CEO Characteristics and Corporate Financing in Thailand

Previous financial crises have cast some doubt about the risk-taking behaviors of top executives. This study investigates the impact of CEO characteristics on corporate financing behaviors after the 1997 Asian financial crisis. Sample firms are non-financial listed firms on the Stock Exchange of Thailand between 2001 and 2005. We use the Ordinary Least Square (OLS) method on pooled cross-section and time-series data controlling for year and industry effects. CEO characteristics are classified into three groups—biography, network and incentives—based on the upper echelons, resource dependence and agency theories, respectively. According to the upper echelons theory, the education of CEOs has an impact on strategic choices. The result shows that CEOs with postgraduate education choose a higher level of financial leverage. Based on the resource dependence theory, networks ease difficulties to access to external resources. We find that politically connected CEOs can finance higher debt, compared to non-connected CEOs. Our findings also support the agency theory. We find that family CEOs use more debt possibly to maintain their voting power. Overall, our research shows that CEO characteristics affect financing decisions. From lenders’ point of views, some attributes of CEOs may reflect better repayment abilities of firms, thus encouraging lenders to provide higher loans. Our study also suggests that to thoroughly investigate the significance of CEOs in shaping corporate strategies, wide aspects of CEO attributes should be considered

BOARD DIVERSITY, NETWORK AND FIRM VALUE

Using a large sample analysis of Thai listed firms, we address an important question. Do board diversity and network add value to firms? This article extends the debate on the benefits and costs of board diversity and network and their effect on the broader picture of corporate governance. Moreover, this article sheds light on the necessity of applying the resource dependence theory in research about boards of directors, in addition to the agency theory. We find that diversity in age and study majors are positively related to Tobin’s Q ratio, while diversity in educational levels leads to lower firm value. Our results suggest that boards with diverse age groups and study areas might generate useful advice and complement each other; however, those with diverse educational levels might create costs due to possible conflicts and a lack of coordination and communication. In addition, the results show that alumni networks have a positive effect on Tobin’s Q ratio. The findings further suggest that an alumni network is significant to firms because it could help firms obtain external resources. Overall, our research provides significant findings for policy makers to widen viewpoints about corporate governance practices and human resource development in emerging countries

Who's on board? Influence of diversity and network of Thai boards of directors on firm value

Using a large sample analysis of Thai listed firms, we address an important question. Do board diversity and network add value to firms? This article extends the debate on the benefits and costs of board diversity and network and their effect on the broader picture of corporate governance. The sample period straddles 2001 to 2005, which allows us to examine board characteristics in response to the Asian financial crisis. We find that diversity in age and study majors are positively related to Tobins Q ratio, while diversity in educational levels leads to lower firm value. Our results suggest that boards with diverse age groups and study areas might generate useful advice and complement each other; however, those with diverse educational levels might create costs due to possible conflicts and a lack of coordination and communication. In addition, the results show that alumni networks have a positive effect on Tobins Q ratio. The findings further suggest that board networks could bring benefits to firms. An alumni network is significant to firms because it could help firms obtain external resources. It also provides significant findings for policy makers to design best practices of directors in emerging countries

Thailand’s Student Loan Fund: An Analysis of Interest Rate Subsidies and Repayment Hardships

This paper presents analysis of the implicit subsidies and repayment hardships of Thailand’s Student Loan Fund (SLF). Comparisons are made between the current SLF with alternative similar schemes, assuming different rates of interest and loan repayment periods. We find that the implicit interest rate subsidy is about 66 per cent, with much of this being due to the fact that the scheme charges only a 1 per cent per annum nominal interest rate. The repayment hardships, measured as the proportion of a graduate’s income allocated to servicing the debt, are around 4 and 3 per cent, for female and male graduates earning average incomes by age. However, these increase to 12 and 10 per cent for female and males whose earnings are in the bottom deciles. The current SLF is generous in terms of repayment hardship for the borrowers. However, the scheme appears to be unsatisfactory in terms of the extent of implicit subsidies.can generate a large (non-marginal) switch to home production and the ensuing deadweight losses are large. Using a cross-country panel, we find that gender differences in labour supply responses to tax policy can explain differences in aggregate labour supply and years of education across countries.student loans; higher education financing

Family ownership and free cash flow

Purpose The purpose of this paper is to investigate the effect of family ownership on investment-cash flow sensitivity and on firm performance. Design/methodology/approach The author uses panel data to examine the relationship between investment and cash flow and between family ownership and the firm performance of Thai listed firms from 2001 to 2008. To account for the endogeneity of the lagged dependent variable, the investment equation is estimated by the generalized method of moments, following Arellano and Bond (1991). Findings The presence of family owners reduces the sensitivity of investment and cash flow. At low and high levels of family ownership, an increase in family shareholding leads to lower investment-cash flow sensitivity. In contrast, firms with medium family ownership levels have higher investment-cash flow sensitivity. Only at high levels of family ownership is firm performance positively related to family shareholding. Originality/value The ownership levels of family shareholders affect the investment-cash flow sensitivity in an S-shaped relation, supporting the interest alignment and entrenchment effects. When family shareholders have high ownership incentives, their interest alignment reduces the agency costs of free cash flow problems and leads to higher firm performance

Thailand’s Student Loan Fund: An Analysis of Interest Rate Subsidies and Repayment Hardships

Thailand, Higher Education Student Loans, Loan Repayments

Bank connections and corporate restructurings: Evidence from Thailand

This study analyzes the importance of bank connections that occur as a result of family relationships and social relations using the data from Thailand. The sample periods covering the 1997 East Asian economic crisis are separated into three phases: pre-crisis (1996), during the crisis (1997-1998) and post-crisis (1999-2000). The presence of relationships between firms and banks is expected to increase the possibility of firm restructuring activities because of useful and timely advice from their close banks. In the pre-crisis period, the probability of dividend cut is higher among bank-connected firms than non-connected firms; during the crisis, top management turnover appears to be the restructuring strategy adopted by connected firms. In the post-crisis period, however, connected firms are less likely to undertake debt restructuring actions, which are mainly driven by a lower incidence of financial advisor appointments. Nevertheless, we find no strong evidence that bank relationships add value to the firms because changes in performance after undertaking restructuring activities are not significantly different between connected and non-connected firms. Overall, the results of this research suggest that connected banks play an important role on a firm's key financial strategy. © EuroJournals Publishing, Inc. 201