Managerial Finance最新文献

{"title":"The effects of FinTech adoption on bank loan spreads","authors":"Jieying Hong, Na Wang, Tianpeng Zhou","doi":"10.1108/mf-03-2024-0238","DOIUrl":"https://doi.org/10.1108/mf-03-2024-0238","url":null,"abstract":"<h3>Purpose</h3>\u0000<p>This paper aims to examine the impact of traditional banks’ financial technology (FinTech) adoption on corporate loan spreads and lending practices.</p><!--/ Abstract__block -->\u0000<h3>Design/methodology/approach</h3>\u0000<p>This study examines the impact of FinTech adoption by banks on corporate loan spreads and lending practices. By analyzing data from bank 10-K filings, we develop a novel metric to assess FinTech adoption at the individual bank level. Our analysis reveals a significant positive correlation between increased FinTech adoption and higher corporate loan spreads, particularly for loans that are relatively informationally opaque. This causality is further validated through a quasi-natural experiment. Additionally, we identify trends toward loans with smaller sizes and longer maturities in banks with advanced FinTech integration.</p><!--/ Abstract__block -->\u0000<h3>Findings</h3>\u0000<p>Using a sample of corporate loans issued from 1993 to 2020, this paper documents a significant positive relationship between a bank’s increased FinTech adoption and higher loan spreads. This correlation is especially noticeable for loans that are informationally opaque. Moreover, the paper reveals trends toward smaller loan sizes and longer maturities with advanced FinTech integration in banks. Overall, these findings indicate FinTech enhances efficiency in processing hard information and holds the potential to enhance financial inclusion.</p><!--/ Abstract__block -->\u0000<h3>Originality/value</h3>\u0000<p>This paper contributes to two significant strands of finance literature. First, it highlights how banks with advanced FinTech integration gain advantages through enhanced processing of hard information. Furthermore, it underscores the role of FinTech in promoting financial inclusion, particularly for those borrowers facing informational opacity.</p><!--/ Abstract__block -->","PeriodicalId":18140,"journal":{"name":"Managerial Finance","volume":"9 1","pages":""},"PeriodicalIF":1.6,"publicationDate":"2024-09-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142269791","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Twitter-based economic uncertainties and time-frequency connectedness among cryptocurrencies","authors":"Mustafa Kocoglu, Xuan-Hoa Nghiem, Ehsan Nikbakht","doi":"10.1108/mf-03-2024-0229","DOIUrl":"https://doi.org/10.1108/mf-03-2024-0229","url":null,"abstract":"&lt;h3&gt;Purpose&lt;/h3&gt;\u0000&lt;p&gt;In this study, we aim to investigate the connectedness spillovers among major cryptocurrency markets. Moreover, we also explore to identify factors driving this connectedness, particularly focusing on the sentimentality of total, short-term, and long-term return connectedness spillovers among cryptocurrencies under Twitter-based economic uncertainties and US economic policy uncertainty. Finally, we investigate the extent to which cryptocurrency markets serve as a safe haven, hedge, and diversifier from news-based uncertainties.&lt;/p&gt;&lt;!--/ Abstract__block --&gt;\u0000&lt;h3&gt;Design/methodology/approach&lt;/h3&gt;\u0000&lt;p&gt;This study employs the connectedness approach following the combination of Ando &lt;em&gt;et al&lt;/em&gt;. (2022) QVAR and Baruník and Krehlík's (2018) frequency connectedness methodologies into the framework proposed by Diebold and Yilmaz (2012, 2014). The data covered from November 10, 2017, to April 21, 2023, and the factors driving cryptocurrency connectedness spillovers are identified and examined. The sentimentality of total, short-term, and long-term return connectedness spillovers among cryptocurrencies, concerning Twitter-based economic uncertainties and US economic policy uncertainty, are analyzed. We apply the Wavelet quantile correlation (WQC) method developed by Kumar and Padakandla (2022) to explore the effects of Twitter-based economic uncertainties and US economic policy uncertainty on Cryptocurrency market connectedness risk spillovers. Besides, we check and present the robustness of WQC findings with the multivariate stochastic volatility method.&lt;/p&gt;&lt;!--/ Abstract__block --&gt;\u0000&lt;h3&gt;Findings&lt;/h3&gt;\u0000&lt;p&gt;Our findings indicate that Ethereum and Bitcoin are net shock transmitters at the center of the connectedness return network. Ethereum and Bitcoin hold the highest market capitalization and value in the cryptocurrency market, respectively. This suggests that return shocks originating from these two cryptocurrencies have the most significant impact on other cryptocurrencies. Tether and Monero are the net receivers of return shocks, while Cardano and XRP exhibit weak shock-transmitting characteristics through returns. In terms of return spillovers, Ethereum is the most effective, followed by Bitcoin and Stellar. Further analysis reveals that Twitter economic policy uncertainty and US economic policy uncertainty are effective drivers of short-term and total directional spillovers. These uncertainty indices exhibit positive coefficient signs in short-term and total directional spillovers, which turn predominantly negative in different magnitudes and frequency ranges in the long term. In addition, we also document that as the Total Connectedness Index (TCI) value increases, market risk also rises. Also, our empirical findings provide significant evidence of Twitter-based economic uncertainties and US economic policy uncertainty that affect short-term market risks. Hence, we state that risk-connectedness spillovers in cryptocurrency markets en","PeriodicalId":18140,"journal":{"name":"Managerial Finance","volume":"32 1","pages":""},"PeriodicalIF":1.6,"publicationDate":"2024-09-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142265738","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Charity begins at the office: issuing cheap stock and stock options to employees and insiders before going public","authors":"John D. Finnerty","doi":"10.1108/mf-09-2023-0540","DOIUrl":"https://doi.org/10.1108/mf-09-2023-0540","url":null,"abstract":"&lt;h3&gt;Purpose&lt;/h3&gt;\u0000&lt;p&gt;Press reports have indicated that firms frequently underprice restricted stock and employee stock options. I test for underpricing of stock and options.&lt;/p&gt;&lt;!--/ Abstract__block --&gt;\u0000&lt;h3&gt;Design/methodology/approach&lt;/h3&gt;\u0000&lt;p&gt;I examined a sample of 5,333 private firm stock and option issuances between 1985 and 2017. I tested for underpricing using two approaches: assuming investors have no special market-timing ability and assuming instead they have perfect market-timing ability.&lt;/p&gt;&lt;!--/ Abstract__block --&gt;\u0000&lt;h3&gt;Findings&lt;/h3&gt;\u0000&lt;p&gt;I find evidence of widespread stock and option underpricing by private firms before they go public reflecting large discounts that exceed reasonable compensation for lack of marketability. Unreported underpricing is more frequent in the last pre-IPO private equity transactions that offer the last opportunity to give such discounts before the stock is publicly traded, but the discounts are greater in the earlier pre-IPO transactions where unreported discounts are presumably tougher for the SEC to detect. Underpricing is still detected even when the actual DLOMs are tested against a benchmark that assumes investors have perfect market-timing ability.&lt;/p&gt;&lt;!--/ Abstract__block --&gt;\u0000&lt;h3&gt;Research limitations/implications&lt;/h3&gt;\u0000&lt;p&gt;Firms frequently underprice restricted stock and employee stock options. Firms tend to underprice stock options more frequently than restricted stock, but restricted stock tends to be priced at deeper discounts when recipients are assumed not to have any special market-timing ability.&lt;/p&gt;&lt;!--/ Abstract__block --&gt;\u0000&lt;h3&gt;Practical implications&lt;/h3&gt;\u0000&lt;p&gt;Private firms issue restricted stock and options as incentive compensation. Lowballing the valuation transfers wealth from outside stockholders to employees/insiders. Wealth transfers take place through the issuance of equity claims to employees/insiders before firms go public. I found that more than a quarter of the DLOMs exceed the theoretical maximum by, on average, between 16% (median) and 20% (mean). This finding raises two questions worthy of investigation. First, to what extent do the frequency and magnitude of DLOMs above the theoretical maximum depend on whether a board of directors obtains an independent appraisal of a stock’s fair market value? Second, if DLOMs above the theoretical maximum are observed even when the stock is independently appraised, how do appraisers justify such large DLOMs?&lt;/p&gt;&lt;!--/ Abstract__block --&gt;\u0000&lt;h3&gt;Social implications&lt;/h3&gt;\u0000&lt;p&gt;The wealth transfers that take place through the issuance of equity claims to employees/insiders before firms go public benefit employees/insiders at the expense of outside shareholders.&lt;/p&gt;&lt;!--/ Abstract__block --&gt;\u0000&lt;h3&gt;Originality/value&lt;/h3&gt;\u0000&lt;p&gt;My paper is the first to furnish evidence of widespread stock and option underpricing by private firms before they go public; demonstrate that the unreported underpricing is more frequent in the last pre-IPO private equity transactions that off","PeriodicalId":18140,"journal":{"name":"Managerial Finance","volume":"35 1","pages":""},"PeriodicalIF":1.6,"publicationDate":"2024-09-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142265737","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Dividend omissions and dividend cuts behaviour: a dynamic random-effect probit panel regression analysis","authors":"Samveg Patel","doi":"10.1108/mf-06-2024-0433","DOIUrl":"https://doi.org/10.1108/mf-06-2024-0433","url":null,"abstract":"<h3>Purpose</h3>\u0000<p>The study aims to examine the dividend omissions and dividend cuts behaviour of manufacturing and non-financial services firms to identify the determinants of dividend omissions and dividend cuts.</p><!--/ Abstract__block -->\u0000<h3>Design/methodology/approach</h3>\u0000<p>The study analyses the financial data of 3,546 firms from 2011 to 2020 (35,460 firm-year observations) using a dynamic random-effect probit panel regression model.</p><!--/ Abstract__block -->\u0000<h3>Findings</h3>\u0000<p>The results suggest that profitability, growth opportunity, leverage, liquidity, risk, extraordinary income, shareholding pattern and buyback are major determinants of dividend omissions. Similarly, dividend cut in the previous year, profitability, operating cash flow, risk and extraordinary income are major factors leading to dividend cuts.</p><!--/ Abstract__block -->\u0000<h3>Research limitations/implications</h3>\u0000<p>Firms which omit the dividend are less likely to start paying dividend in subsequent years, whereas firms which cut the dividend may increase dividend in later years. Also, profitability decreases for a significant number of firms post dividend omission and cut. This indicates that dividend omission is a more prominent signal than a dividend cut for the financial health of a firm.</p><!--/ Abstract__block -->\u0000<h3>Practical implications</h3>\u0000<p>The determinants identified in the study enable analysts and portfolio managers to decide the propensity of dividend omission and cut even before actual announcements and can alleviate the significant loss in the portfolio. Also, managers and the board of directors would be able to monitor the firm’s financial performance to avoid the situation leading to dividend omissions and cuts.</p><!--/ Abstract__block -->\u0000<h3>Social implications</h3>\u0000<p>The study strongly recommends that firms should voluntarily pay dividends to shareholders to encourage the healthy participation of retail shareholders in the equity market and create a long-term win–win situation for all stakeholders in society. If a large number of firms continue not to pay the dividend, the study appeals to the regulators to intervene to protect shareholders' interests for the greater good of society.</p><!--/ Abstract__block -->\u0000<h3>Originality/value</h3>\u0000<p>To the best of author’s knowledge, this is the first study to empirically identify the determinants of dividend omission and cut in the unique setting like India where dividend taxation had undergone a significant change.</p><!--/ Abstract__block -->","PeriodicalId":18140,"journal":{"name":"Managerial Finance","volume":"2016 1","pages":""},"PeriodicalIF":1.6,"publicationDate":"2024-09-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142176734","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Corporate spin-offs and stock performance: a comparative study of pure and composite schemes","authors":"Meghana Bhat, A.S. Shiralashetti","doi":"10.1108/mf-05-2024-0398","DOIUrl":"https://doi.org/10.1108/mf-05-2024-0398","url":null,"abstract":"<h3>Purpose</h3>\u0000<p>Several studies have examined the relationship between spin-off announcements and stock performance. However, a comparison of the announcement effect of different schemes of spin-offs remains relatively underexplored in the literature. This study aims to find the differential impact of pure scheme and composite schemes of spin-offs on parent company stock performance. A pure scheme includes only the separation of business into independent companies, while a composite scheme includes a simultaneous merger of one of the companies with another company along with separation.</p><!--/ Abstract__block -->\u0000<h3>Design/methodology/approach</h3>\u0000<p>A total of 109 pure and 51 composite spin-off announcements made by Indian listed companies from 2010 to 2023 are examined using event study methodology. The cross-sectional <em>t</em>-test is used to measure the significance of abnormal returns. The <em>t</em>-test for two sample means (right-tailed) is incorporated to test the significance of variations in the stock returns of pure and composite schemes of spin-off announcements. Cross-sectional regression is also done to evaluate the impact of the type of scheme on the spin-off return.</p><!--/ Abstract__block -->\u0000<h3>Findings</h3>\u0000<p>The study found a cumulative average abnormal return of −1.06% for the pure spin-off and 8.27% for the composite spin-off over a 41-day event window. The univariate analysis revealed that the composite scheme generates a significantly higher cumulative average abnormal return than the pure scheme. Regression analysis also confirmed that the composite scheme significantly positively impacts the stock return. It can be concluded that investors favour the composite scheme, expecting that it will deliver a better strategic fit and generate synergy.</p><!--/ Abstract__block -->\u0000<h3>Originality/value</h3>\u0000<p>This paper makes a valuable contribution to the existing literature on corporate spin-offs. The study by analysing and comparing how the spin-off and merger combination differently affects the stock performance, helps the investor who wants to capitalize on the market imperfections and the managers to make complex business decisions.</p><!--/ Abstract__block -->","PeriodicalId":18140,"journal":{"name":"Managerial Finance","volume":"385 1","pages":""},"PeriodicalIF":1.6,"publicationDate":"2024-09-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142176732","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Institutional, macroeconomic and firm-specific determinants of financial leverage: the case of Vietnam","authors":"Vu Hiep Hoang","doi":"10.1108/mf-05-2024-0409","DOIUrl":"https://doi.org/10.1108/mf-05-2024-0409","url":null,"abstract":"<h3>Purpose</h3>\u0000<p>This study aims to investigate the institutional, macroeconomic and firm-specific determinants of financial leverage in Vietnam and provides new evidence from the dynamic panel fractional estimator.</p><!--/ Abstract__block -->\u0000<h3>Design/methodology/approach</h3>\u0000<p>This study uses a panel dataset of 859 Vietnamese firms from 2008 to 2022 and employs three estimators: Feasible Generalized Least Squares (FGLS), System Generalized Method of Moments (SysGMM) and Dynamic Panel Fractional (DPF), with DPF being particularly suitable for handling fractional dependent variables and the dynamic nature of financial leverage.</p><!--/ Abstract__block -->\u0000<h3>Findings</h3>\u0000<p>The results confirm the dynamic nature of the financial leverage model, with firm-specific factors, institutional factors and macroeconomic factors playing significant roles in shaping firms' financing decisions. The DPF estimator highlights the positive impact of stock market development on leverage. This study contributes to the literature by providing new evidence on the determinants of leverage in Vietnam, using the DPF estimator for more accurate estimation and revealing the significant impact of the size of the banking sector, the size of the stock market, the stock market development index, the financial development index and the corruption perception index on leverage.</p><!--/ Abstract__block -->\u0000<h3>Originality/value</h3>\u0000<p>This study contributes to the literature by providing new evidence on the dynamic nature of the financial leverage model and the impact of institutional, macroeconomic and firm-specific factors on financial leverage in the context of Vietnam. The use of the DPF estimator allows for a more accurate and reliable estimation of the determinants of leverage, considering the fractional nature of the dependent variable and the persistence of capital structure decisions over time.</p><!--/ Abstract__block -->","PeriodicalId":18140,"journal":{"name":"Managerial Finance","volume":"34 1","pages":""},"PeriodicalIF":1.6,"publicationDate":"2024-09-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142176733","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Does litigation contingency disclosure in corporate filings matter? Evidence from securities class action lawsuits","authors":"Zhanel DeVides, Hyoseok (David) Hwang","doi":"10.1108/mf-12-2023-0758","DOIUrl":"https://doi.org/10.1108/mf-12-2023-0758","url":null,"abstract":"<h3>Purpose</h3>\u0000<p>We investigate the information content of legal contingency disclosures in corporate filings, specifically their usefulness in predicting settlement amounts and mitigation of market response to litigation resolution news.</p><!--/ Abstract__block -->\u0000<h3>Design/methodology/approach</h3>\u0000<p>Using a hand-collected sample of disclosures for settled US securities class action lawsuits, we analyze the contents of the contingent liabilities disclosure before future settlements and classify them into two categories: “pessimistic” and “optimistic” disclosures. We examine whether the tone of disclosure is associated with litigation outcomes, such as settlement amounts and likelihood of incurring material losses, and its effect on market reaction to settlement announcements.</p><!--/ Abstract__block -->\u0000<h3>Findings</h3>\u0000<p>Disclosures with optimistic views on lawsuits are settled for lower amounts, whereas those with more pessimistic views result in higher settlements. Furthermore, while, on average, investors react negatively to litigation resolutions, the market reaction is attenuated (exacerbated) when a prior legal liability disclosure was pessimistic (optimistic). Additionally, investors value disclosure consistency when a litigation outcome is aligned with its legal contingency disclosure. Finally, disclosure consistency is positively associated with managerial ownership as well as the largest shareholder ownership.</p><!--/ Abstract__block -->\u0000<h3>Originality/value</h3>\u0000<p>This study highlights that the overall tone in legal contingency disclosures is informative and has valuation implications for capital markets. It also highlights the benefits of consistent disclosure, i.e. litigation disclosure aligned with litigation outcomes, as it is viewed positively by investors.</p><!--/ Abstract__block -->","PeriodicalId":18140,"journal":{"name":"Managerial Finance","volume":"122 1","pages":""},"PeriodicalIF":1.6,"publicationDate":"2024-09-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142176735","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Nexus between geopolitical risk, female CEOs and firm performance relationship: an international evidence","authors":"Siddhartha Barman, Jitendra Mahakud","doi":"10.1108/mf-05-2024-0353","DOIUrl":"https://doi.org/10.1108/mf-05-2024-0353","url":null,"abstract":"<h3>Purpose</h3>\u0000<p>The purpose of this study is to examine the nexus between geopolitical risk, female CEOs and firm performance through a cross-country analysis.</p><!--/ Abstract__block -->\u0000<h3>Design/methodology/approach</h3>\u0000<p>The study period ranges from 2014 to 2021, and the dataset uses an unbalanced panel of 4,955 companies across 50 nations comprising both developed and emerging economies. Our study has employed a fixed-effect panel regression model, to examine this issue. This analysis was supplemented with applying a dynamic panel technique, i.e. System generalized method of moments (SGMM), to address any endogeneity problems.</p><!--/ Abstract__block -->\u0000<h3>Findings</h3>\u0000<p>The study reveals that female CEOs positively impact firm performance, while geopolitical risks decrease it. Gender plays a significant role in this relationship, with firms with female executives tending to make conservative financial decisions amidst increased risks. The study also shows that geopolitical threats (GPRT) have a greater impact on female CEOs-firm performance relationship in developed nations.</p><!--/ Abstract__block -->\u0000<h3>Originality/value</h3>\u0000<p>This study is a new investigation that explores the intertwining relationship between geopolitical risk, female CEOs and firm performance across the countries.</p><!--/ Abstract__block -->","PeriodicalId":18140,"journal":{"name":"Managerial Finance","volume":"64 1","pages":""},"PeriodicalIF":1.6,"publicationDate":"2024-08-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142176738","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"CEO pay-performance sensitivity and pay for luck and asymmetry","authors":"Yixi Ning, Bill Hu, Zhi Xu","doi":"10.1108/mf-04-2024-0313","DOIUrl":"https://doi.org/10.1108/mf-04-2024-0313","url":null,"abstract":"&lt;h3&gt;Purpose&lt;/h3&gt;\u0000&lt;p&gt;This paper studies the relationship between CEO pay-performance sensitivity and CEO pay for luck as well as the asymmetric benchmarking of CEO pay in which good luck is rewarded but bad luck is not penalized symmetrically. We further explore the impact of the regulatory changes on executive compensation taking effect in the 2000s on CEO pay for luck and asymmetry.&lt;/p&gt;&lt;!--/ Abstract__block --&gt;\u0000&lt;h3&gt;Design/methodology/approach&lt;/h3&gt;\u0000&lt;p&gt;In this study, we examine the relationship between CEO pay-performance sensitivity and CEO pay for luck and the asymmetric benchmarking of CEO compensation. The sample consists of DJIA component companies over a 71-year period from 1950 to 2020. CEO pay-performance sensitivity is measured by both delta and Jensen-Murphy pay-performance sensitivity.&lt;/p&gt;&lt;!--/ Abstract__block --&gt;\u0000&lt;h3&gt;Findings&lt;/h3&gt;\u0000&lt;p&gt;We find that an increase in CEO pay-performance sensitivity as measured by both delta and Jensen-Murphy pay-performance sensitivity leads to an increase in the degree of CEO pay for luck but tends to reduce the level of CEO pay for luck asymmetry. In addition, we find that the major pay-related regulatory changes in recent years have mitigated the degree of CEO pay for luck and pay asymmetry, in which CEO pay structure and the associated CEO pay-performance sensitivity are major mechanisms through which the regulatory changes take effect.&lt;/p&gt;&lt;!--/ Abstract__block --&gt;\u0000&lt;h3&gt;Research limitations/implications&lt;/h3&gt;\u0000&lt;p&gt;Our findings provide empirical evidence supporting the argument that both optimal contracting and rent extraction should be considered as important determinants of CEO compensation.&lt;/p&gt;&lt;!--/ Abstract__block --&gt;\u0000&lt;h3&gt;Practical implications&lt;/h3&gt;\u0000&lt;p&gt;When a firm designs the pay packages for its CEO to align CEO wealth to firm performance, CEO pay-performance sensitivity is expected to improve. However, the improved CEO PPS can also lead to an increased CEO pay for non-performance (Luck), which is an undesired outcome from the shareholder view. Therefore, a firm should thoroughly consider various advantages and disadvantages when compensating its top executives. Third, pay-related regulations have indeed achieved some intended outcomes such as the diminished pay for luck and asymmetry, but they also exacerbated the positive relationship between CEO pay-performance sensitivity and the asymmetric benchmarking of CEO pay. It seems that executive pay-related regulations cannot achieve perfect outcomes without side effects. Continuous reforms and regulations on corporate governance should be a dynamic process under various changing situations.&lt;/p&gt;&lt;!--/ Abstract__block --&gt;\u0000&lt;h3&gt;Originality/value&lt;/h3&gt;\u0000&lt;p&gt;This study contributes to the literature on executive pay for luck and asymmetry in several ways. First, our study is among the few studies empirically testing the relationship between CEO pay-performance sensitivity and pay for luck and asymmetry. We find that CEO pay-performance sensitivity tends to increase t","PeriodicalId":18140,"journal":{"name":"Managerial Finance","volume":"9 1","pages":""},"PeriodicalIF":1.6,"publicationDate":"2024-08-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142176739","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"The cost of debt around the IPO","authors":"David Suleiman","doi":"10.1108/mf-01-2022-0046","DOIUrl":"https://doi.org/10.1108/mf-01-2022-0046","url":null,"abstract":"<h3>Purpose</h3>\u0000<p>The purpose of this study is to provide empirical evidence on a possible economic explanation for changes in borrowing costs of US private firms that are going public.</p><!--/ Abstract__block -->\u0000<h3>Design/methodology/approach</h3>\u0000<p>Using an OLS regression with firm fixed effects and the IPO as an information releasing event that alters information asymmetries between borrowers and lenders and relying on several proxies for pre-IPO information asymmetries, I analyze the impact of the IPO on changes in borrowing costs from before to right after an IPO of firms with high pre-IPO information asymmetries.</p><!--/ Abstract__block -->\u0000<h3>Findings</h3>\u0000<p>My findings indicate that small firms, firms with high R&amp;D, firms with negative EBITDA and firms with a single lending relationship benefit more from going public by realizing larger decreases in borrowing costs after an IPO than firms with lower pre-IPO information asymmetries. The results are consistent with changing information asymmetries caused by the IPO event playing a role in changes in borrowing costs after the IPO. Furthermore, I provide empirical evidence that a reduction in the lender’s bargaining power due to the IPO event plays an important role in explaining changes in borrowing costs around that time.</p><!--/ Abstract__block -->\u0000<h3>Originality/value</h3>\u0000<p>This study uses a hand-collected data set of loans obtained from financial statements issued by US firms at the time of their IPO. As a result, I am able to comprehensively document changes of borrowing costs of US private firms going public and shed light on one of the economic forces behind those changes.</p><!--/ Abstract__block -->","PeriodicalId":18140,"journal":{"name":"Managerial Finance","volume":"6 1","pages":""},"PeriodicalIF":1.6,"publicationDate":"2024-08-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142176794","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}