Labor Union Effect on Corporate Cash Holdings and Their Marginal Value

By using panel data from Korean listed firms, we find that unionized firms strategically hold less cash to enhance their bargaining power against labor unions. We also find that unionized firms are likely to reduce the marginal value of their cash holdings, thereby decreasing shareholder value from the agency theory perspective. This finding complements the agency theory argument that managers tend to waste corporate resources by hoarding cash, particularly when faced with increased information asymmetry and financial constraints. Overall, our results suggest that information-related financial constraints and agency problems are likely to co-exist in unionized firms.     

Earnings Quality Effect on Corporate Excess Cash Holdings and Their Marginal Value

By using panel data from Korea’s listed firms, we find that firms with poor earnings quality are more likely to accumulate excess cash holdings, perhaps in an attempt to buffer themselves from information asymmetry problems. We also find that firms with poor earnings quality are more likely to discount the marginal value of their excess cash holdings because their shareholders appear to question the reason for such cash policy changes from the agency theory perspective. Overall, our results suggest that information asymmetry and agency problems are likely to co-exist in firms with poor earnings quality.     

The Influence of a Credit Rating Change on Dividend and Investment Policy Interactions

We examine firms’ alterations in dividend and investment activities following credit rating changes. We find that downgraded firms reduce both dividends and investments more than no‐rating‐change firms. However, a silver lining of this doubly negative impact for shareholders is an increase in investment efficiency in firms that are most likely to overinvest. For upgraded firms, investments increase, but dividend outlays do not, compared to firms without rating changes. Our findings of asymmetric dividend stickiness and symmetric investment changes on a credit shock suggest that dividends and investments should not always be considered competing uses of funds.     

Cash Flow Sensitivity of Investment

Investment cash flow sensitivity is associated with both underinvestment when cash flows are low and overinvestment when cash flows are high. The accessibility of external capital is positively correlated with cash flows, intensifying investment cash flow sensitivity. Managers actively counteract the variations in internal and external liquidity by accumulating working capital when liquidity is high and draining it when liquidity is low. These results imply that cash flow sensitive firms face financial constraints, which are binding in low cash flow years. Traditional indicators of financial constraints, such as size and dividend payout, successfully distinguish firms that may potentially face constraints, but are less successful in distinguishing between periods of tight and relaxed constraints. These periods are much more clearly separated by the KZ index, which, on the other hand, is less successful in identifying firms that are likely to face liquidity constraints.     

Split Ratings and Differences in Corporate Credit Rating Policy between Moody's and Standard & Poor's

This paper investigates split credit ratings awarded by Moody's and Standard & Poor's (S&P) to U.S. corporations. Bivariate probit model estimates, analyzing 5,238 firm‐year observations from dual‐rated S&P 500/400/600 index‐constituent corporations, indicate firm‐specific financial and governance characteristics predict split ratings. Large, profitable companies with enhanced interest coverage, a greater percentage of independent directors, and more institutional investment are less likely to receive splits. Moody's appears more conservative in its evaluations, assigning lower ratings to smaller, less profitable companies with low interest coverage. Moody's also associates external, independent constraints on managerial autonomy with a higher corporate credit standing relative to S&P.     

The Impact of Ambiguity on Managerial Investment and Cash Holdings

Standard finance theory suggests that managers invest in projects that, in expectation, produce returns that justify the use of capital. An underlying assumption is that managers have the information necessary to understand the distributional properties of the pay‐offs underlying the decision. This paper examines firm investment behavior when managers are likely to find it more challenging to develop expectations of pay‐offs, namely during periods of increased macroeconomic ambiguity. In particular, we examine how macroeconomic ambiguity – proxied by the variance premium (Drechsler, 2010 ) and the dispersion in forecasts of corporate profits from the Survey of Professional Forecasters (Anderson et al., 2009 ) – impacts managerial capital investment and cash holdings. Consistent with ambiguity theory, we find that macroeconomic ambiguity is negatively associated with capital investment and positively associated with cash holdings. These results are robust to alternative explanations related to risk, investor sentiment and economic conditions. Moreover, consistent with recent theoretical real options literature, we find that ambiguity reduces the value of investment opportunities, while risk increases the value of such opportunities. Overall, these findings provide initial empirical evidence on the economic distinction between ambiguity and risk with respect to managerial investment and cash holdings.     

大股东控制、市场化程度与公司现金持有水平

运用2003～2008年我国所有非金融类A股上市公司的样本数据,从大股东控制视角出发,重点关注第一大股东持股比例、实际控制人性质和公司所在地区市场化程度对于公司现金持有水平的共同作用。结果表明,第一大股东持股比例与公司现金持有量水平正相关,实际控制人为国有的比非国有的上市公司的现金持有量高;公司外部治理环境的改善,有助于减轻由第一大股东持股比例以及实际控制人性质对公司现金持有量造成的负面影响。     

商业信用、融资约束与公司价值

以我国 A 股非金融类上市公司为样本,就商业信用变动对公司价值的影响进行分析,并以投资效率损失作为融资约束程度分类标准,对融资约束程度不同公司的商业信用变动的边际价值进行对比分析。研究发现：商业信用有利于提高公司价值;融资约束公司的商业信用变动的边际价值小于非融资约束公司;对于融资约束类公司,商业信用变动的边际价值会随着商业信用存量的增加而增加;而对于非融资约束类公司,商业信用变动的边际价值会随着商业信用存量的增加而减小。     

The Relation Between SFAS No. 95 Cash Flows From Operations and Credit Risk

This study examines the relevance of Financial Accounting Standards (SFAS) No. 95 operating cash flow disclosures for assessing a primary component of firm risk, namely credit risk. We find that SFAS No. 95 operating cash flows is an important determinant of credit risk, measured by debt ratings, incremental to other profitability and risk–related information. We also find that operating cash flows have a stronger incremental relation to credit risk for firms with a larger proportion of long–term debt and larger firms with lower operating uncertainty. Interestingly, cash flows appear to have less incremental importance for firms in high tech and regulated industries.     

The Effects of Corporate Social Performance on the Cost of Corporate Debt and Credit Ratings

This study investigates the differential impact that various dimensions of corporate social performance have on the pricing of corporate debt as well as the assessment of the credit quality of specific bond issues. The empirical analysis, based on an extensive longitudinal data set, suggests that overall, good performance is rewarded and corporate social transgressions are penalized through lower and higher corporate bond yield spreads, respectively. Similar conclusions can be drawn when focusing on either the bond rating assigned to a specific debt issue or the probability of it being considered to be an asset of speculative grade.     

The Determinants of Corporate Trade Credit Policies in a Bank‐dominated Financial Environment: the Case of Finnish Small Firms

This paper examines trade credit policies of small firms operating in a bank‐dominated environment (Finland). We find that creditworthiness and access to capital markets are important determinants of trade credit extended by sellers. The level of purchases is positively correlated with the level of accounts payable. Larger and older firms and firms with strong internal financing are less likely to use trade credit, whereas firms with a high ratio of current assets to total assets, and firms subject to loan restructurings use it more. Negative loan decisions by financial intermediaries increase and a close bank‐borrower relationship decreases the probability that a firm does not take advantage of trade credit discounts.     

Corporate trade credit and inventories: New evidence of a trade-off from accounts payable and receivable

Trade credit is an important source of finance for firms and has been well researched, but the focus has been on financial trade-offs. In this paper, we consider the trade-offs with inventories and develop a simple model that recognizes the incentives a firm faces to offer and receive trade credit. Our model identifies the response of accounts payable and accounts receivable to changes in the cost of inventories, profitability, risk and liquidity, and importantly, this influence operates through a production channel. Our results support the model and complement many existing studies focused on explaining the financial terms of trade credit.     

数字经济对企业现金持有水平影响研究 ——基于"宽带中国战略"的准自然实验

全面推进以“宽带中国战略”为主的数字化经济建设是带动企业数字化转型，优化企业资源配置，进而促进企业长期稳定发展的重要步骤。以“宽带中国战略”为准自然实验，基于2008-2020年中国上市公司数据，采用DID（双重差分）模型考察数字经济对企业现金持有水平的影响。研究表明：数字经济显著抑制企业现金持有水平，有效促进经济流通；中介效应模型检验发现，积累人力资本和缓解融资约束是数字经济降低企业现金持有水平的重要机制；异质性检验发现，数字经济对东部地区企业和中小企业现金持有水平的抑制作用更显著。基于以上研究，充分识别了当前我国数字经济对于企业现金持有水平的抑制作用，同时有助于推进“宽带中国战略”的进一步落地实施。     

中国上市公司高管学术经历对企业现金持有的影响

依据沪深A股上市公司2008-2017年数据,考量高管学术经历对企业现金持有的影响。结果表明：高管学术经历通过风险特质和创新活动影响现金持有水平;高管学术经历与现金持有水平正相关,行业竞争的缓和会削弱二者的正相关关系;相对于国有企业,高管学术经历对非国有企业现金持有水平的影响更显著。     

Corporate decision making in the presence of political uncertainty: The case of corporate cash holdings

Using a quarterly panel of U.S. corporations over the period 1985–2014, we show that corporate managers respond to political uncertainty and economic policy uncertainty shocks in different ways. We proxy for political uncertainty using the Partisan Conflict Index and employ a prevalent empirical macroeconomic methodology to construct structural shocks that are orthogonal to shocks captured by the Economic Policy Uncertainty Index. Following a political uncertainty shock, corporations increase cash but do not adjust investment. Alternatively, following an economic policy uncertainty shock, firms appear to draw on cash and reduce capital spending to increase research and development spending.     

The Original Maturity of Corporate Bonds: The Influence of Credit Rating,Asset Maturity,Security, and Macroeconomic Conditions

We examine the determinants of the new issue maturity of corporate bonds. As credit rating decreases, new bond issues have longer maturities, but substantial variation in maturity within each rating class remains. We seek to explain the variation of new issue maturity within credit classes. We find that asset maturity, security covenants, and macroeconomic conditions influence the new issue maturity of bonds within rating categories.     

Interenterprise Credit and Adjustment during Financial Crises: The Role of Firm Size

Small and medium‐sized enterprises (SMEs) suffered a sharp contraction in their borrowing from banks during the Great Recession. Analyzing a large firm‐level database for European countries, the paper shows that trade credit amplified the liquidity squeeze on SMEs, with adverse effects on their real activity. SMEs sharply increased their net trade credit and thus transferred financial resources to larger firms. Given the large weight of SMEs in the economy of European countries, the liquidity squeeze of SMEs likely contributed to the depth of the output fall and the slow recovery in Europe during the Great Recession.     

Managerial Behavior and the Link between Stock Mispricing and Corporate Investments: Evidence from Market‐to‐Book Ratio Decomposition

We examine the impact of mispricing on corporate investments and its components: capital expenditures, research and development, acquisitions, and asset sales. By decomposing the market‐to‐book ratio into mispricing and growth components, we show that corporate investments are linked to mispricing through market‐timing and catering, after controlling for growth and financial slack. This investment‐mispricing link is more pronounced in financially constrained firms and in firms with short‐horizon shareholders. Overall, our study indicates that the sensitivity of investments to mispricing is a function of the nature of mispricing, the type of investment, and the firm's characteristics.     

The Persistent Puzzle of Corporate Capital Structure: Current Challenges and New Directions

This paper is the keynote address from the Eastern Finance Association's 2012 meeting in Boston. I assert that, despite a substantial amount of work and much progress in the capital structure field, traditional models do a remarkably poor job of explaining the dynamics of observed capital structures. New approaches that focus on the firm's intertemporal access to capital appear to represent the most promising avenues for yielding fresh insights.