Tiziana La Rocca

Effect of Diversification on Capital Structure

Previous empirical financial studies have paid little attention to the role of diversification strategy on financial choices. This study analyses the financing strategies of multibusiness firms, suggesting the relevance of sorting the diversification phenomena into its related and unrelated components. The implications of our findings are important because they explain earlier contradictory results on capital-structure determinants and offer an explanation of how the degree of product specialization/diversification and the direction of diversification (related or unrelated) translate into different corporate financial behaviours.

The influence of local institutional differences on the capital structure of SMEs: Evidence from Italy

This paper explains both capital-structure and debt-maturity choices for SMEs in terms of institutional differences at the local level, making use of regions as the unit of analysis. Specifically, the article considers local financial development and the effectiveness of the local enforcement system, controlling for firm-specific characteristics. The ability of the local financial market to provide funds efficiently is of particular interest to SMEs, due to the fact that large firms can tolerate imperfections in the local financial system by moving to international, more highly integrated financial markets. The main findings of the analysis suggest that capital-structure and debt-maturity choices interact as complementary factors and that corporate financial decisions are not only the result of firm-specific or industry-specific characteristics, but are also based on the institutional climate in which a firm operates. After controlling for heterogeneity in firm characteristics, leverage was found to be positively influenced by local financial development, while the enforcement system was less relevant. Conversely, debt maturity was longer in regions with high levels of law enforcement, whereas local financial development did not play a relevant role.

Investment cash flow sensitivity and financial constraint: a cluster analysis approach

This article sheds light on the mixed empirical evidence concerning financial constraint and investment sensitivity to cash flow. The literature suggests that measuring financial constraint is far from straightforward, and we therefore propose a cluster analysis procedure to identify unambiguous groups of constrained firms. We found the investment results to be highly sensitive to cash flow for financial constraint firms. Moreover, in line with previous research, our results showed that the traditional criteria used to identify financially constrained firms led to ambiguous interpretations. Overall, our results propose that the cluster analysis can be used to encompass the various single-criterion approaches, thereby providing a finer measurement of the financial constraint construct and deeper insight into the relationship between investment sensitivity to cash flow and financial constraint.

Corporate Governance, Intellectual Capital and Value Creation

This paper is a tentative to integrate, using a heterodox approach, the capabilities perspective, that raises the role of the managers competences, and the incomplete contract perspective, that raises the role of agency problems, to describe how the corporate governance relationships work in high competitive and complex environments. This paper provides a redefinitions and reassessments of corporate governance theoretical models according to the changing nature of the firm. This paper tries to describe the corporate governance relationships by the interaction between authority, as the most valuable source of incentive to offer to the manager for firm-specific investment, and responsibility, as a mechanism to avoid opportunistic behaviors. The interaction between them allows managers to solve hold-up problems at the beginning and, after, moral hazard problems. These two factors balance the incentive problem with the need of a constraint to the managers activities and explain the way to incentive innovation and managerial creativity to reach firms success and support value creation processes.

Debt-maturity, corporate diversification and relatedness

The aim of this study is to analyse the financing choices of multibusiness firms, in terms of debt-maturity. The results suggest that the degree of product diversification and the direction of diversification (related or unrelated) translate into different corporate financial behaviours. In particular, diversification related or unrelated had opposite effects on debt-maturity; the former strategy has a negative effect whereas the latter has a positive influence on debt-maturity.The aim of this study is to analyse the financing choices of multibusiness firms, in terms of debt-maturity. The results suggest that the degree of product diversification and the direction of diversification (related or unrelated) translate into different corporate financial behaviours. In particular, diversification related or unrelated had opposite effects on debt-maturity; the former strategy has a negative effect whereas the latter has a positive influence on debt-maturity.

Investimenti e vincoli finanziari: evidenze da una cluster analysis

Corporate investment is a critical factor in the overall activity of the economic and capital markets. Although the level of financial constraints plays an important role in the investment decisions of companies, the nature of the relationship continues to dominate the ongoing theoretical debate, while the existing empirical evidence is mixed. After applying the cluster analysis approach to a sample of Italian manufacturing firms, our findings suggest that the approach can reveal new insights on financial constraint issues, making it a more useful approach than traditional criteria and measures.

Local Financial Development and SMEs Capital Structure: An Empirical Investigation

The present study investigates the role of institutional differences at the local level as determinants of firms’ capital structure. Specifically, the aim is to empirically assess whether and to what extent SMEs’ financial decisions are affected by local financial development - evaluating this influence both ceteris paribus, and by allowing it to be conditional on different levels of legal enforcement inefficiency. After controlling for debt inertia, firms’ heterogeneity and endogeneity problems, the main finding of the analysis suggests that local financial development may be an important determinant of SMEs’ capital structure. In fact, firms appear to have better access to financial debt in areas characterized by a higher quality of the legal system - possibly as intermediaries may be more inclined to provide funds where the enforcement systems enable a more effective credit protection. Despite the international process of capital markets integration, local financial institutions do not seem to become irrelevant for SMEs - which are in need of well developed institutions at local level to gain easier access to external financial resources.

Local Financial Development and Corporate Financial Policy

The aim of the present study is to explain both capital-structure and debt-maturity choices for small and medium-size firms in terms of institutional differences at the local level. In particular, local financial development, the effectiveness of the local enforcement system, together with other firm-specific characteristics, are considered. The empirical analysis is strictly based on the indicator created by (Guiso, Sapienza, & Zingales, 2004) while the methodological approach is similar to (Barclay, Marx, & Smith, 2003). We found that capital-structure and debt-maturity choices interact with each other and that corporate financial decisions are influenced by institutional factors. In contrast to (Barclay et al., 2003) and to reports in the Italian literature, the results of the analysis showed that leverage and debt-maturity are complementary factors. Leverage was found to be positively affected by local financial development while the enforcement system was less relevant. Debt maturity resulted longer in regions with better enforcement of the law, whereas local financial development did not play a relevant role. Other interesting findings regarding the role of credit worthiness, measured through the corporate financial rating, are also discussed.