Ana Paula Matias Gama

Corporate debt policy of small firms: an empirical (re)examination

The capital structure decision can be considered a difficult problem for academics as well as for managers. Corporate debt policy has been studied in the context of both large and small firms in developed countries, but comparatively less developed countries have received much less attention in the literature. This is particularly true in the case of medium income economies with an above average weight of financial intermediaries. This paper tests the factors affecting the capital structure decision of small firms in one such country. The pooled time series cross‐section regression estimates for 995 firms and four years, suggests variables such as taxes, bankruptcy costs, size, collateral, age and growth opportunities affect the capital structure decisions of small firms. These findings have significant implications, both at the firm level and for the support of policies that redefine the financial infrastructure that may foster the emergence of local entrepreneurs in these economies.

The governance‐performance relations in publicly listed family controlled firms: an empirical analysis

Purpose – Combining ownership and management might lead concentrated shareholders, such as families, to wealth expropriation. The lack of external monitors and disciplinary agents potentially permits them to pursue this path. Thus, monitoring activity is one of the major drawbacks in family controlled firms. The purpose of this paper is to provide an integrated analysis of the governance roles of various block‐holders, institutional investors and corporate boards in firm performance in the context of publicly‐listed family‐controlled firms.Design/methodology/approach – Using a multi‐industry data set of 208 firms listed on the Milan Stock Exchange (MSE), this study employs the generalized method of moments (GMM) to address the issue of endogeneity on panel data over the period 200‐2006.Findings – The results show that family firms have better accounting performance than non‐family firms. So, active family involvement in management positions seems to reduce managerial opportunism. However, higher accountin...

Conclusions and Suggestions for Further Research

This chapter presents the main conclusions of the study and suggestions for further researcher. Based on the results obtained, we provide also some recommendations to policy makers, financial analysts and regulators.

Period, Sample Selection and Definition of Variables

This chapter presents the definitions of the basic concepts underlying the empirical study. We begin by defining the period investigated, which we define as the New Economic Period (NEP) as well as the concept of net firms. Then, we define the procedures to select the sample. We present the number of observations and also the systematization of the investigation. For comparative purposes, we define also a match sample—no-net firms and finally we present the definition of the variables used.

The Ohlson and Feltham Ohlson Models

This chapter analyses the phenomenon of “positive valuation of losses” in the new economy companies in the US. One of the potential explanations of this phenomenon is that these companies are start-up companies, mostly technology-based, that invest massively in intangible assets, in particular research and development (R&D) and advertising. Under Generally Accepted Accounting Principles (GAAP), these investments should be considered at full cost in the year they occur. Thus, in this chapter, we analyse the Ohlson (OM) (Contemp Acc Rev 11(2):661–687, 1995) and Feltham and Ohlson (FOM) (Contemp Acc Rev 11(2):689–731, 1995) valuation models. Feltham and Ohlson (Contemp Acc Rev 11(2):689–731, 1995) demonstrated analytically, using dynamic information, that losses, particularly at the stage of start-up in growth and technology-based companies, are considered to be costs that create an effect of conservatism accounting, consequently, there is an undervaluation of assets, hence the results and equity. However, this situation tends to be reversed over time, because given the principle of rationality, the investors continue to invest in the company if those investments are associated with abnormal profitability expectations.

The Value Relevance of the Variables Earnings and Book Value of Equity for Valuation Purposes

Since the seminal work of Ball and Brown (J Acc Res 6(2):159–1478, 1968) and Beaver (J Acc Res 6:179–192, 1968), extensive literature has examined the relationship between the prices of securities and (positive) results reported by companies. However, analysis of price/losses is scarce, with contradictory results obtained so far. Ratio (price versus losses) gained relevance in 1990s, with well-documented results in new economy companies (Shiller in Irrational exuberance. Princeton University Press, Princeton, 2000). It is for this group of companies that the phenomenon “positive valuation losses” assumes its great of significance, although it was not an entirely new phenomenon. For example, Amir and Lev (J Acc Econ 22(1–3):3–30, 1996) documented this relationship in the mobile phone sector, also with reference to the US market, in the 1980s.

Analysis and Discussion of Results

Given the magnitude and persistence of losses reported by the companies under study, this chapter aims to test empirically the phenomenon of “positive valuation of the losses” based on the theoretical framework of the OM and FOM models. The objective is to understand how investors assess this type of company, given the persistence and the continuous reporting of losses. So, after some considerations on the econometric procedures, we analyze the results obtained with reference to each of the research hypotheses formulated.

The Impact of Investment in Intangible Assets on the Market Value

Given the higher magnitude of investments in R&D and advertising that are assumed in net and non-net firms, this chapter analyses the impact of these investments on the market value of a company. We also evaluate the effect of growth on the market value of the company, with a particular focus on the Internet sector, highlighting the growth potential of this sector due its emerging nature.

The Role of Multiple Large Shareholders in Public Listed Firms: An Overview

A key issue in corporate governance is whether large owners contribute to resolving agency problems or exacerbate them. This paper surveys how large shareholders interact among themselves and how the composition of the controlling group, as well as the type of shareholders, can affect both monitoring and the level of private benefit extraction and, consequently, firm value. Recent studies on ownership structure of listed firms reveal that family firms are the most common form of ownership. We therefore also analyse potential agency conflicts that can emerge between families and other large shareholders by examining the governance roles of the structures of multiple large shareholder.