Corporate Governance Benefits of Mutual Fund Cooperation
Rex Wang Renji, Patrick Verwijmeren, Shuo Xia
IWH Discussion Papers,
Nr. 21,
2022
Abstract
Mutual fund families increasingly hold bonds and stocks from the same firm. We study the implications of such dual holdings for corporate governance and firm decision-making. We present evidence that dual ownership allows financially distressed firms to increase investments and to refinance by issuing bonds with lower yields and fewer restrictive covenants. As such, dual ownership reduces shareholder-creditor conflicts, especially when families encourage cooperation among their managers. Overall, our results suggest that mutual fund families internalize the shareholder-creditor agency conflicts of their portfolio companies, highlighting the positive governance externalities of intra-family cooperation.
Artikel Lesen
Forced Displacement, Exposure to Conflict and Long-run Education and Income Inequality: Evidence from Croatia and Bosnia and Herzegovina
Adnan Efendic, Dejan Kovač, Jacob N. Shapiro
Abstract
This paper investigates the long-term relationship between conflict-related migration and individual socioeconomic inequality. Looking at the post-conflict environments of Bosnia and Herzegovina (BiH) and Croatia, the two former Yugoslav states most heavily impacted by the conflicts of the early 1990s, the paper focuses on differences in educational performance and income between four groups: migrants, internally displaced persons, refugees, and those who did not move two decades after the conflicts. For BiH, the analysis leverages a municipality-representative survey (n = 6, 021) that captured self-reported education and income outcomes as well as migration histories. For Croatia, outcomes are measured using an anonymized education registry that captured outcomes for over half a million individuals over time. This allows an assessment of convergence between different categories of migrants. In both countries, individuals with greater exposure to conflict had systematically worse educational performance. External migrants now living in BiH have better educational and economic outcomes than those who did not migrate, but these advantages are smaller for individuals who were forced to move. In Croatia, those who moved during the conflict have worse educational outcomes, but there is a steady convergence between refugees and non-migrants. This research suggests that policies intended to address migration-related discrepancies should be targeted on the basis of individual and family experiences caused by conflict.
Artikel Lesen
Exposure to Conflict, Migrations and Long-run Education and Income Inequality: Evidence from Bosnia and Herzegovina
Adnan Efendic, Dejan Kovač, Jacob N. Shapiro
Abstract
We investigate the long-term relationship between conflict-related migration and individual socioeconomic inequality. Looking at the post-conflict environment of Bosnia and Herzegovina (BiH), a former Yugoslav state most heavily impacted by the conflicts of the early 1990s, the paper focuses on differences in educational performance and income between four groups: migrants, internally displaced persons, former external migrants, and those who did not move. The analysis leverages a municipality-representative survey (n≈6,000) that captured self-reported education and income outcomes as well as migration histories. We find that individuals with greater exposure to conflict had systematically worse educational performance and lower earnings two decades after the war. Former external migrants now living in BiH have better educational and economic outcomes than those who did not migrate, but these advantages are smaller for individuals who were forced to move. We recommend that policies intended to address migration-related discrepancies should be targeted on the basis of individual and family experiences caused by conflict.
Artikel Lesen
The Diplomacy Discount in Global Syndicated Loans
Gene Ambrocio, Xian Gu, Iftekhar Hasan, Panagiotis Politsidis
Journal of International Money and Finance,
February
2022
Abstract
This paper investigates whether state-to-state political ties with the United States affect the pricing of global syndicated loans. We find that a one-standard-deviation improvement in state political ties between the U.S. and the government of a borrower’s home country is associated with a 14.7 basis points lower loan spread, shaving off about 11.8 million USD in interest payments over the duration of the average loan for borrowers. Results also show that the effect of political ties is stronger for narrower and more concentrated loan syndicates, when lead arrangers are U.S. banks, during periods in which the U.S. is engaged in armed conflicts, when the U.S. president belongs to the Republican Party, and for borrowers with better balance sheets and prior lending relationships. Notably, not all firms benefit equally, as cross-listed firms and firms in countries with strong institutional quality and ability to attract institutional investors are much less affected by political ties.
Artikel Lesen
The Influence of Bondholder Concentration and Temporal Orientation on Investments in R&D
Pengfei Ye, Jonathan O’Brien, Christina Matz Carnes, Iftekhar Hasan
Journal of Management,
Nr. 3,
2021
Abstract
Although innovation can be a critical source of competitive advantage, research has found that debt can erode management’s willingness to invest in R&D. In this article, we employ a stakeholder bargaining power perspective to argue that this effect is most pronounced when the firm’s bonds are concentrated in the hands of bond blockholders. Furthermore, we contend that the temporal orientation of bondholders influences this relationship. Specifically, while it is commonly assumed that bondholders have a limited temporal orientation that induces them to focus on short-term value appropriation, we argue that some bond blockholders adopt a long-term temporal orientation. This orientation, in turn, makes them more inclined to support long-term value creation for the firm in the form of enhanced investments in R&D. Moreover, while agency theory suggests that there is an inherent conflict of interest between shareholders and bondholders, our results suggest that the temporal orientation of investors (i.e., both shareholders and bondholders) matters much more than whether they invested in the firm’s equity or its debt.
Artikel Lesen
Names and Behavior in a War
Štěpán Jurajda, Dejan Kovač
Journal of Population Economics,
Nr. 1,
2021
Abstract
We implement a novel empirical strategy for measuring and studying a strong form of nationalism—the willingness to fight and die in a war for national independence—using name choices corresponding to a previous war leader. Based on data on almost half a million soldiers, we first show that having been given a first name that is synonymous with the leader(s) of the Croatian state during World War II predicts volunteering for service in the 1991–1995 Croatian war of independence and dying during the conflict. Next, we use the universe of Croatian birth certificates and the information about nationalism conveyed by first names to suggests that in ex-Yugoslav Croatia, nationalism rose continuously starting in the 1970s and that its rise was curbed in areas where concentration camps were located during WWII. Our evidence on intergenerational transmission of nationalism is consistent with nationalist fathers purposefully reflecting the trade-off between within-family and society-wide transmission channels of political values. We also link the nationalist values we proxy using first name choices to right-wing voting behavior in 2015, 20 years after the war.
Artikel Lesen
Investor Relations and IPO Performance
Salim Chahine, Gonul Colak, Iftekhar Hasan, Mohamad Mazboudi
Review of Accounting Studies,
Nr. 2,
2020
Abstract
We analyze the value of investor relations (IR) strategies to IPO firms. We find that firms that are less visible and have inexperienced management tend to hire IR consultants prior to the issue date. IR consultants help create positive news coverage before an IPO, as reflected in a more optimistic tone of published media. Their presence is associated with higher underpricing at the IPO date but with lower long-run returns. IR-backed IPOs also exhibit disproportionately higher insider-related agency problems, as IR-induced higher underpricing tends to occur primarily in IPOs where underwriter and venture capitalist agency conflicts are more severe. These findings suggest that the IR programs of IPO firm are mostly short-term oriented and facilitate the ulterior motives of some insiders (underwriters and venture capitalists) targeting higher first-day returns.
Artikel Lesen