Download or read book Two Essays on Corporate Liquidity Management written by Chang Liu (Writer on finance) and published by . This book was released on 2018 with total page 115 pages. Available in PDF, EPUB and Kindle. Book excerpt: My dissertation contains two essays regarding corporate liquidity management. In the first essay, we find that personal connections between borrowers and lenders have a significant impact on the choice of corporate liquidity. Connected firms tend to obtain larger credit lines and hold less cash. Closer personal ties result in easier access to credit lines during economic shocks, such as financial crisis and negative news of credit quality. In addition, connections help firms with tighter financial constraints or higher risk obtain larger amount of credit lines. Connections also increase the amount of credit lines of borrowers with less public debt. Overall, our findings suggest that reduced asymmetric information between borrowers and lenders can improve corporate liquidity management. In the second essay, we study the relationship between corporate liquidity choice and market value by using the market-to-book decomposition of Rhodes-Kropf, Robinson, and Viswanathan (2005). We find that sector overvaluation or long-run growth usually increase the portion of cash in the total corporate liquidity. The effect is stronger in firms with larger growth opportunities, better corporate governance, or longer investor horizons. Moreover, the choice between cash and credit lines for firms without credit ratings are more sensitive to the sector overvaluation or long-run growth. In addition, we find sector error and long-run growth have stronger effects on corporate liquidity in the long horizons.

Download or read book Essays on Risk Assumption and Liquidity Management written by and published by . This book was released on 2014 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Essays in Behavioral Corporate Finance written by Hui Zheng and published by . This book was released on 2012 with total page 186 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation explores the extent to which managerial overconfidence affects corporate decisions. This analysis includes three essays, which address a wide range of corporate decisions including financing, investment, acquisition, innovation, liquidity management and advertising decisions. The first essay introduces a fine-tuned test of the relationship between managerial overconfidence and corporate decisions by taking the chief financial officer (CFO) overconfidence effect into account. Ex-ante, I identify financial policies and non-financial policies such as investment, innovation and acquisition as the primary managerial duties of CFOs and chief executive officers (CEOs) respectively. I construct overconfidence measures for both CEOs and CFOs and test the impact of CEO and CFO overconfidence, both on financial decisions and on nonfinancial decisions. Based on a sample of 1,173 S & P 1500 firms, I find that financial policies are primarily affected by CFO overconfidence while only CEO overconfidence affects nonfinancial decisions. My findings demonstrate that managerial biases affect corporate decisions and managerial duties shape the ways in which top managers influence corporate policies. The second essay investigates how overconfident CEOs allocate resources toward innovation activities. It argues that overconfident CEOs tend to have greater innovation input. To finance innovation, they save more cash out of the cash flow and spend more on innovation when the cash flow is high. Results from an empirical analysis of 1,015 S & P 1500 firms support this argument. Moreover, based on a series of financial constraint measurements, the effect of CEO overconfidence on liquidity management is found to be more pronounced in financially constrained firms and in highly innovative firms, but not in firms without financial constraints. With regards to innovation performance, overconfident CEOs tend to have more patents, but the overall quality of their patents is not significantly better than that of rational CEOs. The third essay introduces a simple model of firm advertising behavior in monopolistic competition industries and applies it to the situation of managerial overconfidence. The model shows that the optimal advertising to sales ratio is determined by both firm advertising competency and consumer preference. Overconfident CEOs are more willing to use advertising as a means to convey the quality of their firms and products. Such overestimation of the effects of advertising by overconfident CEOs will result in overspending on advertising. When financially constrained, an overconfident CEO's tendency to overspend will be curbed to some extent, but his amount of advertising will increase with cash flows. An empirical analysis of 654 S & P 1500 firms supports these predictions. The distorted effect of managerial overconfidence is more prominent when firms are financially constrained and when the overconfidence measure is continuous.

Download or read book Managing Corporate Liquidity written by Lance Moir and published by Global Professional Publishi. This book was released on 1999 with total page 216 pages. Available in PDF, EPUB and Kindle. Book excerpt: � Essential reading for finance directors and corporate treasurers � Gives detailed information on recently developed controls such as interest rate hedging If cash, as every manager knows, is the life blood of a business then managing cash flow, interest rates and banking relations are among the vital functions of treasury management in any business. Managing Corporate Liquidity is a practical and concise guide offering advice and insight into the fundamental decisions of liquidity management that managers have to make. It takes into full account the increased use of liquidity instruments, looking in detail at interest rate hedging and additional control mechanisms which have been developed in recent years. This book is especially targeted to finance directors, corporate treasurers, and managers--in fact, everyone within a business who should be aware of the cash flow implications of their actions.

Download or read book Managing Corporate Liquidity written by Lance Moir and published by Routledge. This book was released on 2014-06-11 with total page 207 pages. Available in PDF, EPUB and Kindle. Book excerpt: Cash, as every manager knows, is the life-blood of a business. Managing cash flow, interest rates, and banking relations are some of the most important functions of treasury management. Managing Corporate Liquidity is a practical and concise guide designed specifically to offer advice and insight into the fundamental decisions of liquidity management. This book also takes into account the increased use of liquidity instruments, looking in detail at interest-rate hedging and the various control mechanisms that have been developed in recent years. An essential guide for treasury managers, financial managers at all levels, and entrepreneurs, business owners, and their advisers.

Download or read book Essays on Corporate Liquidity Generation Reporting and Valuation written by Michael Scholz and published by . This book was released on 2014 with total page 273 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Three Essays on Firm Liquidity Management written by Chris M.- Lawrey and published by . This book was released on 2015 with total page 132 pages. Available in PDF, EPUB and Kindle. Book excerpt: In Part 1, we study the costs associated with firm illiquidity. We specifically examine the impact of illiquidity on the costs of financing, financial distress, underinvestment, and competitiveness in product markets. We focus on a comprehensive definition of liquidity that expands upon the typical measure of liquidity, cash and marketable securities, commonly used in the management literature. Our liquidity index, derived from existing cash and marketable securities, available credit lines and cash volatility, measures the likelihood that a firm will become illiquid. Lastly, we address the endogeneity issue that plagues corporate literature linking firm performance to other firm attributes using a well-developed dynamic panel generalized method of moments (GMM) estimator. Our results indicate that illiquidity is associated with higher costs of financing, increased financial distress, and decreased competitive advantage. In Part 2, we examine the extent that firms utilize lines of credit to fund cash dividends. We find that higher dividend payouts are related to higher liquidity and dividend paying firms that experience cash shortages with utilize credit lines to continue dividend payments. Our sample statistics indicate that dividend paying firms are considerably different than non-payers. Dividend payers tend to be more liquid, despite having less cash, have smaller credit line balances, higher market capitalizations, less long-term debt, are more profitable, and spend less on capital investments. One of our keying findings indicates that liquidity is an important determinant of dividend payouts. In Part 3, we study the determinants of liquidity for 4,928 micro-firms surveyed by the Kauffman Foundation over the period 2004 – 2012. Female owned firms are more liquid, smaller, carry more inventories, and use less trade credit than male firms. White-owned firms are less liquid than Asian or African-American owned firms, while the Asian-owned are significantly larger than white- and African-American-owned, and the African-American-owned have the least inventory and land holdings. The most highly educated owners operated the largest firms, with the most equipment, and the least inventory and land. Firms with most experienced owners are the most liquid and largest. Additionally, we find that liquidity is negatively related to firm inventory levels and equipment holdings.

Download or read book Three Essays on Corporate Liquidity Financial Crisis and Real Estate written by Kimberly Fowler Luchtenberg and published by . This book was released on 2013 with total page 270 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Two Essays on Corporate Decisions Liquidity and Investment Efficiencies written by Xiaoyun Yu and published by . This book was released on 2001 with total page 222 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Three Essays on Corporate Liquidity Financial Distress and Equity Returns written by and published by . This book was released on 2007 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Essays on Liquidity Management and Aggregate Fluctuations written by Manuel Emilio Macera Carnero and published by . This book was released on 2013 with total page 73 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Business Network Corporate Liquidity and Stakeholders of the Firm written by Ruoran Gao and published by . This book was released on 2015 with total page 394 pages. Available in PDF, EPUB and Kindle. Book excerpt: My research builds on the view that firms are not standalone entities, but rather, they are inter-connected into a large business network through input-output relationships. Firms interact closely with their major stakeholders, such as customers, suppliers, and creditors, and such interactions have profound influences on firm policies and their access to financing. In my dissertation, I explore the impact of these connections on corporate liquidity management and financing decisions. The first essay studies a business network based on customersupplier relations, and how a firm's connectivity in the network can affect firmlevel policies. The second essay is a joint study with Prof. Yaniv Grinstein. It examines one important aspect of corporate internal liquidity, cash holdings, and its relationship with firm-specific and economy-wide uncertainties. The third essay explores the interaction between interfirm connections and bank-lending decisions. More specifically, how a firm's connections with a bank's existing borrowers affect the bank's lending decision to the firm.

Download or read book Essays in Empirical Corporate Finance written by Yang Zhao and published by . This book was released on 2020 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: In this thesis, I study two independent but closely related topics: the impact of liquid assets on corporate investments and bank deposit funding. In the first chapter, I examine the effect of a firm's liquidity holdings on its real investments and its impact on broader outcomes. I exploit a regulation-driven supply expansion of wealth management products (WMPs) that leads to an exogenous liquidity return increase accessible to Chinese firms. WMPs are deposit alternatives issued by commercial banks outside of the regulatory purview and are the dominant form of liquidity holdings by Chinese firms. I find that in response to the regulation, firms increase their liquidity holdings and sharply reduce capital and R& D expenditures. Using exogenous variation in banks' WMP supply induced by regulation, I argue that the effect of corporate liquidity holdings on real investments is causal and not driven by changes in firms' real investment opportunities. The reduction in real investments further leads to a decrease in firm-level TFP, patent application, primary business revenue, and employment. Exploiting regional economic growth in a difference-in-difference setting that uses the same regulatory shock suggests that the growth of corporate liquidity holdings has a negative impact on local economic outcomes. Cities more exposed to the WMP supply expansion exhibit slower capital and consumption growth. My findings suggest that a firm's liquidity holding decisions have a direct impact on its real investments and broader economic activities. In the second chapter, we demonstrate the passthrough of Treasury supply to deposit funding through bank market power. We show that an increase in Treasury supply leads to a net deposit outflow. At the same time, reliance on wholesale funding decreases. The effect is heterogeneous in nature - banks in more competitive markets experience larger outflows. The explanatory power of Treasury supply is not driven by monetary policy and bank-specific investment opportunities. Our empirical findings are rationalized with a model of imperfect deposit competition. Consistent with "The Deposits Channel of Monetary Policy", the model and empirics predict the opposite effect for Fed Fund rate hikes: there is a larger response in less competitive markets. Our results also shed light on the effect of the Reverse Repurchase (RRP) Facility on monetary policy passthrough.

Download or read book Essays in Corporate Finance written by Felipe Cortés and published by . This book was released on 2013 with total page 130 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation seeks to understand the effect of information asymmetries on corporate liquidity choices and efficiency of bankruptcy resolution, and the role of pooling and reputational concerns on an originator's incentives to invest in signal precision. The first chapter identifies and provides a causal estimate of the economic importance of information asymmetries between corporate insiders and outsiders in equity markets on small public firms decision to hoard liquid assets. The second chapter develops a theory of securitization in which the originator's incentives to screen are endogenized and affected by reputational concerns to investigate the effect of the pooling of assets on screening and systematic risk. In the third chapter, we investigate the impact of relative bargaining power of firms over creditors during bankruptcy on ex-post firm performance, once the firm emerges out of bankruptcy. Although existing theories predict a causal link between firm opaqueness and firm cash holdings, endogenous and coarse measures of opaqueness hinder the identification of this link. Using the discontinuous requirement of financial reporting introduced by Sarbanes-Oxley Act, Section 404, we estimate the causal effect of opaqueness on cash holdings. We show that firms that comply with Section 404 and provide more reliable information exhibit lower cash holdings compared to observationally similar firms. Further, compliant firms that hold less cash exhibit higher R & D expenditures relative to non-compliant firms. This difference sheds light on the opportunity costs of holding cash. In the second chapter, we develop a theory of securitization in which the securitization of large asset pools leads to a reduction in idiosyncratic risk but an increase in systematic risk, and the originate-to-distribute model of securitization is not sufficient for this result. The model is one in which the originator's screening incentives are endogenized, and screening and pooling of loans in securitization have both idiosyncratic and systematic risk consequences. The originator's screening incentives are affected by career concerns as well as by the impact of screening on the risk of the securitized portfolio. The effect of securitization on idiosyncratic risk and systematic risk occurs via a dilution of the originator's screening incentives, with greater dilution occurring as more loans are added to the pool being securitized. Further, when we endogenize the information acquisition incentives of the investors who purchase securitized claims, we find that there is an interaction between these incentives and the screening incentives of originators. A weakening of the issuer's screening incentives leads to weaker incentives for investors to become informed and a higher valuation uncertainty, creating a feedback effect that further weakens the issuer's screening incentives. In the third chapter of my thesis evaluates the impact of bargaining between management and creditors on bankruptcy outcome and ex-post efficiency of bankruptcy resolution. We find that firms in which creditors (management) exerts greater (lower) influence in the negotiation process are more likely to be liquidated. Increase in power of creditors during the bankruptcy negotiations is associated with lower likelihood of re-filing and superior post-bankruptcy profitability among firms that emerge. However such ex-post efficiency gains come at a cost as increase in power of creditors also leads to a lengthier bankruptcy. The unique aspect of our analysis is our ability to correct for the selection bias engendered by our focus on firms that emerge out of bankruptcy using the Bankruptcy Abuse Prevention and Consumer Protection Act (BACPA) passed in 2005 as an exogenous shock to the likelihood of liquidation. Collectively, our results lend credence to the idea of allocating greater power to creditors in bankruptcy proceedings.

Download or read book Essays on Liquidity and Risk Management written by Mingxin Li and published by . This book was released on 2017 with total page 96 pages. Available in PDF, EPUB and Kindle. Book excerpt: This thesis consists of three independent essays on stock liquidity, corporate cash holdings, and financial institution earnings risk. The first study examines the relationship between stock liquidity and the difference in domestic and foreign market prices for a sample of 650 international firms cross-listed on a U.S. stock exchange. The study exploits the 2001 change to decimalization pricing and the 2003 U.S. dividend tax cut as quasi-natural experiments and finds that ADR liquidity decreases the absolute value of the ADR premium. The paper documents a positive relationship between liquidity and price discovery as well as a liquidity effect on the price convergence between the ADRs and their underlying shares. The second study focuses on corporate cash holdings as a mechanism of risk management. The paper documents a diversification effect on cash for a large sample of international firms, and examines the impact of agency costs, financial constraints and product market competition on the relationship between diversification and cash holdings. The results show that weak product market competition can weaken or even reverse the negative diversification effect on cash holdings. Weak country-level shareholder protection helps explain the weak diversification effect to a smaller degree, whereas financial constraints strengthen the diversification effect. Further, the competition effect is stronger for innovative, high R&D intensity firms and for firms with high uncertainty of sales and productivity growth. The third study analyzes the impact of deposit insurance design on the earnings uncertainty of financial cooperatives. The 2008 amendment to the Financial Institutions Act in the province of British Columbia resulted in an economically and statistically significant decrease in the credit unions' earnings uncertainties. The policy spurred deposit growth, but instead of an increase in lending, credit unions grew their capital-to-asset ratio. The results support the hypothesis that an unlimited insurance coverage boosts depositors' confidence and increases the flow of funds to the insured cooperatives. The paper does not find support for the moral hazard hypothesis where full deposit insurance increases risk-taking and creates liquidity risk by attracting wholesale funds.

Download or read book Essays on Liquidity Management Threshold Strategies and Agency Frictions written by Santiago Moreno-Bromberg and published by . This book was released on 2019 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Two Essays on Stock Market Liquidity written by Mohamed Abdel-aziz Mekhaimer and published by . This book was released on 2014 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation is composed of two essays. In the first essay, we use the introduction of the first transatlantic trading platform NYSE Arca Europe (NAE), as an exogenous shock to examine the impact of market design on commonality in liquidity. We find that commonality in liquidity increases significantly for stocks traded in the NAE, specifically, the introduction of the transatlantic NAE trading platform increases the comovement of NAE stocks with NAE aggregate liquidity while their comovement with the home market aggregate liquidity decreases. Further, we find that the commonality in liquidity remains unchanged for matched non-NAE control sample stocks. Our results are robust to different methods for computing commonality, different liquidity proxies and across size quintiles. We conclude that market design and trading infrastructure has a significant impact on commonality in liquidity. The second essay investigates the impact of internal governance on stock market liquidity. Acharya, Myers and Rajan (2011) develop a model of internal governance where subordinate managers can effectively monitor the CEO to maintain the future of the firm. Using a measure of internal governance based on the difference in horizons between a CEO and his subordinates, we show that firms with better internal governance have lower information asymmetry and higher liquidity. We also show that internal governance is more effective in enhancing liquidity for firms with CEOs close to retirement, firms that require higher firm-specific skills, and firms with experienced subordinate managers. Our results are robust to inclusion of conventional governance measures, alternative model specifications, and different measures of internal governance and liquidity.