Download or read book Internal Capital Markets and Competitive Threats written by Garrett Swanburg and published by . This book was released on 2014 with total page 47 pages. Available in PDF, EPUB and Kindle. Book excerpt: Theory suggests that diversified firms' internal capital markets can help or hinder their ability to respond to competitive threats. They can help by allowing the firm to quickly move resources to threatened markets (resource flexibility), but can hurt by making it easier for the firm to exit an industry. This paper examines how diversified firms respond to heightened competition following tariff reductions in order to assess the competing theories. The main finding is diversified firms reduce their investment in threatened industries relative to non-diversified firms. This results in a higher proportion of firm-level investment funds being allocated to unaffected segments.

Download or read book Internal Capital Markets in Business Groups and the Propagation of Credit Supply Shocks written by Ms.Yu Shi and published by International Monetary Fund. This book was released on 2019-05-21 with total page 39 pages. Available in PDF, EPUB and Kindle. Book excerpt: Using business registry data from China, we show that internal capital markets in business groups can propagate corporate shareholders’ credit supply shocks to their subsidiaries. An average of 16.7% local bank credit growth where corporate shareholders are located would increase subsidiaries investment by 1% of their tangible fixed asset value, which accounts for 71% (7%) of the median (average) investment rate among these firms. We argue that equity exchanges is one channel through which corporate shareholders transmit bank credit supply shocks to the subsidiaries and provide empirical evidence to support the channel.

Download or read book Incentives in Internal Capital Markets written by Roman Inderst and published by . This book was released on 2002 with total page 37 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper considers the effect of competition for scarce financial resources on managers' incentives to generate profitable investment opportunities. Competition is only unambiguously beneficial if projects are symmetric. If divisions differ in their cash endowments or their growth potential, integration may reduce incentives for some managers, which may lower total firm value. Moreover, relaxing capital constraints, e.g., by integrating a cash cow project, may reduce incentives.We treat two different scenarios where contracts can either only specify monetary incentives or additionally the allocation of funds. While distorted capital allocations increase managers' incentives, they only survive renegotiations in integrated firms.

Download or read book Internal Capital Markets Cross subsidization and Product Market Competition written by Giacinta Cestone and published by . This book was released on 2001 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book The Deep Pocket Effect of Internal Capital Markets written by and published by . This book was released on 2009 with total page 26 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book A Multinational Perspective on Capital Structure Choice and Internal Capital Markets written by Mihir A. Desai and published by . This book was released on 2003 with total page 28 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines the impact of local tax rates and capital market conditions on the level and composition of borrowing by foreign affiliates of American multinational corporations. The evidence indicates that 10 percent higher local tax rates are associated with 2.8 percent higher debt/asset ratios of American-owned affiliates, and that borrowing from related parties is particularly sensitive to tax rates. Borrowing by American affiliates responds to local inflation and political risks, and is more costly in countries with underdeveloped capital markets and those providing weak legal protections for creditors. Affiliates in environments where external borrowing is costly borrow less from unrelated parties: one percent higher interest rates are associated with 1.4 to 2.0 percent less external debt as a fraction of assets. Instrumental variables analysis reveals that affiliates substitute loans from parent companies for between half and three quarters of the reduced borrowing from unrelated parties stemming from adverse local capital market conditions. These patterns suggest that multinational firms are able to structure their finances in response to tax and capital market conditions, thereby creating opportunities not available to many of their local competitors

Download or read book A Multinational Perspective on Capital Structure Choice and Internal Capital Markets written by Mihir A. Desai and published by . This book was released on 2010 with total page 41 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines the impact of local tax rates and capital market conditions on the level and composition of borrowing by foreign affiliates of American multinational corporations. The evidence indicates that 10 percent higher local tax rates are associated with 2.8 percent higher debt/asset ratios of American-owned affiliates, and that borrowing from related parties is particularly sensitive to tax rates. Borrowing by American affiliates responds to local inflation and political risks, and is more costly in countries with underdeveloped capital markets and those providing weak legal protections for creditors. Affiliates in environments where external borrowing is costly borrow less from unrelated parties: one percent higher interest rates are associated with 1.4 to 2.0 percent less external debt as a fraction of assets. Instrumental variables analysis reveals that affiliates substitute loans from parent companies for between half and three quarters of the reduced borrowing from unrelated parties stemming from adverse local capital market conditions. These patterns suggest that multinational firms are able to structure their finances in response to tax and capital market conditions, thereby creating opportunities not available to many of their local competitors.

Download or read book Internal Capital Markets in Times of Crisis written by Raffaele Santioni and published by . This book was released on 2017 with total page 56 pages. Available in PDF, EPUB and Kindle. Book excerpt: Italy's economic and banking systems have been under stress in the wake of the Global Financial Crisis and Euro Crisis. Firms in business groups have been more likely to survive this challenging environment, compared to unaffiliated firms. Better performance stems from access to an internal capital market, and the survival value of groups increases, inter alia, with group-wide cash flow. We show that actual internal capital transfers increase during the crisis, and these transfers move funds from cash-rich to cash-poor firms and also to those with more favorable investment opportunities. The ability to borrow externally provides additional funds that are shared across group affiliated firms. Our results highlight the benefits of internal capital markets when external capital markets are tight or distressed.

Download or read book Research Handbook on Mergers and Acquisitions written by Claire A. Hill and published by Edward Elgar Publishing. This book was released on 2016-09-30 with total page 497 pages. Available in PDF, EPUB and Kindle. Book excerpt: Global in scope and written by leading scholars in the field, the Research Handbook on Mergers and Acquisitions is a modern-day survey of the state of M&A. Its chapters explore the history of mergers and acquisitions and also consider the theory behind the structure of modern transaction documentation. The book also address other key M&A issues, such as takeover defenses; judges and practitioners' perspectives on litigation; the appraisal remedy and other aspects of Federal and state law, as well as M&A considerations in the structure of start-ups. This Handbook will be an invaluable resource for scholars, practitioners, judges and legislators.

Download or read book Adoptions and Eliminations of Economic Profit Plans and Internal Capital Markets Efficiency written by Dobrina Georgieva Jandik and published by . This book was released on 2013 with total page 46 pages. Available in PDF, EPUB and Kindle. Book excerpt: Internal capital markets of diversified firms have been associated with inefficient allocation of investment funds across divisions, leading to value losses. Utilizing a sample of diversified firms that adopted or eliminated Economic Profit Plans (EPPs) between 1990 and 2009, we show that adoptions of those plans (that reward profitability, but penalize excessive capital investment) mitigate investment distortions and lead to value gains. Following the adoption of EPPs, diversified firms start allocating investment funds based on growth opportunities of their divisions. EPP adopters lower their divisional investment levels, especially in segments with below-average growth opportunities. The overall investment allocation efficiency improves, and the diversification discount diminishes after the adoption of EPPs. However, EPPs appear to be used only as temporary tools for assessing corporate performance. The plans are adopted primarily by firms expected to immediately generate plan bonuses for management, and they are frequently eliminated by firms with bad accounting performance, and low managerial bonuses. The study contributes to the literature on organizational efficiency, internal capital markets and on the importance of measures based on economic profits or residual income.

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.

Download or read book Business Groups and Internal Capital Markets written by Ozgur Berk Kan and published by . This book was released on 2006 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We compare the performance of firms affiliated with diversified business groups with the performance of unaffiliated firms in an emerging market, Turkey. Our analysis addresses the question of whether group affiliated firms create internal capital markets or control large cash flows. Our findings indicate that group affiliation improves firm's accounting performance, but not stock market performance. While deviation of cash flow rights from voting rights has negative, but insignificant effect on accounting performance, it has significant effect on market performance. Furthermore, we find that firm's accounting (but not stock market) performance increases with the level of group diversification. Our results reveal the fact that internal capital markets play an important role for the existence of business groups in an emerging market context.The views expressed in these papers are those of the author(s), they do not reflect the opinions of LECG, LLC and should not be construed as representing the positions of other experts at LECG, LLC.

Download or read book Emerging Market Business Groups and Firm Risk written by Bavani Subramaniam 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 The Development of Local Capital Markets written by Mr.Luc Laeven and published by International Monetary Fund. This book was released on 2014-12-19 with total page 25 pages. Available in PDF, EPUB and Kindle. Book excerpt: Capital markets can improve risk sharing and the efficiency with which capital is allocated to the real economy, boosting economic growth and welfare. However, despite these potential benefits, not all countries have well developed capital markets. Moreover, government-led initiatives to develop local capital markets have had mixed success. This paper reviews the literature on the benefits and costs of developing local capital markets, and describes the challenges faced in the development of such markets. The paper concludes with a set of policy recommendations emerging from this literature.

Download or read book The Future of Pension Plans in the EU Internal Market written by Nazaré da Costa Cabral and published by Springer Nature. This book was released on 2019-11-26 with total page 359 pages. Available in PDF, EPUB and Kindle. Book excerpt: This edited volume takes a closer look at various European pension-plan models and the recent challenges, trends and predictions related to the design of such schemes. The contributors analyse new ideas, both from national governments and European institutions, and consider current debates on topics such as the Capital Markets Union (CMU) and the so-called ‘European Pillar of Social Rights’ – calling for a new approach to social policy at the European level in response to common challenges, such as ageing and the digital revolution.This interdisciplinary work embraces economic, financial and legal perspectives, while focusing on previously selected coherence aspects in order to ensure that the analyses are comprehensive and globally consistent.

Download or read book Handbook of the Economics of Finance written by G. Constantinides and published by Elsevier. This book was released on 2003-11-04 with total page 698 pages. Available in PDF, EPUB and Kindle. Book excerpt: Arbitrage, State Prices and Portfolio Theory / Philip h. Dybvig and Stephen a. Ross / - Intertemporal Asset Pricing Theory / Darrell Duffle / - Tests of Multifactor Pricing Models, Volatility Bounds and Portfolio Performance / Wayne E. Ferson / - Consumption-Based Asset Pricing / John y Campbell / - The Equity Premium in Retrospect / Rainish Mehra and Edward c. Prescott / - Anomalies and Market Efficiency / William Schwert / - Are Financial Assets Priced Locally or Globally? / G. Andrew Karolyi and Rene M. Stuli / - Microstructure and Asset Pricing / David Easley and Maureen O'hara / - A Survey of Behavioral Finance / Nicholas Barberis and Richard Thaler / - Derivatives / Robert E. Whaley / - Fixed-Income Pricing / Qiang Dai and Kenneth J. Singleton.

Download or read book OECD Sovereign Borrowing Outlook 2021 written by OECD and published by OECD Publishing. This book was released on 2021-05-20 with total page 94 pages. Available in PDF, EPUB and Kindle. Book excerpt: This edition of the OECD Sovereign Borrowing Outlook reviews developments in response to the COVID-19 pandemic for government borrowing needs, funding conditions and funding strategies in the OECD area.