Corporate boards in high-tech firms

Evidence concerning the impact of boards on firms’ governance and performance remains controversial. We explore the issue of board effectiveness by examining the supervisory role boards play and their advisory function. We examine the importance of these two roles in high technology contexts and control for the endogenous nature of the representative variables in boards. Our paper uses a sample of European firms to highlight that in high-tech industries the advisory function of boards provides higher explanatory power for performance than does the monitoring function, and that larger and less independent boards may improve governance and consequently enhance performance.Financial support from the Education Ministry at the Regional Government of Castilla y Leon (GR144

Capital budgeting practices in Spain

This paper seeks to shed further light on the capital budgeting techniques used by Spanish companies. Our paper posits that the gap between theory and practice might be related to the nature of sources of value and to the efficiency of mechanisms aligning managerial and shareholder incentives, rather than to resource restrictions or model misinterpretation. We analyze data from a survey conducted in 2011, the final sample comprising 140 non-financial Spanish firms. Our findings show a behaviour pattern similar to that reported in prior research for firms in other countries. Particularly noteworthy is that payback appears to be the most widely used tool, while real options are used relatively little. Our results confirm that size and industry are related to the frequency of use of certain capital budgeting techniques. Further, we find that the relevance of growth opportunities and flexibility is an important factor explaining the use of real optionsThis work has benefited from financial support from the Spanish Ministry of Science and Innovation (grant ref. ECO2011-29144-C03-01) and the Program of Advanced Human Capital Formation, Ministry of Education, Government of Chil

Capital budgeting practices in Spain

Producción CientíficaThis paper seeks to shed further light on the capital budgeting techniques used by Spanish companies. Our paper posits that the gap between theory and practice might be related to the nature of sources of value and to the efficiency of mechanisms aligning managerial and shareholder incentives, rather than to resource restrictions or model misinterpretation. We analyze data from a survey conducted in 2011, the final sample comprising 140 non-financial Spanish firms. Our findings show a behaviour pattern similar to that reported in prior research for firms in other countries. Particularly noteworthy is that payback appears to be the most widely used tool, while real options are used relatively little. Our results confirm that size and industry are related to the frequency of use of certain capital budgeting techniques. Further, we find that the relevance of growth opportunities and flexibility is an important factor explaining the use of real options.This work has benefited from financial support from the Spanish Ministry ofScience and Innovation (grant ref. ECO2011-29144-C03-01) and the Program of Advanced Human Capital Formation, Ministry of Education,Government of Chile. The authors assume all responsibility for any errors in this work

More on the credit channel of monetary policy transmission: an international comparison

En este trabajo presentamos algunos indicios del funcionamiento del canal del crédito como una forma posible de transmisión de las medidas de política monetaria. El tema se aborda desde una perspectiva internacional, en la que se compara la reacción ante los cambios en la política monetaria de las empresas no financieras de doce países de la OCDE. Haciendo uso del tipo de interés como un indicador del estado de la política monetaria, encontramos que dicho tipo de interés afecta a las decisiones de inversión de las empresas a través de la disponibilidad de crédito bancario, especialmente en el corto plazo. Estos resultados parecen evidenciar una distinta efectividad de la política monetaria en función de las características del sistema financiero de cada país, de modo que en los países con una mayor orientación hacia el mercado, en los cuales la financiación bancaria reviste menor importancia, las decisiones empresariales no se ven tan modificadas como en los países de mayor orientación hacia la intermediación financiera.In this paper we provide some evidence of the credit channel as a possible way of transmitting monetary policy decisions. We do it in an international framework by comparing the reaction of non-financial companies of twelve OECD countries to changes in monetary policy. Using the interest rate as an indicator of the stance of monetary policy, we find that the interest rate does affect firms’ investment and output by altering their bank finance availability, specially the short-term finance. Our results also seem to show a rather different effectiveness of the monetary policy depending on the features of the financial system of each country. In those countries with a more market-oriented financial system, corporate finance relies less heavily on banks, so they are not so influenced by shifts in monetary policy as companies of other more bank-based countrie

Growth opportunities and the effect of corporate diversification on value

This paper provides empirical evidence of how a firm’s growth opportunities shape the diversification–value relationship on a sample of U.S. companies between 1998 and 2010. Our findings suggest that the negative relationship between diversification and a firm’s value may reverse at high levels of diversification, and that such a U-form diversification–value relation is partly mediated by a firm’s growth opportunities. Results are robust to various model specifications and after controlling for endogenous self-selection of the diversification decision

European banks’ executive remuneration under the new European Union regulation

Producción CientíficaWe review how the new European regulation of bank executive compensation could affect the future of banking in Europe. Although there is no conclusive empirical evidence on the relation between bank executive remuneration and the financial crisis, authorities have intensively regulated the compensation of bank managers to eliminate risk-taking incentives in the financial industry. However, the new regulation could have unintended consequences of creating an adverse selection problem at European banks, reducing the number of best-performing managers available for European banks, and motivating an excessive increase in fixed remuneration over total remuneration, altering the way incentive systems work

The gender gap in bank credit access

We use a sample of over 80,000 Spanish companies started by a sole entrepreneur between 2004 and 2014, and distinguish between male and female entrepreneurs demand for credit, credit approval ratio, and credit performance. We find that female entrepreneurs who start a business are less likely to ask for a loan. Of the female entrepreneurs requesting a credit, the probability of obtaining one in the founding year is significantly lower than their male peers in the same industry. This lower credit access disappears over the subsequent years, once the company has a track record of profits and losses. We also observe that women-led companies that receive a loan in the founding year are less likely to default as compared to men-led companies. This superior performance disappears for subsequent years, coinciding with the disappearance of the lower credit access. Taking all these results together, we rule out both taste-based discrimination and statistical discrimination in the credit industry, and point to the possible presence of double standards which might be a consequence of implicit (unconscious) discriminationThis research has been funded by (i) FEF-IEAF with the Research Award Antonio Dionis Soler 2019; (ii) the Spanish Government (AEI/FEDER-UE) (ref. FEM2017-83006-R) (iii) USPCEU-Mutua Madrileña (060516-USPMM-02/17) (iv) Spanish Government (ref. ECO2015-65826-P) (v) Spanish Government (ref. ECO2017-85356-P

Los interlocking directorates en España: evolución, poder y consejeros independientes

Esta investigación explora la evolución de las redes sociales formadas por la conexión entre consejos de administración —relación interlocking directorates— de las empresas cotizadas españolas en el periodo 1999-2008, mostrándose como una nueva dimensión en el estudio del gobierno corporativo. Permite descubrir cómo se estructura el poder en la esfera económica, avanzar en la comprensión del papel desarrollado por el consejo de administración y ahondar en el rol de los consejeros independientes propiciados por los códigos de buen gobierno. Los resultados muestran cambios estructurales en la red, fragmentándose en mayor medida en los últimos años y con menores valores de densidad, características más propias de redes de países anglosajones. El análisis de centralidad evidencia un desplazamiento de las empresas del sector financiero a posiciones más periféricas, otorgando mayor protagonismo a empresas privadas del sector energético o de la construcción, intuyendo un cambio del modelo de banca a un modelo más anglosajón.Financiación recibida por parte del Ministerio de Educación, Cultura y Deporte a través del programa de Formación del Profesorado Universitario (FPU) y del Ministerio de Economía y Competitividad por el proyecto de investigación con referencia ECO2012-3255

Exercising a firm’s growth options: A portfolio approach

This paper investigates a firm’s decision to exercise its growth options within the current scope of business. We contend that the point at which a firm chooses whether or not to exercise such options depends on several strategic characteristics associated to its portfolio of businesses (i.e. level of diversification, average volatility of its current business, relatedness among them, and rivalry in its core business). Using a sample of U.S. companies from 1998 to 2013, we find evidence that a firm’s level of diversification and the volatility of its current business deter immediate growth option exercise. In contrast, relatedness and rivalry in its core business trigger growth options exercise. Our portfolio perspective differs from the bulk of the literature on real options, which evaluates each growth option exercise in isolation, and contributes to furthering knowledge on the drivers underlying a diversified firm's strategic investmentsThis work was supported by the Regional Government of Castilla y León (grant number VA260U14), the Regional Government of Madrid and the European Social Fund (grant number EARLYFIN, S2015/HUM-3353), and the Spanish Ministry of Science and Innovation (grant number ECO2017-84864-P and ECO2017-85356-P

Exercising a firm’s growth options: A portfolio approach

Producción CientíficaThis paper investigates a firm’s decision to exercise its growth options within the current scope of business. We contend that the point at which a firm chooses whether or not to exercise such options depends on several strategic characteristics associated to its portfolio of businesses (i.e. level of diversification, average volatility of its current business, relatedness among them, and rivalry in its core business). Using a sample of U.S. companies from 1998 to 2013, we find evidence that a firm’s level of diversification and the volatility of its current business deter immediate growth option exercise. In contrast, relatedness and rivalry in its core business trigger growth options exercise. Our portfolio perspective differs from the bulk of the literature on real options, which evaluates each growth option exercise in isolation, and contributes to furthering knowledge on the drivers underlying a diversified firm's strategic investments.Junta de Castilla y León (grant VA260U14)Gobierno de la Comunidad de Madrid - Fondo Social Europeo (grant EARLYFIN, S2015/HUM-3353)Ministerio de Ciencia e Innovación (grants ECO2017-84864-P and ECO2017-85356-P