Third Paris Spring Corporate Finance Conference, 2011 (video)
de HEC Paris
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Description
This podcast contains the presentations and discussions of the Third Paris Spring Corporate Finance Conference on 19/20 May 2011, organized by HEC Paris and Université Paris-Dauphine in Paris at the headquarters of the French Banking Federation. All video clips are full-length, with about 25 min. per paper presentation, and 20 min. for discussion, response and plenary debate. The first video is the keynote address by Franklin Allen (Wharton), on “Stakeholder Capitalism, Corporate Governance and Firm Value” (60 min.). The conference included 13 papers, chosen from over 300 submissions, on a variety of topics in corporate finance. The first two papers address empirically the differences between private and public papers. The third paper is a theoretical investigation of rollover freezes, followed by an empirical paper on the impact of debt overhang on durable goods guarantees. The next two papers investigate the relationship between legal job security (paper #5) and stock market liquidity (paper #6) on incentives for innovation. The following three papers focus on various aspects of credit supply, notably during a financial crisis, with two theoretical papers on the role of shortages of liquid assets (paper #7), of optimal policy interventions (paper #8) followed by an empirical analysis of cyclical demand and supply effects (paper #9). The next session offers two papers on mergers and acquisitions, highlighting the role of R&D activity for merger strategies in an industry (paper #10) and the effect of deal anticipation in takeover bids and their evolution over time (paper #11). The final two papers analyze the impact on investments of the increased price informativeness acquired in cross-listings (paper #12), and the importance of agency costs in firms’ cash holdings (paper #13). New episodes will be added every week.
| Nom | Description | Sortie | Prix | ||
|---|---|---|---|---|---|
| 1 | VideoDiscussion of 'Agency Conflicts and Cash: Estimates from a Structural Model' | Erwan Morellec (EPFL Lausanne) discussing Boris Nikolov on 'Agency Conflicts and Cash: Estimates from a Structural Model' | 15/1/12 | Gratuit | Afficher sur iTunes |
| 2 | VideoAgency Conflicts and Cash: Estimates from a Structural Model | Boris Nikolov (University of Rochester) presenting 'Agency Conflicts and Cash: Estimates from a Structural Model' - Abstract: We estimate a dynamic model of firm investment and cash accumulation to ascertain whether agency problems affect corporate cash holding decisions. We model four specific mechanisms that misalign managerial and shareholder incentives: managerial bonuses based on current profits, limited managerial ownership of the firm, a managerial reference for firm size, and managerial perquisite consumption. Interestingly, we find nonmonotonic relations between features of cash policy and both perquisites and size preference. Our estimates indicate that agency issues related to perquisites are more important for explaining corporate cash holding than issues related to empire building. We also find that firms with lower blockholder and institutional ownership have higher managerial perquisite consumption. These agency problems result in a 22% increase in cash and a loss to equity holders of approximately 6%. | 8/1/12 | Gratuit | Afficher sur iTunes |
| 3 | VideoDiscussion of 'Cross-Listing, Investment Sensitivity to Stock Price and the Learning Hypothesis' | Robert Hansen (Tulane University) discussing Laurent Fresard on 'Cross-Listing, Investment Sensitivity to Stock Price and the Learning Hypothesis' | 1/1/12 | Gratuit | Afficher sur iTunes |
| 4 | VideoCross-Listing, Investment Sensitivity to Stock Price and the Learning Hypothesis | Laurent Fresard (HEC Paris) presenting 'Cross-Listing, Investment Sensitivity to Stock Price and the Learning Hypothesis' - Abstract: Using a large sample of U.S. cross-listings, we show that cross-listed firms have a higher sensitivity of corporate investment to stock price than non cross-listed firms. This difference materializes after foreign firms access the U.S. markets (as it does not exist before) and is persistent. These findings are strong and robust to various controls, e.g., whether firms are financially constrained or not. The positive impact of a cross-listing on the sensitivity of investment-to-stock price is significantly smaller for firms incorporated in countries that rank low on measures on governance and disclosure quality. Moreover, this cross-listing effect increases with proxies for the extra information that a U.S. crosslisting generates for firms’ managers. We argue that these findings support the hypothesis that a crosslisting enables managers to learn more information from the stock market, which then they use to make their corporate investment decisions. | 25/12/11 | Gratuit | Afficher sur iTunes |
| 5 | VideoDiscussion of 'Deal anticipation and markup pricing in takeovers: A structural analysis' | Annette Poulsen (University of Georgia) discussing Espen Eckbo on 'Deal anticipation and markup pricing in takeovers: A structural analysis' | 18/12/11 | Gratuit | Afficher sur iTunes |
| 6 | VideoDeal anticipation and markup pricing in takeovers: A structural analysis | Espen Eckbo (Tuck School of Business at Dartmouth) presenting 'Deal anticipation and markup pricing in takeovers: A structural analysis' - Abstract: Takeover rumors cause the market to anticipate the expected offer premium, resulting in a pre-bid target stock price runup. A runup may also reflect a surprise increase in he target's stand-alone value, possibly prompting the target to demand a markup of the offer price. Common sense suggests that bidders should rarely agree to markups: after all, runups tend to occur amid intense market rumors and, given target incentives, offering a markup carries a substantial risk of 'paying twice'. However, the takeover literature reports that o er premiums and runups are highly positively correlated, as if costly markup pricing exists as the norm. To address this puzzle, we present a structural analysis of the deal anticipation hypothesis which shows that the relation between runups, markups and premiums is highly nonlinear when synergy gains vary in the sample. Thus, earlier linear projections of premiums on runups do not properly test the deal anticipation hypothesis for runups. Furthermore, our large-sample evidence rejects the existence of costly markup pricing in the data. While offer premiums cause runups, there is little evidence that runups feed back into higher offer premiums. | 11/12/11 | Gratuit | Afficher sur iTunes |
| 7 | VideoDiscussion of 'R and D and the Market for Acquisitions' | Ulf Axelson (London School of Economics) discussing Alexei Zhdanov on 'R and D and the Market for Acquisitions' | 4/12/11 | Gratuit | Afficher sur iTunes |
| 8 | VideoR and D and the Market for Acquisitions | Alexei Zhdanov (University of Lausanne) presenting 'R and D and the Market for Acquisitions' - Abstract: We show theoretically and empirically how an active acquisition market positively affects firm incentives to innovate and conduct R and D. Our model shows how the incentives of small firms to conduct R and D in order to innovate increase with competition, demand and the probability that they are taken over. In contrast, we show that large firms optimallymay decide to purchase smaller innovative firms and conduct less R and D themselves. Empirically, we document that the R and D of small firms responds more than the R and D of larger firms to demand shocks and the probability of being an acquisition target. The results also show that firm R and D increases with product-market competition and with dustry acquisition liquidity and that these effects are stronger for smaller firms. | 27/11/11 | Gratuit | Afficher sur iTunes |
| 9 | VideoDiscussion of 'Cyclicality of Credit Supply: Firm Level Evidence' | Eric de Bodt (Université Lille 2) discussing Bo Becker on 'Cyclicality of Credit Supply: Firm Level Evidence' | 20/11/11 | Gratuit | Afficher sur iTunes |
| 10 | VideoCyclicality of Credit Supply: Firm Level Evidence | Bo Becker (Harvard University) presenting 'Cyclicality of Credit Supply: Firm Level Evidence' - Abstract: Theory predicts that there is a close link between bank credit supply and the evolution of the business cycle. Yet this effect has been hard to quantify in the time-series. While loan issuance falls in recession, it is not clear if this is due to demand or supply. We focus on firms’ substitution between bank debt and public bonds using firm-level data from 1990 to 2009. Any firm that raises new debt must have a positive demand for external funds. If the same firm switches from loans to bonds, we conclude that this is due to a contraction in bank credit supply. We find strong evidence of substitution from loans to bonds at times characterized by tight lending standards, high levels of non-performing loans to bank equity, low bank share prices and tight monetary policy. Although the bank-to-bond substitution can only be measured for firms with access to bond markets, we show that this substitution has strong predictive power for bank borrowing and investments by small, out-of-sample firms. | 13/11/11 | Gratuit | Afficher sur iTunes |
| 11 | VideoDiscussion of 'Optimal Interventions in Markets with Adverse Selection' | Thomas Gehrig (University of Vienna) discussing Thomas Philippon on 'Optimal Interventions in Markets with Adverse Selection' | 6/11/11 | Gratuit | Afficher sur iTunes |
| 12 | VideoOptimal Interventions in Markets with Adverse Selection | Thomas Philippon (New York University) presenting 'Optimal Interventions in Markets with Adverse Selection' - Abstract: We characterize cost-minimizing interventions to restore lending and investment when fiÖnancial markets fail because of adverse selection. Because the government intervenes without shutting-down Öfinancial markets, the strategic decision to participate in a governmentís program reveals private information and affects the borrowing terms of agents outside the program. This has striking implications. First, the government cannot selectively attract good borrowers. More importantly, the cost and investment achieved of an intervention depend only on the rate faced by non participating borrowers. Simple programs of direct lending or debt guarantee are optimal while programs with equity injections, or asset purchases are not. Finally, when interventions are optimally designed, the government has no incentive to shut down private markets. | 30/10/11 | Gratuit | Afficher sur iTunes |
| 13 | VideoDiscussion of 'Outside and Inside Liquidity: From Asset Shortage to Financial Crises' | Thomas Noe (Oxford) discussing Enisse Kharroubi on 'Outside and Inside Liquidity: From Asset Shortage to Financial Crises' | 23/10/11 | Gratuit | Afficher sur iTunes |
| 14 | VideoOutside and Inside Liquidity: From Asset Shortage to Financial Crises | Enisse Kharroubi (BIS) presenting 'Outside and Inside Liquidity: From Asset Shortage to Financial Crises' - Abstract: This paper studies the implications of a shortage of liquid asset for the occurrence of financial crises. Following Holmström and Tirole (1998), we provide a liquidity based model in which investors can issue short term liquid assets when they need to refinance distressed illiquid projects. Moreover the framework is augmented with an exogenous demand for liquid assets which scales the extent to which the economy faces a shortage of liquid assets. The main result of the paper is that when the exogenous demand for liquid assets is sufficiently strong, a positive feedback loop can emerge between the return and the volume of liquid assets, investors hoard ex ante, thereby creating indeterminacy. On the contrary a sufficiently low demand for liquid assets always ensures a unique equilibrium. The paper finally investigates policy options to restore efficiency in the case where the equilibrium is indeterminate. | 16/10/11 | Gratuit | Afficher sur iTunes |
| 15 | VideoDiscussion of 'Does Stock Liquidity Enhance or Impede Firm Innovation?' | François Degeorge (University of Lugano) discussing Vivian Fang on 'Does Stock Liquidity Enhance or Impede Firm Innovation?' | 9/10/11 | Gratuit | Afficher sur iTunes |
| 16 | VideoDoes Stock Liquidity Enhance or Impede Firm Innovation? | Vivian Fang (Rutgers University) presenting 'Does Stock Liquidity Enhance or Impede Firm Innovation?' - Abstract: There has been much debate about whether stock liquidity enhances or impedes firm innovation. Some fear that high stock liquidity hinders firms’ long-run investment in innovation by making managers myopic. Others believe that high stock liquidity makes stock prices more efficient which mitigates managerial myopia and enhances firm innovation. We document a negative relationship between stock liquidity and firm innovation productivity. This relationship is more pronounced when management is less entrenched or when firm profits are low. Both are consistent with high transaction costs insulating managers from pressures to maximize shortterm profits (or stock price). To establish causality we show the negative relationship holds following an exogenous shock to liquidity (decimalization). We next examine the role of institutional investors. We find that an exogenous increase in liquidity (decimalization) leads to a higher level of institutional ownership by transient and quasi-indexers which reduces innovation. Increases in dedicated institutional ownership are not correlated with an exogenous increase in liquidity but are positively associated with innovation. Our findings suggest that institutional investors who gather private information enhance innovation while transient and quasi-indexer institutional investors impede innovation. | 2/10/11 | Gratuit | Afficher sur iTunes |
| 17 | VideoDiscussion of 'Wrongful Discharge Laws and Innovation' | Milo Bianchi (Université Paris-Dauphine) discussing Ramin Baghai on 'Wrongful Discharge Laws and Innovation' | 25/9/11 | Gratuit | Afficher sur iTunes |
| 18 | VideoWrongful Discharge Laws and Innovation | Ramin Baghai (London Business School) presenting 'Wrongful Discharge Laws and Innovation' - Abstract: We show that wrongful discharge laws (laws that inhibit the common-law doctrine of employment-at-will) spur innovation. In our model, wrongful discharge laws make it costly for firms to arbitrarily discharge employees. This enables firms to commit to not punish short-run failures of employees and, thereby, encourage employees to exert greater effort in risky, but potentially mould-breaking, projects. We provide supporting empirical evidence using the staggered adoption of wrongful discharge laws across the U.S. states. Using difference-in-difference tests, we show that firms and employees in the affected states engage in greater innovation, measured by the number of patents led, citations to these patents, and the number of patents and citations per employee and per dollar of R and D expense. Using a novel dataset, we also document a 'creative destruction' in the affected states: we find more new firms being created and more existing firms being destroyed, with an increase in both job creation and job destruction. | 18/9/11 | Gratuit | Afficher sur iTunes |
| 19 | VideoDiscussion of 'Are Consumers Affected by Durable Goods Makers’ Financial Distress? The Case of Auto Manufacturers' | Karin Thorburn (NHH Bergen) discussing Gregor Matvos on 'Are Consumers Affected by Durable Goods Makers’ Financial Distress? The Case of Auto Manufacturers' | 11/7/11 | Gratuit | Afficher sur iTunes |
| 20 | VideoAre Consumers Affected by Durable Goods Makers’ Financial Distress? The Case of Auto Manufacturers | Gregor Matvos (University of Chicago) presenting 'Are Consumers Affected by Durable Goods Makers’ Financial Distress? The Case of Auto Manufacturers' -Abstract: Theory suggests the financial decisions of durable goods makers can impose spillovers on their consumers. Namely, the consumption stream that durable goods provide frequently depends on services provided by the manufacturer itself (e.g., warranties, spare parts availability, maintenance and upgrades). Manufacturer bankruptcy, or even the possibility thereof, threatens this service provision and as a result can substantially reduce the value of its products to their current owners. We test whether this hypothesis holds in one of the largest durable goods markets, automobiles. We use data on prices of millions of used cars sold at wholesale auctions around the U.S. during 2006-8. We find that an increase in an auto manufacturer’s financial distress (as measured by an increase in its CDS spread) does result in a contemporaneous drop in the prices of its cars at auction, controlling for a host of other influences on price. The estimated effects are statistically and economically significant. Furthermore, cars with longer expected service lives (those within manufacturer warranty, having lower mileage, or in better condition) see larger price declines than those with shorter remaining lives. These patterns do not seem to be driven solely by reduced demand from auto dealers affiliated with the troubled manufacturers or by contemporaneous declines in new car prices. Our estimates also imply a potentially large indirect cost of financial distress on car manufacturers. | 10/7/11 | Gratuit | Afficher sur iTunes |
| 21 | VideoDiscussion of 'The Hazards of Debt: Rollover Freezes, Incentives, and Bailouts' | Philip Valta (HEC Paris) discussing Ing-Haw Cheng on 'The Hazards of Debt: Rollover Freezes, Incentives, and Bailouts' | 4/7/11 | Gratuit | Afficher sur iTunes |
| 22 | VideoThe Hazards of Debt: Rollover Freezes, Incentives, and Bailouts | Ing-Haw Cheng (University of Michigan) presenting ''The Hazards of Debt: Rollover Freezes, Incentives, and Bailouts'' - Abstract: We investigate the trade-off etween incentive provision and inefficient rollover freezes for a firm financed with short-term debt. First, debt maturity that is too short-term is inefficient, even with incentive provision. The optimal maturity is an interior solution that avoids excessive rollover risk while providing sufficient incentives for the manager to avoid risk-shifting when the firm is in good health. Second, allowing the manager to risk-shift during a freeze actually increases creditor confidence. Debt policy should not prevent the manager from holding what may appear to be otherwise low-mean strategies that have option value during a freeze. Third, a limited but not perfectly reliable form of emergency financing during a freeze - a 'bailout' - may improve the terms of the trade-off and increase total ex-ante value by instilling confidence in the creditor markets. Our conclusions highlight the endogenous interaction between risk from the asset and liability sides of the balance sheet. | 3/7/11 | Gratuit | Afficher sur iTunes |
| 23 | VideoDiscussion of 'Does capital market myopia affect plant productivity? Evidence from going private transactions' | Francesca Cornelli (London Business School) discussing Sreedhar Bharath on 'Does capital market myopia affect plant productivity'? Evidence from going private transactions' | 27/6/11 | Gratuit | Afficher sur iTunes |
| 24 | VideoDoes capital market myopia affect plant productivity? Evidence from going private transactions | Sreedhar Bharath (Arizona State University) on 'Does capital market myopia affect plant productivity? Evidence from going private transactions' - Abstract: One influential criticism of the stock market oriented U.S. financial system is that its excessive focus on short term quarterly earnings forces public firms to behave in a myopic manner. We hypothesize that if capital markets pressure listed firms to be myopic in a way that impacts efficiency, then going private (when myopia is eliminated) should cause U.S. firms to improve their establishment level productivity relative to a peer control groups of firms. We find no evidence that this is the case. Our key finding is that while there is evidence for substantial within-establishment increases in productivity after going private, there is little evidence of difference-in-differences efficiency gains relative to peer groups of establishments constructed to control for industry, age, size at the time of going private, and the endogeneity of the going private decision effects. Also, we do not find evidence that myopic markets lead to under-investment at the establishment level. On the contrary, we find that after going private, firms shrink capital and employment, and close plants more quickly, relative to peer groups. Our findings cast doubt on the view that public markets cause listed firms to make sub-optimal, productivity-decreasing choices, or under-invest at the establishment level. | 26/6/11 | Gratuit | Afficher sur iTunes |
| 25 | VideoDiscussion of 'Why Are Most Firms Privately-held?' | Gordon Phillips (University of Maryland) discussing Joan Farre-Mensa on 'Why Are Most Firms Privately-held?' | 22/6/11 | Gratuit | Afficher sur iTunes |
| 26 | VideoWhy Are Most Firms Privately-held? | Joan Farre-Mensa (NYU) on 'Why Are Most Firms Privately-held?' - Abstract: Even among large U.S. firms, most choose to remain private rather than listing on a stock market. I show that an important reason for this choice is public firms’ inability to disclose information selectively. This leads to a ‘two-audiences’ problem: Disclosure reduces information asymmetries among investors but also potentially benefits product-market competitors. Being public involves a trade-off between this disclosure cost and the benefit of a lower cost of capital due to the greater liquidity with which shares can be traded on a stock market. Using a rich new dataset on private U.S. firms, I show that firms in industries with high disclosure costs and high information asymmetry are more likely to remain private while firms in industries that require a large scale to operate efficiently are more likely to be public. I then establish a new stylized fact: Public firms hold more cash than private firms. This fact is robust to several ways of addressing the endogeneity of the going-public decision, including matching, exploiting within-firm variation, and instrumental variables. Consistent with my model, I find that public firms hoard cash in order to mitigate the disclosure costs associated with raising capital. | 21/6/11 | Gratuit | Afficher sur iTunes |
| 27 | Slides for Stakeholder Capitalism, Corporate Governance and Firm Value | Franklin Allen (Wharton School) - Slides for keynote address 'Stakeholder Capitalism, Corporate Governance and Firm Value' | 20/6/11 | Gratuit | Afficher sur iTunes |
| 28 | VideoStakeholder Capitalism, Corporate Governance and Firm Value | Franklin Allen (Wharton School) - Keynote address on 'Stakeholder Capitalism, Corporate Governance and Firm Value' - Abstract: In countries such as Germany, the legal system ensures that firms are stakeholder-oriented. In others, like Japan, social norms achieve a similar effect. We analyze the advantages and disadvantages of stakeholder-oriented firms that are concerned with employees and suppliers compared to shareholder-oriented firms in a model of imperfect competition. Stakeholder firms are more (less) valuable than shareholder firms when marginal cost uncertainty is greater (less) than demand uncertainty. With globalization shareholder firms and stakeholder firms often compete. We identify the circumstances where stakeholder firms are more valuable than shareholder firms, and compare these mixed equilibria with the pure equilibria with stakeholder and shareholder firms only. The results have interesting implications for the political economy of foreign entry. | 19/6/11 | Gratuit | Afficher sur iTunes |
| Total : 28 épisodes |
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