Maggie Foley

Corporate Cash Holdings and Financial Crisis: An Empirical Study of Chinese Companies

AbstractThis study investigates the determinants of cash holdings in the period 1999–2009 in China. The sample period covers the time of financial crisis. The focus in this study is on how firm characteristics, especially financial constraints and investment options, are associated with cash holdings. The findings show that: Compared to “normal” times, Chinese firms tend to increase their cash holdings during the financial crisis.In general, the firms with more financial constrains, and with more investment opportunities, tend to hold more cash.Further, the firms with lower leverage, less net working capital (NWC), and lower capital expenditures, are more likely to increase their cash holdings as well. Likewise, those firms tend to save more cash from cash flow.The evidence suggests that Chinese firms are precautious with their cash holdings.

The impact of unionization and other factors on undocumented immigrant settlement patterns in the US

In this study, we seek to add to the literature on undocumented immigrants by (1) identifying key determinants of the settlement patterns of undocumented immigrants and (2) testing a new hypothesis, what is referred to here as the ‘union-aversion hypothesis’. This hypothesis is elaborated upon in Section II of this study, but ultimately it argues that undocumented workers prefer to settle in states where the percentage of the labour force that is unionized is lower. Our findings suggest that the state-level settlement pattern of undocumented immigrants in the US is an increasing function of a state’s median family income level, the mean January temperature in a state and the relative size of the documented Hispanic population in the state, while being a decreasing function of the overall cost of living in the state. In addition, strong empirical support for the union-aversion hypothesis is obtained, namely the settlement pattern of undocumented immigrants is a decreasing function of the percentage of a state’s labour force that is unionized.

Women in the boardroom and corporate decisions of Italian listed companies: Does the “critical mass” matter?

The purpose of this paper is to investigate the relationship between women in the board of directors, firm performance and corporate decisions as well as the risk of the firm, debt level, and research and development (RD it has a negative effect on risk and appears to have a positive impact on investment in R&D The results also suggest a strong relationship between female directors and firm value, especially when certain multicultural factors are considered. Finally, considering the concept of “critical mass,” in line with the arguments of Kanter (1977), the results seem to emphasize a greater influence of women with respect to corporate decisions, moving from “tokenism” to a “critical mass” scenario.,The outcomes of the application, besides improving the current knowledge on the relationship between female representation in the board of directors, innovation, financial, and accounting decisions, intend to reveal if the governance of Italian listed companies is efficient in determining company results and in pursuing optimal decisions. Moreover, the results could be useful for both policy makers for the regulation of corporate governance and the board of directors and as a suggestion to companies that regularly appoint the members of the board of directors.,The work is not limited to examining the relationship between female representation and the performance of firms but instead uses a series of indicators of corporate decisions and multicultural, such as, the nationality of women in board of directors, the educational level, the past experience, and their interaction with the variables concerning the decision-making process. To the best knowledge of authors, this is the first study that investigates the relationship between women and corporate decisions in a single civil law country.

An analysis of withdrawn shareholder proposals

This study visits the role of shareholder proposals in the governance of public corporations by studying withdrawn shareholder proposals. Among all shareholders, unions are the most likely to withdraw proposals. Furthermore, firms with a record of poor performance, lower insider ownership and more independent boards are likely to see proposals withdrawn. Since unions often possess a high level of bargaining power, we put emphasis on the behavior of unions. We find that unions resubmit proposals that have gained high shareholder support in the prior year. About fifty percent of those resubmitted proposals are withdrawn prior to the annual shareholder meetings. In addition, almost all of those proposals do not reappear in the following year, implying that the issues underlying those proposals have been settled. This phenomenon indicates that unions submit shareholder proposals strategically. Furthermore, it is more likely for unions to adopt this strategy when the prior voting support is higher, when the insider ownership is lower, and when the ownership is less dispersed. The identified strategy played by unions suggests that unions use shareholder proposals for union workers at the expense of shareholder value.

Financial market determinants of the real cost of funds to public corporations in the US: 2SLS and GMM findings

Purpose - The purpose of this study is to provide new empirical evidence on the impact of a variety of financial market forces on the ex post real cost of funds to corporations, namely, the ex post real interest rate yield on AAA-rated long-term corporate bonds in the USA. The study is couched within an open-economy loanable funds model, and it adopts annual data for the period 1973-2013, so that the results are current while being applicable only for the post-Bretton Woods era. The auto-regressive two-stage least squares (2SLS) and generalized method of moments (GMM) estimations reveal that the ex post real interest rate yield on AAA-rated long-term corporate bonds in the USA was an increasing function of the ex post real interest rate yields on six-month Treasury bills, seven-year Treasury notes, high-grade municipal bonds and the Moody’s BAA-rated corporate bonds, while being a decreasing function of the monetary base as a per cent of gross domestic product (GDP) and net financial capital inflows as a per cent of GDP. Finally, additional estimates reveal that the higher the budget deficit as a per cent of GDP, the higher the ex post real interest rate on AAA-rated long-term corporate bonds. Design/methodology/approach - After developing an initial open-economy loanable funds model, the empirical dimension of the study involves auto-regressive, two-stage least squares and GMM estimates. The model is then expanded to include the federal budget deficit, and new AR/2SLS and GMM estimates are provided. Findings - The AR/2SLS and GMM (generalized method of moments) estimations reveal that the ex post real interest rate yield on AAA-rated long-term corporate bonds in the USA was an increasing function of the ex post real interest rate yields on six-month Treasury bills, seven-year Treasury notes, high-grade municipal bonds and the Moody’s BAA-rated corporate bonds, while being a decreasing function of the monetary base as a per cent of GDP and net financial capital inflows as a per cent of GDP. Finally, additional estimates reveal that the higher the budget deficit as a per cent of GDP, the higher the ex post real interest rate on AAA-rated long -term corporate bonds. Originality/value - The author is unaware of a study that adopts this particular set of real interest rates along with net capital inflows and the monetary base as a per cent of GDP and net capital inflows. Also, the data run through 2013. There have been only studies of deficits and real interest rates in the past few years.

Property Tax Capitalization within a National Historic District versus Property Tax Capitalization outside that National Historic District: Another Application of the Tiebout Hypothesis

This study has two objectives. First, it seeks to apply a hedonic pricing model to determine whether property taxes have been capitalized into the prices of single family homes located within in the Savannah Historic Landmark District in Savannah, Georgia. A total of 593 home sales over the 2000-2005 period are considered, with the housing prices and the property tax expressed in 2005 dollars. Second, this study seeks to apply that very same model to prices of some 1908 single family homes within the metropolitan Savannah area but outside the Savannah Historic Landmark District. Estimating the model in semi-log form, after allowing for a variety of housing characteristics, reveals that the natural log of the real sales price of single-family houses within the Savannah Historic Landmark District as well as those outside the Savannah Historic Landmark District were in fact negatively affected by the city and county property tax level.

Debt and Investment: A Firm Level Evidence

In this study, the panel smooth transition model will be used to analyze the nonlinear relationship between debt and investment. It can be inferred from the results that debt drives investment when the debt level is relatively low. However, a rise in debt reaching the “threshold” level diminishes the chances of an increase in investments. The results above indicate: the current economic downturn being experienced will not be resolved by further leverage.

Estimation of the liquidity trap using a panel threshold model

ABSTRACT This empirical study investigates, unlike previous studies, the presence of a liquidity trap using firm-level data. The study focuses on the case of China. A panel threshold model is employed. The empirical estimation reveals that the interest elasticity of money demand declines as the interest rate falls, a finding indicating that China has not been in a liquidity trap.

Teaching the Economics of Income Tax Evasion

The chapter seeks to facilitate the teaching and learning of income tax evasion behavior, which is tacitly illegal, by providing a balanced view of the factors that motivate a taxpayer either to comply with the Internal Revenue Code or engage in income tax evasion. The context is one of a cost-benefit analysis. Once the factors that contribute to the costs of tax evasion and those that contribute to the benefits of tax evasion are both identified and quantified, the rational taxpayer decides on which tax behavior on balance best serves her or his interest and acts accordingly.

Contesting corporate control: shareholder voting

In this study we examine the outcome of shareholder proposals and focus on the factors leading to a majority vote. Our findings include: 1) the issues of a proposal play a significant role in determining whether or not the proposal achieves majority shareholder support; 2) ownership structure plays a significant role in the occurrence of a majority vote proposal; 3) most importantly, Institutional Shareholder Services (ISS) recommendations can significantly influence how shareholders vote. When a shareholder proposal which is opposed by management, receives a positive ISS recommendation, this proposal is far more likely to achieve majority shareholder support.