Félix Javier López Iturriaga

Bankruptcy visualization and prediction using neural networks: A study of U.S. commercial banks

Abstract We develop a model of neural networks to study the bankruptcy of U.S. banks, taking into account the specific features of the recent financial crisis. We combine multilayer perceptrons and self-organizing maps to provide a tool that displays the probability of distress up to three years before bankruptcy occurs. Based on data from the Federal Deposit Insurance Corporation between 2002 and 2012, our results show that failed banks are more concentrated in real estate loans and have more provisions. Their situation is partially due to risky expansion, which results in less equity and interest income. After drawing the profile of distressed banks, we develop a model to detect failures and a tool to assess bank risk in the short, medium and long term using bankruptcies that occurred from May 2012 to December 2013 in U.S. banks. The model can detect 96.15% of the failures in this period and outperforms traditional models of bankruptcy prediction.

Debt ownership structure and legal system: an international analysis

This paper is concerned with the ownership structure of corporate debt from an institutional perspective. An attempt is made to identify the factors affecting bank debt use from an international sample of companies from Austria, Germany, Japan, Belgium, France, Italy, Holland, Spain, Portugal, Finland, Sweden and the USA. The results show that bank debt depends both on factors specific to each company and on institutional features of each country. More exactly, it is found that bank loans are related to firm size, to the quality and risk of the projects, and to the collateral. It is also found that a number of legal-institutional factors are impacting on the source of firms’ debt, such as creditor protection, firm disclosure requirements and law enforcement.This paper is concerned with the ownership structure of corporate debt from an institutional perspective. An attempt is made to identify the factors affecting bank debt use from an international sample of companies from Austria, Germany, Japan, Belgium, France, Italy, Holland, Spain, Portugal, Finland, Sweden and the USA. The results show that bank debt depends both on factors specific to each company and on institutional features of each country. More exactly, it is found that bank loans are related to firm size, to the quality and risk of the projects, and to the collateral. It is also found that a number of legal-institutional factors are impacting on the source of firms’ debt, such as creditor protection, firm disclosure requirements and law enforcement.

Boards of directors and firm performance: the effect of multiple directorships

We analyse the influence of multiple directorships (busyness) on the performance of the Spanish listed firms between 2007 and 2009. We find a nonlinear relation due to the combination of a reputation effect and a dedication effect. For low levels of multiple directorships, the reputation effect prevails, so that serving on more boards of directors means more skills and more incentives to perform directorial duties, with a positive impact on the firm’s performance. After a certain threshold (our results point to around four boards), the dedication effect prevails as directors become overwhelmed attending to the duties of too many boards.We analyse the influence of multiple directorships (busyness) on the performance of the Spanish listed firms between 2007 and 2009. We find a nonlinear relation due to the combination of a reputation effect and a dedication effect. For low levels of multiple directorships, the reputation effect prevails, so that serving on more boards of directors means more skills and more incentives to perform directorial duties, with a positive impact on the firm’s performance. After a certain threshold (our results point to around four boards), the dedication effect prevails as directors become overwhelmed attending to the duties of too many boards.

Auditoría y discrecionalidad contable en la gran empresa no financiera española

RESUMEN En el presente trabajo se analiza la incidencia de algunos aspectos de la función de auditoría sobre la calidad de la información contable suministrada por la empresa. Partiendo de una muestra de 137 empresas que cotizaron en las Bolsas españolas durante los años 2002 y 2003, nuestro estudio se puede estructurar en dos vertientes: las características de la comisión de auditoría y la relación de la empresa con los auditores externos. Nuestros resultados evidencian una estrecha y beneficiosa relación entre la fiabilidad de la información contable y tanto el tamaño como la independencia de la comisión de auditoría. Asimismo, se observa que el prestigio de la empresa auditora mejora la calidad de los estados financieros y que existe una combinación de efecto experiencia y efecto connivencia en relación con la duración del contrato con el auditor.

Financial Constraints for Investment in Brazil

The purpose of this work is to verify the existence of financial constraints for investment in Brazil, an emerging market with growing international visibility. Using panel data methodology and GMM, we estimate dynamic investment models based on the Euler equation and Tobin’s q for a panel dataset of 199 Brazilian nonfinancial firms for the time period 1995-2006. Our findings show that Brazilian firms face financial constraints since their investment depend on internally generated funds. Results are robust to different investment models based on the Euler equation, while controlling for growth opportunities. Significant investment-cash flow sensitivity has been found for the whole sample of firms. Subsamples of firms considered as under financial constraints, according to dividend payout and equity issuance policies, have higher investment-cash flow sensitivity. Investment-cash flow sensitivity of financially constrained firms in Brazil is higher than that in the UK and in Romania, a transition economy. These results extend empirical evidence of financial constraints in Brazil.

A panel data study on Spanish firms' inventory investment

This paper raises several questions about inventory investment of a sample of 172 big nonfinancial Spanish companies. Inventory investment has been usually explained by two alternative theories: the production smoothing model and the (S,s) model. First, we provide a descriptive analysis based on industry-level data to show some shortcomings of the first model. Then, we test a flexible accelerator model using firm-level data. The results seem to show that inventory investment, previous-period inventories and sales are closely and significantly related. This evidence, although not conclusive, rejects both the pure production smoothing model and the (S,s) model. At the same time, our results confirm the view of a target inventory level and the plausibility of the so-called stock-adjustment model, so that the optimal inventory holding buffers sales volatility.

Earnings management and the contest to the control: an international analysis of family-owned firms

In this paper, we focus on the conflict of interests among shareholders as a possible determinant of earnings management. Using a sample of 3559 listed firms from the United States, Canada, the United Kingdom, France, Spain and Italy between 2008 and 2013, we analyse how the distribution of power among shareholders affects earnings management in family-owned firms. We find that the contest to the dominant family shareholder is relevant: namely, the more challenge to the control of dominant shareholders, the less earnings management in family firms. This contest is more important in civil law countries in which the shareholders rights are less protected. We also find that the nature of the blockholders can be relevant: consistent with the view that non-family shareholders are under more public scrutiny and have more difficulty to agree with the largest family shareholder to extract private benefits, our results suggest that a second or third non-family shareholder can reduce or alleviate earnings management.

Gobierno corporativo y factores determinantes del cambio de firma auditora en la gran empresa española

RESUMEN El presente trabajo analiza el efecto del consejo de administración y del comité de auditoría en la decisión de cambio de auditor. Hemos analizado todos los cambios de auditor en las empresas no financieras cotizadas en el mercado continuo español entre 2004 y 2007. Nuestros resultados muestran que el tamaño, la composición y el número de reuniones de ambos órganos influyen significativamente en el cambio de auditor. También encontramos que la rotación de auditor no comporta una mejor calidad de la información financiera, siendo las empresas cuyos órganos de gobierno corporativo más se adecuan a las recomendaciones de buen gobierno las que se hallan más inclinadas a cambiar de auditor.

LA PERSONA ADECUADA EN EL MOMENTO ADECUADO: LOS MIEMBROS DEL COMITÉ DE AUDITORÍA Y LA CALIDAD DE LA INFORMACIÓN FINANCIERA

We analyze some personal characteristics of the members of the audit committee of the Spanish listed firms and the relation between these characteristics and earnings management. We find a non-linear relation with tenure, so that long tenures can initially compromise the directors’ independence but, after a given threshold, longer tenures improve the expertise of the members. Serving in too many boards has a negative influence on the ability of directors to detect earnings management, and higher academic background and more diverse professional background improve the directors’ abilities.

¿Puede el entorno institucional fomentar la inversión en I+D? Un análisis internacional .

Analizamos la influencia de la proteccion legal de los inversores y la estructura de propiedad en la inversion corporativa en I+D. Partiendo de datos de 1.091 empresas de diecinueve paises, encontramos que un marco legal que proteja los derechos de los inversores fomenta el gasto corporativo en I+D. Una vez que se remueven los obstaculos institucionales, los factores financieros devienen mas eficaces para la generacion de I+D. La concentracion de la propiedad actua como sustituto de la proteccion legal, influyendo positivamente en la I+D de los paises con peor entorno institucional.