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Abstract:
This paper investigates minority expropriation problems in closely-held corporations, where control is shared by a small number of blockholders. Using a large sample of Spanish firms for the years 1996 through 2000, we find that firms whose characteristics make them more vulnerable to minority expropriation tend to have controlling groups with stakes that are far removed from the 50% threshold, where expropriation is higher. However, because of adjustment costs, firms do not achieve an optimal ownership structure. Performance improves when the controlling group's ownership stake is higher and, for a given ownership stake, when the number of group members increases.

Corporate ownership, multiple large shareholders, corporate performance, private benefits, minority expropriation

Abstract:
This paper investigates minority expropriation problems in closely-held corporations, where control is shared by a small number of blockholders. Using a large sample of Spanish fi rms for the years 1996 through 2000, we fi nd that fi rms whose characteristics make them more vulnerable to minority expropriation tend to have controlling groups with stakes that are far removed from the 50% threshold, where expropriation is higher. However, because of adjustment costs, fi rms do not achieve an optimal ownership structure. Performance improves when the controlling group's ownership stake is higher and, for a given ownership stake, when the number of group members increases.

corporate ownership, multiple large shareholders, corporate performance, private benefi ts, minority expropriation, non listed firms

Abstract:
This paper studies the interaction between ownership structure, taken as a proxy for shareholders' commitment, and customer satisfaction - the main driver of consumer loyalty - and their impact on a firm's brand equity. The results show that customer satisfaction has a positive direct effect on brand equity but an indirect negative one because of reductions in ownership concentration. This latter effect emerges when managers are mainly customer-oriented. Such result gives out a warning signal that highlights the perverse effect of implementing policies, focused excessively on satisfying customers at the expense of shareholders, on a firm's brand equity. The empirical analysis uses an incomplete panel data comprising 69 firms from 11 nations, for the period 2002-2005.

Corporate social responsibility, brand equity, shareholders' commitment and customer loyalty

Abstract:
This paper studies empirically the effect of ownership concentration on the risk and performance of commercial banks, controlling for shareholders protection laws, bank regulations, and other country and bank specific traits. The sample used comprises 423 banks around 39 countries, for the period from 2000 to 2006. Our analyses show that ownership concentration is more important to explain performance than risk taking. Our main finding is the first empirical evidence of a cubic relationship between ownership concentration and bank performance. Such evidence is supportive of theoretical hypotheses of effective monitoring at low levels of ownership concentration, expropriation or loss of managerial discretion at moderate ownership concentration, and high costs of expropriation at high levels of ownership concentration. We also find that ownership concentration is more important to increase the performance of banks with dispersed ownership structure when legal protection of shareholders is low.

Banks, Ownership Structure, Risk, Corporate Governance, Regulation

Abstract:
This paper examines the effect on the firm's banking cost of the issue of debt securities. We argue over the existence of a positive relationship between the issue of market debt and the reduction of firm's banking cost. This idea relies on three main arguments: i) banks can delegate to investors the supervision task, a feature that makes bank supervision less costly; ii) The issue of public debt increases firms' bargaining power in front of the banks, as the former can get funds through non-bank financing channels; iii) Banks with no prior information on the issuing firm may interpret the issue of debt securities as a positive signal of firm's quality. Additionally, we argue that the previous effects are less important for non-first issues and are sensible to the maturity of the bond issued. We empirically test these and other related theoretical results making use of a database of non-financial Spanish firms during the 1993-1998 period. We find empirical support for our theoretical contentions.

Bank debt, Debt securities

Abstract:
This paper presents findings from a study investigating a firm's ethical practices along the value chain. In so doing we attempt to better understand potential relationships between a firm's ethical stance with its customers and those of its suppliers within a supply chain and identify particular sectoral and cultural influences that might impinge on this. Drawing upon a database comprising of 667 industrial firms from 27 different countries, we found that ethical practices begin with the firm's relationship with its customers, the characteristics of which then influence the ethical stance with the firm's suppliers within the supply chain. Importantly, market structure along with some key cultural characteristics were also found to exert significant influence on the implementation of ethical policies in these firms.

Practical Ethics, Value Chain, Multiple Correspondence Analysis

Abstract:
We present a two-period model within an incomplete information setting,where competitive and cooperative features of different lenders are shown. First, a pair of lenders must agree to compete for two firms' projects against other fund providers. Second, there is a competition for the financing of the firms between pairs of lenders. Our main result shows in a wide number of scenarios that it is optimal for lenders to enter in cooperative agreements to share junior liquidation rights along with senior rights on project returns. This fact has implications in the relationship between banks as well as that between other financiers like venture capitalists, where a strict individual competition to provide funds can lead to an underinvestment situation.

Abstract:
We study the effect of social capital on financial capital. Specifically, we study how similarity (matching) of borrowers' and lenders' cohorts along their corporate social responsibility dimension affects the cost of debt financing. The main finding is that borrowers' ethical posture alone is not enough for obtaining cheapest rates. Favorable loan conditions are obtained when both lenders and borrowers belong to similar cohorts attributing high value for social responsibility aspects. Employing an international database composed of 4,554 syndicated loans involving 175 corporations in 15 different countries for the period 2003-2006 we document a large and significant reduction in lending rates when both borrowers and lenders belong to similar cohort along the social responsibility dimension. These results withstand a battery of robustness tests.

Costs, Corporate Social Responsibility, Lenders

Abstract:
This study examines empirically how bank regulations adopted in lender countries influence the characteristics of loan contracts, using a sample of loans made by 278 large commercial banks around 39 countries, to borrowers in 83 countries, in the period from 1998 to 2006. The analyses provide evidence that: (1) loan spread margins and loan maturity have respectively inverse-U and U-shaped relationships with capital regulations stringency, (2) loan maturity decreases with official supervisory power (3) the loan share of arranger lenders decreases with capital stringency, while increases both with the level of private monitoring and with the official supervisory power. Our findings indicate that more stringent capital regulations are associated with lower priced risk characteristics (spread and maturity) of loan contracts and with higher loan risk diversification. By contrast, official supervisory power is associated with riskier and less diversified loan contracts. In addition, both official supervisory power and private monitoring work as substitutes to capital regulation to reduce the (priced) risk measures of loan contracts when capital stringency is low. For higher capital stringency, supervision and private monitoring are complements to capital regulation to reduce loan contracts risk measures.

Banks, Regulation, Credit, Risk, Bank Lending, Syndicated Loans

Abstract:
In this paper we study the effect of banks' equity holdings on the probability of firms being listed on the stock market as well as on issuing negotiated debt. We argue that banks take an equity position either to expropriate the current shareholders or strategically to open the possibility of future business opportunities once firms are listed on the stock market. The first reason hinders security issues while the second stimulates them. We have shown that when banks' stakes are low, the expropriating argument applies, while the strategic one does so for large stakes. We have proved our contentions making use of a sample composed of 5160 firms from 59 different countries for the period 2000-2004.

Banks, Security issues, Monitoring, Expropriation

Abstract:
Using data from 3,638 Spanish firms between 1996 and 2000, this article studies the relationship between the presence of large shareholders in the ownership structure of firms and R&D investment. Consistent with our theoretical contention, our results indicate that the impact of large shareholders on the R&D investment is (1) negative when blockholders are banks, (2) positive when blockholders are non-financial corporations and (3) null when blockholders are individuals. In addition, we find a systematic negative relationship between the number of blockholders and R&D investment. Finally, we extend our study by analysing the influence that the combined effect between blockholder type and R&D investment has on the firm's economic performance. Results of this work provide relevant implications for policy makers and academic research.

Abstract:
This study offers insights for policy makers and managers interested in enhancing CSR. For managers, our findings suggest that projecting a socially-friendly image in order to disguise earnings management cannot be sustained over time due to the detrimental effect on financial performance. In addition, this study provides a warning signal to policy makers that certain practices geared toward raising a firm's CSR may simply be a mechanism for hindering other devious practices. This study draws on a generalized agency theory where managers are seen as the agents of all stakeholders and the earnings management literature to highlight that CSR can be used to garner support from stakeholders and, therefore, provides an opportunity for entrenchment to those managers that manipulate earnings. As such, it suggests new avenues of research for both the corporate governance literature, as well as for the stakeholder perspective. Using archival data from a multi-national panel sample of 593 firms from 26 countries between 2002 and 2004, we find a positive impact of earnings management practices on CSR; this relationship holds for different robustness checks. Also, we demonstrate that the combination of earnings management and CSR has a negative impact on financial performance. This paper investigates the connection between earnings management and corporate social responsibility (CSR). We argue that earnings management practices damage the collective interests of stakeholders; hence, managers who manipulate earnings can deal with stakeholder activism and vigilance by resorting to CSR practices.

Abstract:
We examine empirically the relationships amongst managerial entrenchment practices, social performance, and financial performance. We hypothesize that entrenched managers may collude with non-shareholder stakeholders in order to reinforce their entrenchment strategy; this is particularly so in firms that have efficient internal control mechanisms. Moreover, we prove that the combination of entrenchment strategies and the implementation of socially responsible actions have particularly negative effects on financial performance. We test these contentions with a sample of 358 companies, from 22 different countries, for the period 2002-2005.

Abstract:
In this paper, we analyze the effects of banks as main blockholders on a firm's returns and on the concentration of ownership in the hands of the controlling blockholders. Compared with previous studies, we approach to this problem by taking into consideration the type of blockholders building up coalitions with banks for controlling a firm. This allows us to reconcile different results, reported in relevant literature, on the impact of banks' ownership of a firm on its returns. In short, we argue that the effect is only negative when banks are the main blockholders or when they build up coalitions with other banks. We prove empirically our theoretical contentions making use of a sample of Spanish firms for the period 1996-2000.

Corporate Governance, Main Blockholders, Financial Institutions