Credit Constraints,Technology Choice and Exports: A Firm‐level Study for Latin American Countries

In this paper, constraints on technology choice and credit access are introduced into a firm‐level trade model in a dynamic setting in order to explain factors that limit benefits to a firm from trade liberalization. Theoretical analysis shows that firms face credit constraints depending on their initial productivity and the cost of credit. As a result, credit‐constrained firms may not be able to cross the minimum productivity threshold needed to enter and compete in a foreign market. Empirical analysis using firm‐level panel data for six Latin American countries confirms that financial constraints negatively influence firms' export and investment decisions.     

A Note on Fixed Costs and the Profitability of Depository Intermediaries

In this paper we consider some factors which are of potential importance in the debate concerning the sources of performance for intermediaries. Using data from depository institutions (banks and savings and loans), we find that the distributional intensity (provided by standardized number of offices in a market) is consistently important in explaining cross- sectional profitability. This result implies that the number of offices in a market is at least as important as more traditional measures of efficiency and concentration in determining returns in this sector of the financial services industry. Indeed, when pooled data are used, there is a strong quadratic relationship between return on assets and the number of offices in a market. We show that this relationship can be viewed as coming from spatially differentiated markets as opposed to collusion or efficiency per se. Finally, we provide evidence that results concerning the rule of efficiency versus market concentration are themselves sensitive to the implicit assumption that there are no close substitutes for the services provided by a sub-set of the industry. In particular, results from ‘pooled’ bank and thrift data often provide conclusions which are different from those which include only banks. © 1997 John Wiley & Sons Ltd.     

Value relevance of earnings: Evidence from Middle Eastern and North African Countries

Researchers as well as regulators are increasingly more interested in enhancing their understanding of the factors that influence value relevance of reported earnings in financial statements. In the light of globalization and increased exposure to international accounting practices, a better comprehension of factors contributing to or reducing value relevance of earnings is essential. This paper investigates the value relevance of earnings and its components for a number of Middle Eastern and North African (MENA) countries. Additionally, the paper examines how differences in levels of mandated disclosures, source of accounting standards, and legal systems moderate the informativeness of earnings to investors. We find that mandated disclosure and source of accounting standard, (especially non-governmental source) are positively associated with earnings informativeness. Additionally, MENA countries with French civil law and systems have lower value relevance relative to countries in our sample with English and related legal codes. Further, the firms that have adopted international financial reporting standards have higher value relevance than firms in MENA countries which adhere to local standards.     

Regional growth and finance in Europe: Is there a quality effect of bank efficiency?

In this study, we test whether regional growth in 11 European countries depends on financial development and suggest the use of cost- and profit-efficiency estimates as quality measures of financial institutions. Contrary to the usual quantitative proxies of financial development, the quality of financial institutions is measured in this study as the relative ability of banks to intermediate funds. An improvement in bank efficiency spurs five times more regional growth then an identical increase in credit does. More credit provided by efficient banks exerts an independent growth effect in addition to direct quantity and quality channel effects.     

Dynamic linkages between the center and periphery in international stock markets

This paper examines the dynamic linkages between the equity market of US representing the center and emerging markets using the Granger-causality test. The findings show that causality runs from the S&P500 to the stock prices of the 15 emerging markets but not vice versa.     

Political Uncertainty and Bank Loan Contracts: Does Government Quality Matter?

Journal of Financial Services Research - We investigate the relation between political uncertainty and bank loan spreads using a sample of loan contracts for the G20 firms during the period from...     

Did you really take a hit? Understanding how video games playing affects individuals

This study addresses the important and recurring question of whether playing video games is detrimental to the socio-economic development of a person. It does this by using novel data from the Taking Part Survey in England to establish whether games playing is associated with particular socio-economic characteristics and/or other forms of cultural participation. The results do not indicate any obviously negative effects of video games playing: rather, those who play are typically better educated and no less wealthier, and games players are also more likely than non-games players to participate in other forms of culture, particularly active forms of participation. These findings are reinforced when comparing the characteristics of individuals who did and did not play video games when younger.     

Corporate social responsibility performance,financial distress and firm life cycle: evidence from Australia

This study examines the association between corporate social responsibility (CSR) performance and financial distress and additionally the moderating impact of firm life cycle stages on that association. Based on a sample of 651 publicly listed Australian firm‐years’ data covering the 2007–2013 period, our regression results show that positive CSR activity significantly reduces financial distress of the firm. In addition, the negative association between positive CSR performance and financial distress is more pronounced for firms in mature life cycle stages. Our results are robust to alternative proxy measures of financial distress, CSR performance and life cycle stages.     

Business Strategy and Labor Investment Efficiency*

This paper examines the relation between business strategy and labor investment efficiency. Since business strategy affects both the agency problem and firm‐level uncertainty, as well as the overall shape of corporate behavior, we would expect the efficiency of labor investment to vary with the particular business strategy a firm pursues. Using a large sample of US data, we find that firms having a prospector‐type business strategy are associated with inefficient labor investment, while those having a defender‐type business strategy are associated with efficient labor investment. We provide evidence that uncertainty, rather than the agency problem, causes prospector‐type firms to exhibit inefficient labor investment. Finally, we document that inefficient labor investment by prospectors leads to relatively low profitability in subsequent periods. These findings are robust when subjected to a series of sensitivity tests.