ABSTRACT We study the implications of hedging for corporate financing and investment. do so using an extensive, hand‐collected data set on activities. Hedging can lower odds negative realizations, thereby reducing expected costs financial distress. In theory, this should ease a firm's access to credit. Using tax‐based instrumental variable approach, we show that hedgers pay interest spreads are less likely have capital expenditure restrictions in their loan agreements. These favorable terms,...

Abstract The recent split share structure reform in China involves the nontradable shareholders proposing a compensation package to tradable exchange for listing rights of their shares. We find that state ownership (the major owners shares) has positive effect on final ratio. In contrast, mutual fund institutional owner negative ratio and especially state-owned firms. evidence is consistent with our predictions have incentives complete quickly exert political pressure funds accept terms...

Abstract Using a unique insurance dataset for sample of Chinese publicly listed companies the period 1997 through 2003, this study tests simultaneous linkages between debt capacity, cost debt, and corporate property insurance. Our results suggest that, on one hand, higher appears to motivate use more insurance, but high leverage alone does not lead purchase The latter finding might reflect institutional setting China, example, where there is low chanceof legally enforced company liquidation....

This article analyzes how creditors’ simultaneous debt and equity holdings affect firm investment policies. We find that firms with dual ownership are less likely to have capital expenditure restrictions in loan contracts, the relation varies predicted ways monitoring needs of borrowers capacity owners. A frequent use restrictions, however, does not result borrowers’ risk-shifting. Dual also more be granted an unconditional waiver do significantly reduce issuance or expenditures after a...

Abstract: This paper examines the effects of corporate governance mechanisms (measured by a set board characteristics) on profit efficiency United Kingdom (UK) life insurance firms. A parametric ‘stochastic frontier’ approach is used to compute scores and second‐stage regression models are estimated test influence these efficiencies. We find that, viewed in isolation, characteristics tend have little effect firm UK market. However, we do that proportion non‐executive directors exhibits...

Abstract Corporate governance and risk management issues have received prominent publicity in recent years following several major company failures such as Bear Stearns Lehman Brothers. While prior studies examined this issue within the context of derivatives’ trading, little is known regarding linkage between corporate alternative activities insurance. Using a detailed firm survey conducted by World Bank (2004) , we examine impacts various monitoring mechanisms chief executive officer (CEO)...

Does hedging affect corporate outcomes? This paper looks at the consequences of for firm financing and investment. It does so using detailed, hand-collected data on loan contracts. Hedging can reduce odds negative profit realizations, reducing expected costs financial distress. In theory, this should ease a firm's access to credit. Using tax-based instrumental variables approach, we find that hedgers pay lower interest spreads are less likely have capital expenditure restrictions in their...

I provide evidence about the value effects of alternative risk management by examining corporate purchase property insurance, a commonly used pure hedge asset‐loss risks. Using an insurance data set from China, find that there is inverted U‐shape effect extent use on firm measured several versions Tobin's Q. Therefore, to certain degree, has positive value; however, over appears detrimental value. Given inflection points occur at relatively high levels observed spending, beneficial majority...

We examine the effect of a CEO's military service on merger and acquisition decisions outcomes. find that acquirers led by CEOs with backgrounds earn significantly higher abnormal stock returns at deal announcement, these deals exhibit short-run long-run synergies. In addition, we presence CEO attenuates negative poor corporate governance excess cash acquirer Overall, evidence suggests value system developed in helps lower agency costs acquisitions generates better Taken together, our...

Abstract By examining required rates of return, we study how shareholders perceive stronger stakeholder orientation arising under the adoption constituency statutes. Constituency statutes decrease (increase) cost equity for firms operating in high- (low-) competition industries. For high-competition industries, increase future cash flows and performance resilience to negative industry downturns, suggesting that facilitate CSR activities product differentiation competitive In contrast,...

Purpose Taking advantage of the 2008 Sichuan Great Earthquake as a natural experiment, purpose this paper is to examine motives and effects corporate donations by focusing on how firm ownership identity first-order governance mechanism affects disaster relief donations. Design/methodology/approach The authors conduct regressions market event studies, use matching address confounding differences in characteristics. Findings hypothesize that private firms are better governed than state-owned...