The helping hand, the lazy hand, or the grabbing hand? Central vs. local government shareholders in publicly listed firms in China

We analyze related party transactions between Chinese publicly listed firms and their stateowned enterprise (SOEs) shareholders to examine whether companies benefit from the presence of government shareholders and politically connected directors appointed by the government. We find that related party transactions between firms and their government shareholders seem to result in expropriation of the minority shareholders in firms controlled by local government SOEs or with a large proportion of local government affiliated directors on their board, and in provinces where local government bureaucrats are less likely to be prosecuted for misappropriation of state funds. On the other hand, firms controlled by the central government (or with a large proportion of central government affiliated directors) are benefited in their related party transactions with their central government SOEs.Law and economics, Government ownership, China, State-Owned Enterprises (SOE), Related party transactions, Political connections

Fintech and big tech credit: drivers of the growth of digital lending

Fintech and big tech companies are making rapid inroads into credit markets. We hand construct a global database of fintech and big tech lending volumes for 79 countries over 2013-2018. Using a panel regression analysis, we find these new forms of digital lending are larger in countries with higher GDP per capita (albeit at a declining rate), where banking sector mark-ups are higher, and where banking regulation is less stringent. We also find that these alternative forms of credit are more developed where the ease of doing business is greater, investor protection disclosure and the efficiency of the judicial system are more advanced, and where bond and equity markets are more developed. Overall, fintech and big tech credit seem to complement other forms of credit, rather than substitute for them

The Stock Market Evaluation of IPO-Firm Takeovers

We conduct an event study to assess the stock market evaluation of public takeover announcements. Unlike the majority of previous research, we specifically focus on acquisitions targeted at newly public IPO-firms and show that the stock market positively evaluates these M&As as R&D. However, bidders' abnormal announcement returns are significantly lower for takeovers directed at targets with critical intangible assets and innovative capabilities inalienably bound to their initial owners than for those that have internally accumulated respective resources and capabilities. We explain these findings with the acquirer's post-acquisition dependence on continued access to the IPO-firm founders' target-specific human capital. Our results contribute to literature in that they show that the stock market perceives these potential impediments to successful exploitation of acquired strategic resources and thus identify a potential cause for heretofore mostly inconsistent evidence on bidder abnormal returns in corporate takeovers found in previous research

Patterns in the Timing of Corporate Event Waves

Corporate events happen in waves. In this paper, we examine the relationship between five different types of corporate event waves (mergers, IPOs, SEOs, stock repurchases, and debt issues) using a comprehensive dataset of more than 264,000 corporate transactions over the 25-year period 1980-2004. Our results show considerable overlap between all types of waves, especially during the 1990s. The general pattern seems to start with new issue waves (SEO and IPO), followed by cash- and stock-financed M&A waves, followed in turn by repurchase and debt issue waves. Merger waves continue well after SEO and IPO waves have ended. There is also considerable overlap between stockfinanced M&A and stock repurchase waves, suggesting that most stock repurchases in waves occur when the market is overvalued. Overall, our results are most consistent wit

Regulation, Taxes, and Share Repurchases in the United Kingdom

We examine share repurchase activity in the United Kingdom over a period when the tax and regulatory environment changed drastically. We find that the form and intensity of repurchase activity in the United Kingdom is influenced by the tax consequences for pension funds. We also find that firms announcing share repurchases earn smaller excess returns, both in the short run and the long run, than those earned by firms in the United States. This is because of regulatory provisions in the United Kingdom that make it less likely that firms can use superior information to buy back shares when their shares are undervalued.