1,721,003 research outputs found
CEO Compensation, Family Control, and Institutional Investors in Continental Europe
Full text linkThis paper investigates the impact of family control and institutional investors on CEO pay packages in Continental Europe, using a large data set of 754 listed firms with 3,731 firm-year observations from 14 countries over the period 2001-2008. We find that family control curbs the level of CEO total and cash compensation, and the fraction of equity-based compensation. Moreover, we do not observe a significant effect of family control on the excess level of total and cash compensation. This evidence indicates that controlling families do not use CEO compensation to expropriate wealth from minority shareholders. We also show that institutional ownership is associated with higher levels of CEO cash and total compensation in Continental Europe, especially in family firms. We further find that foreign institutional investors have a positive and significant impact on the level of CEO compensation. Finally, our results indicate that institutional investors affect the CEO pay structure: they increase the use of equity-based compensation in both family and non-family firms
Family control and Financing decisions
Full text linkEmpirical studies examining the financing decisions of the firm focus exclusively on publicly held firms, not family-controlled firms despite their economic importance. This study investigates the external financing behavior of family-controlled firms, using a comprehensive sample of 777 large European firms during the period 1998 to 2008. We document that, unlike nonfamily-controlled firms, the external financing decisions of family-controlled firms are influenced by control incentives and information asymmetry considerations. We find that family firms have a strong preference for debt financing, a noncontrol diluting security, while they are more reluctant to raise capital through equity offerings in comparison to nonfamily firms. We also find that credit markets, view family firms as more risk-averse and that family firms invest more in low-risk (fixed-asset capital expenditures (CAPEX)), than in high-risk investments (R&D expenditures) confirming their non-risk seeking behavior
Creditor rights, country governance, and corporate cash holdings
Full text linkThis study examines the impact of creditor rights and country governance on cash holdings using a sample of firms from 47 countries. We hypothesize that cash holdings are smaller when both creditor rights and country governance are high. In these circumstances firms will not need to hold as much cash for future investments needs (precautionary funds) because firms will expect that funds will be available in the future. Our findings support our hypothesis and hold for alternative definitions for cash holdings, different country samples, different definitions of governance and concerns about endogeneity
Multinationals, research and development, and carbon emissions: international evidence
Full text linkWe investigate the relationship between research and development (R&D) and firm-level carbon emissions to determine whether firm type matters. Multinational corporations (MNCs) with high-level R&D expenditure have a greater ability than domestic companies to generate technologies that will contribute to controlling environmental pollution and climate change. However, we know less about whether MNCs contribute to reducing carbon emissions worldwide, because they also have the ability to overcome controls on pollution levels by shifting their production facilities from regions with more restrictions to those with fewer restrictions. The sample we use includes roughly 20,000 firm-year observations from 44 countries for the period 2003-2019. We find that MNCs decrease their carbon emissions by increasing their R&D spending more than domestic companies do. We further demonstrate that foreign direct investment (FDI) creates opportunities for MNCs to adjust their overall carbon emissions if they are located in developed countries. Key policy insights R&D investment in low-carbon technologies and practices decreases carbon emissions intensity and the impact on average is larger for MNCs than for domestic companies, showing that firm-type matters to emission reduction outcomes. MNCs manage their geographically diversified production so as to avoid reducing overall net global carbon emissions. MNCs may seek to operate in places that are weaker in enforcement of emissions reduction, which in turn raises their net global carbon emissions. MNCs located in developed countries are comparatively more important as corporate actors to drive carbon emission reductions due to changing location of operations
Effect of acquisitions on R&D intensity: international evidence
No full textThis study examines the effect of acquisitions worldwide on R&D intensity of acquiring firms. Acquisitions on one hand could help acquirers with accessing innovation capabilities of target firms. On the other hand, R&D intensity of acquirers decreases after acquisitions because of integration problems between the acquirer and the target. The results do not show strong evidence that R&D intensity significantly changes after acquisitions in general. Industry relatedness and the listing status of targets do not seem to matter in regards to acquirers’ future R&D intensity, either. However, R&D intensity appears to be influenced by whether or not acquirers operate in industries with high R&D intensity. Moreover, R&D intensity of acquirers increases after cross-border acquisitions when cultural distance is high and the income level is similar between the acquirer and the target countries. An increase in R&D intensity is more pronounced when acquirers are not American firms
Pecking Order Behavior in Emerging Markets
Full text linkThis paper examines the validity of the pecking order hypothesis in 23 emerging market countries. Emerging market countries would appear to be an ideal setting for the pecking order hypothesis to hold because of the presence of strong asymmetric information issues and agency costs. We observe, however, little support for the pecking order hypothesis as the primary financing theory for all emerging market firms. Firms in these countries finance their deficit mainly with equity, the opposite of what would be expected under this hypothesis. However, we do find support for the pecking order for firms in emerging market countries that suffer the most from either asymmetric information issues and/or agency costs. Our findings are consistent with the idea that the environment the firm operates in influences the financial decisions the firm makes
Comparison of debt financing between international and domestic firms Evidence from Turkey, Germany and UK
No full textPurpose - To investigate relative differences in debt financing between international and domestic industrial firms operating in Turkey, Germany and the UK
The Long-Term Performance of Initial Public Offerings (IPOs): Venture Capitalists, Reputation of Investment Bankers, and Corporate Structure
Full text linkThe Initial Public Offerings (IPOs) literature has uncovered the underpricing, hot issue markets, and long-term underperformance anomalies. The long-term underperformance of IPO firms has gained the focus of recent academic attention. Recent studies document that venture capitalists, and the reputation of investment bankers are associated with the long-term performance of firms going public. The lack of venture capitalists has been shown to relate with the long-term underperformance of IPO firms. On the other hand, IPO firms underwritten by less reputable underwriters have been found to experience more negative long-term market adjusted returns. Unlike previous studies, this study examines the interactive effects of venture capitalists, and the reputation of investment bankers on the long-term performance of IPOs using alternative performance measures. Moreover, we examine the possible interactive effects of institutional ownership with venture capitalists and the reputation of investment bankers. It is argued that the investigation of the joint effects of venture capitalists, reputation of investment bankers, and institutional investors on the long-term performance of IPO firms is more likely to throw additional light on the long-term underperformance of IPO firms than examining the role of these factors independently. In addition, this study investigates whether the corporate structure of the firm is associated with the long-term performance of IPOs. This investigation relies on 456 IPO transactions over the period of 1989–1994. Results based on raw and adjusted buy- and-hold returns show that the reputation of investment bankers on the long-term performance of IPO firms is negligible, if any. These results are inconsistent with the findings of Carter, Dark, and Singh (1998). However, venture backed IPOs with considerable institutional ownership experience superior long-term performance. Consistent with Brav and Gampers (1997), our evidence shows that long-term performance of IPO firms is not significantly different from counterpart IPO firms. Size/book-to-market/industry adjustment not only decreases underperformance of non-venture backed IPO firms, but also eliminates the superior performance of venture-backed IPO firms relative to both, market and non-venture backed IPO firms. Finally, the analysis provides little evidence in support of the corporate diversification hypothesis which states that diversified IPO firms have lower long-term performance in comparison to focused IPO firms
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