We relate trade credit to product characteristics and aspects of bank–firm relationships document three main empirical regularities. First, the use is associated with nature transacted good. In particular, suppliers differentiated products services have larger accounts receivable than standardized goods firms buying more receive cheaper for longer periods. Second, receiving secure financing from relatively uninformed banks. Third, a majority in our sample appear at low cost. Additionally,...

ABSTRACT We study the impact of directors with foreign experience on firm performance in emerging markets. Using a unique data set from China, we exploit introduction policies to attract talented emigrants and increase supply individuals different provinces at times. document that increases after firms hire identify channels through which emigration talent may lead brain gain. Our findings provide evidence how transmit knowledge about management practices corporate governance

This paper examines how firm characteristics, legal rules, and financial development affect corporate finance decisions. In contrast to the existing literature, I use data on unlisted companies show that institutions play an important role in determining extent of agency problems. particular, find countries with good creditor protection, it is easier for firms investing intangible assets obtain loans. The protection rights also ensuring access long-term debt operating sectors highly volatile...

We investigate whether cultural differences between professional decision makers affect financial contracts in a large data set of international syndicated bank loans. find that more culturally distant lead banks offer borrowers smaller loans at higher interest rate and are likely to require third-party guarantees. These effects do not disappear following repeated interaction borrower lender economically sizable: A one-standard-deviation increase distance, approximately the distance Canada...

While the positive growth effects of financial integration are extensively documented, little is known its impact on small and young firms. This paper aims to fill this void relying a panel 60,000 firm-year observations listed unlisted companies in Eastern European economies assess differential foreign bank lending firm financing. Foreign stimulates sales, assets, use debt even though effect dampened for More strikingly, firms benefit most from presence, while businesses connected domestic...

ABSTRACT We show that, after the revelation of corporate fraud in a state, household stock market participation that state decreases. Households decrease holdings fraudulent as well nonfraudulent firms, even if they do not hold stocks firms. Within households with more lifetime experience less equity. Following exogenous increase due to Arthur Andersen's demise, states Andersen clients larger participation. provide evidence documented effect is likely reflect loss trust market.

This paper shows that during episodes of market turmoil, 13F institutional investors with short trading horizons sell their stockholdings to a larger extent than longer horizons. creates price pressure for stocks held mostly by short-horizon investors, which, as consequence, experience drops, and subsequent reversals, long-horizon investors. These findings, obtained after controlling the withdrawals experienced are not driven other investors' firms' characteristics. Overall, evidence...

Exploiting the Japanese banking crisis of 1990s as a laboratory, we investigate effects bank bailouts on supply credit and performance banks' clients. Our findings indicate that size capital injections relative to initial financial condition banks is crucial for success bailouts. Capital are large enough reestablish requirements increase spur investment. In contrast, not only do too small fail credit, but they also encourage evergreening nonperforming loans. (JEL E44, G21, G28, G32, G34)

Exploiting confidential data from the euro area, we show that sound banks pass negative rates on to their corporate depositors and pass-through is not impaired when policy move into territory. We do observe a contraction in deposits, reflecting general increase liquidity during sample period. When charge firms with ex ante high invest more than comparable are charged liquid holdings less. These results challenge common view conventional monetary becomes ineffective at zero lower bound.

Abstract Can shareholders’ divestitures and threats of exit trigger improvements in firms’ environmental social (E&S) policies? We show that E&S incidents are followed by some, but relatively small, divestitures. Nevertheless, following incidents, firms with a one-standard-deviation higher E&S-conscious institutional ownership decrease their greenhouse gas emissions 36.5% improve scores 7.2% more than other if managers receive equity compensation. do not observe any associated...

We explore how mutual fund managers and investors react when the tradeoff between a fund's sustainability performance becomes salient. Following introduction of Morningstar's ratings (the "globe" ratings), funds increased their holdings sustainable stocks to attract flows. Such sustainability-driven trades, however, underperformed, impairing funds' overall performance. Consequently, emerged. In new equilibrium, globe do not affect investor flows no longer trade improve ratings.

We show that trade credit flows increase when a firm in production network becomes less reliable supplier due to an operating shock. Affected firms extend more their customers have lower switching costs or expect disruption. Suppliers are dependent on the affected facilitate extension. However, financial constraints at and suppliers prevent credit, sever relationships with firms, sales of drop, suggesting enhances stability.

ABSTRACT Using a data set that provides unprecedented detail on investors' stockholdings, we analyze whether investors take the quality of corporate governance into account when selecting stocks. We find all categories (domestic and foreign, institutional small individual) who generally enjoy only security benefits are reluctant to invest in companies with weak governance. In contrast, individuals connected company insiders more likely companies. These findings suggest it is important...

Abstract We study the effects of investor protection on stock returns and portfolio allocation decisions. In our theoretical model, if is weak, wealthy investors have an incentive to become controlling shareholders. equilibrium, price reflects demand from both shareholders investors. Due high shareholders, weak corporate governance stocks not low enough fully discount extraction private benefits. Thus, lower expected when weak. This has implications for domestic foreign investors’...

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We proxy for board members’ opinions and values using directors’ ancestral origins show that diversity has costs benefits, leading to high performance volatility. Consistent with the idea diverse groups experiment more, firms ancestrally boards have more numerous cited patents. In addition, their strategies conform less those of industry peers. However, greater also meetings make predictable decisions. These findings suggest may lead inefficiencies in decision-making process conflicts boardroom.

Abstract Exploiting China’s anti-corruption campaign, we show that following a decrease in corruption, firm performance improves. Small and young firms benefit more. We identify the channels through which corruption hampers performance. Following allocation of capital labor becomes more efficient. Firms operating ex ante corrupt environments experience larger productivity gains, higher growth sales, lower cost debt than other firms. Taken together, our results suggest is an inefficient...

We explore whether lenders' decisions to provide liquidity in periods of distress are affected by the extent which they internalize negative spillovers industry downturns. conjecture that high-market-share lenders more likely and show industries when fire sales ensue. High-market-share also customers suppliers distressed disruption supply chains is expected be costly. Our results suggest a novel channel explain why credit concentration may favor financial stability. Received November 3,...

This paper shows that banks exhibit a weaker (stronger) home bias in the extension of new loans when funding conditions their country improve (deteriorate). We refer to these changes as flight abroad and effects, respectively, show they are unrelated better known quality effect arises during periods market turmoil. Our results also indicate global amplify homegrown shocks on foreign countries while stabilizing factor for supply credit countries.

Better access to debt markets mitigates the effects of uncertainty on corporate policies. We establish this result using staggered introduction anti-recharacterization laws in US states. These enhanced firms' ability borrow by strengthening creditors' rights repossess collateral pledged special purpose vehicles. After passage laws, firms that face more hoard less cash and increase payouts, leverage, investment intangible assets. Our findings suggest better shields from fluctuations decreases...

We conjecture that suppliers offer trade credit to ease competition in downstream markets. show theoretically have transfer surplus high-bargaining-power customers would want an increasing price schedule preserve sales other buyers. Suppliers can implement this using credit. Empirically, we find grant when they fear the cannibalization of customers. Exploiting a law lowered cost offering credit, higher provision leads expansion suppliers’ customer base.

Abstract We document that heightened public attention to gender equality is associated with an increase in board diversity. Improvements diversity are more pronounced firms a corporate culture already sympathetic equality. When increases, reach out larger pool of women, such as women without industry experience or outside their network, but female director appointments do not appear be dilutive the board’s skills. Instead, we observe less reliance on connections for and decrease propensity...

We study the relation between banks' environmental disclosures and lending activities. Taking advantage of granular loan-level data from a euro-area credit registry, we show that banks with extensive lend more to brown borrowers do not provide firms in green industries. These results are driven by financing borrowers' transition greener technologies. Instead, weakest industries, especially if they have low capital adequacy. Our suggest overemphasize their climate goals credentials while...