stock returns are correlated to the magnitude of the catastrophe. The second essay analyzes the effect of a large land grant university, the University of Illinois, on the State Treasury of Illinois. If the State Treasury were acting as its own agent trying to maximize revenues, would it choose higher education as an investment versus other alternative investments. While it is true the State makes large expenditures for the operations of the University, it is also true that individuals receiving degrees on average receive higher incomes. Taxes or higher incomes offset the cost of operating the University. The study is broken out by the level of student: undergraduate, masters, doctorate, medical professional, and by function of the University. It was found that all levels of education have a positive return not only for the individual, but also for the State Treasury. This is in excess of any non-pecuniary benefits to the State of having a better educated population, or the local taxation effects on the county or city where the campus is located. These returns are found to be higher than other types of investments.
