scholarly journals Does Debt Diversification lead to a Discount in Firm Value?

2019 ◽  
Vol 8 ◽  
pp. 24-30 ◽  
Author(s):  
Nemiraja Jadiyappa ◽  
Namrata Saikia ◽  
Bhavik Parikh
Keyword(s):  
Empirical Analysis ◽  
Capital Markets ◽  
Firm Value ◽  
Free Rider ◽  
Multiple Sources ◽  
Free Rider Problem ◽  
A Value ◽  
Alternative Measures ◽  
Debt Holders ◽  
The Impact

Corporate firms access multiple sources of debt simultaneously. This study analyzes the impact of debt diversification on firm value. We argue that, when firms diversify their debt sources, the monitoring role played by debt holders decreases as a result of the free rider problem. Hence, such firms should experience a value discount in the capital markets. Our empirical analysis provides evidence for the existence of a value discount in the capital markets for firms accessing multiple sources of debt. Our results remain robust for alternative measures of debt diversification.

Multiple banking relationships, agency costs and firm value: evidence from India

2019 ◽  
Vol 46 (1) ◽  
pp. 1-18 ◽  
Author(s):  
Nemiraja Jadiyappa ◽  
Bhanu Sireesha ◽  
L. Emily Hickman ◽  
Pavana Jyothi
Keyword(s):  
Firm Value ◽  
Fixed Effects ◽  
Emerging Market ◽  
Negative Relationship ◽  
Bank Lending ◽  
Free Rider ◽  
Content Type ◽  
Free Rider Problem ◽  
Banking Relationships ◽  
Prior Literature

Purpose Prior literature demonstrates that the effectiveness of bank monitoring decreases when multiple banks are involved, due to a free rider problem, leading to lower firm value. The purpose of this paper is to investigate whether this free rider problem exists in an emerging market context, and whether the relationship between multiple banking relationships and firm value is conditioned on bankers’ incentives to monitor. Design/methodology/approach The authors use multivariate panel regression to examine the hypotheses. The conditioning effect of the incentive to govern (the amount of average bank lending) is modeled using an interaction variable. Based on the result of the Hausman test, the authors employ two-way fixed effects estimator to estimate the coefficients. Findings First, the negative relationship between multiple banking relationships and firm value holds true among Indian firms. Second, the authors show that this negative relationship is lessened for firms with high average bank debt or higher free cash flows. The analyses suggest that these moderating effects are related to a reduction in the free rider problem rather than a decrease in financial constraints. However, these results are only significant among larger firms. Originality/value Prior literature has not considered the conditioning impact of the “incentives to govern” when examining the free rider problem, inherent in situations where multiple actors are involved. The authors show in this study that the free rider problem disappears when the incentives to govern are considered in the overall research framework.

scholarly journals Consumer Welfare of Country-of-Origin Labelling and Traceability Policies

Agronomy ◽  
2021 ◽  
Vol 11 (5) ◽  
pp. 916
Author(s):  
Joel Bruneau ◽  
Albert I. Ugochukwu
Keyword(s):  
Market Failure ◽  
International Adoption ◽  
Country Of Origin ◽  
Consumer Surplus ◽  
Consumer Welfare ◽  
Free Rider ◽  
Free Rider Problem ◽  
Potential Market ◽  
International Trading ◽  
The Impact

Traceability regulations are a way to protect consumers by forcing firms to identify and track products step-by-step through all stages of production, processing, and distribution. Traceability is often used in conjunction with country-of-origin labelling where products explicitly identify where production takes place. However, such country-of-origin regulations can conflict with WTO provisions. This paper analyzes the impact on consumer welfare of traceability and country-of-origin in an international trading regime to assess whether such regulations actually improve consumer welfare. The paper constructs a theoretical model that highlights the potential market failure that arises from traceability. The paper then introduces a simple international trade regime to identify impacts on consumer surplus. The paper compares outcomes with, and without, traceability and country-of-origin regulations. Given the inherent free-rider problem, the paper shows that, as long as costs associated with traceability are low enough, mandatory regulations are welfare improving. Free trade, in the absence of foreign traceability, can lower consumer welfare so provides a rationale for country-of-origin rules. However, mandatory country-of-origin rules need not be welfare enhancing. We show that country-of-origin rules are similar to import barriers and so are third-best solutions. The better solution is international adoption and recognition of traceability rules which would make country-of-origin rules moot.

scholarly journals Ownership structure and performance: evidence from Portugal

2010 ◽  
Vol 7 (3) ◽  
pp. 25-32
Author(s):  
Inês Lisboa ◽  
José Paulo Esperança
Keyword(s):  
Financial Markets ◽  
Ownership Structure ◽  
Small Dimension ◽  
Free Rider ◽  
Ownership Concentration ◽  
Free Rider Problem ◽  
Low Levels ◽  
And Performance ◽  
The Impact ◽  
New Evidence

This paper provides new evidence on the impact of ownership over performance in small dimension markets. Analyzing the Portuguese firms we confirm the monitoring effect. Unlike previous studies, we also confirm the expropriation effect to low levels of ownership concentration. These results suggest that the free rider problem between the manager and the principal is significant in countries with small financial markets

scholarly journals Norm-Based Trade Union Membership: Evidence for Germany

2004 ◽  
Vol 5 (4) ◽  
pp. 481-504 ◽  
Author(s):  
Laszlo Goerke ◽  
Markus Pannenberg
Keyword(s):  
Panel Data ◽  
Labour Market ◽  
Trade Union ◽  
Union Membership ◽  
Union Density ◽  
Free Rider ◽  
Free Rider Problem ◽  
Social Custom ◽  
The Impact

Abstract In the absence of closed shops and discriminatory wage policies, union membership can be explained by the existence of social norms.We describe a model, incorporating institutional features of the German labour market, which explicitly allows for social custom effects in the determination of union membership. Using panel data for Germany, we find evidence for according effects which restrict freeriding. The impact of social norms tends to increase with net union density. Hence, observed reductions in the demand for union membership can weaken the impact of a norm and accentuate the free-rider problem.

scholarly journals Free‑Rider Problem in Classroom Games – Impact of Gender and Intergroup Conditions

2018 ◽  
Vol 66 (6) ◽  
pp. 1517-1525
Author(s):  
Soňa Kukučková ◽  
Pavel Žiaran
Keyword(s):  
Public Goods ◽  
Undergraduate Students ◽  
Social Dynamics ◽  
Teaching Experiment ◽  
Nonparametric Tests ◽  
Free Rider ◽  
Free Rider Problem ◽  
Significant Difference ◽  
Individual Strategies ◽  
The Impact

Behavioural experiments in the field of provision of public goods (including free rider problem) help to uncover the underlying processes and forces determining the nature of economy in the public sector. The objective of this paper is to determine the impact of gender and intergroup conditions on the extent of cooperation in standard linear public goods game using the voluntary contribution mechanism. Design of the teaching experiment is based on the methodology of Špalek (2011) with some modification. There were 80 undergraduate students of business participating in the classroom game, age range 20–22 years. Students were divided into three independent groups by 26 to 27 participants. Each group was playing independently, and individual strategies were recorded. We used the nonparametric tests (Mann‑Whitney U test and Kruskal‑Wallis Test) to analyse the differences between the gender and groups. Findings do not show statistically significant difference based on gender. On the other hand, the intergroup conditions determined by the social dynamics and discussion have significant influence on the distribution of goods. Results bring strong evidence on the importance of social and political factors influencing the pro‑social behaviour in the society.

Overcoming stereotypes of renewable energy

2019 ◽  
pp. 124-136
Author(s):  
Victor D. Gazman
Keyword(s):  
Renewable Energy ◽  
Empirical Analysis ◽  
Energy Generation ◽  
New Paradigm ◽  
Financial Instrument ◽  
Promising Direction ◽  
Investment Projects ◽  
Power Stations ◽  
New Generation ◽  
The Impact

The article considers prerequisites for the formation of a new paradigm in the energy sector. The factors that may affect the imminent change of leadership among the energy generation are analyzed. The variability of the projects of creation and functioning of power stations is examined. The focus is made on problematic aspects of the new generation, especially, storage and supply of energy, achieving a system of parity that ensures balance in pricing generations. The author substantiates the principles of forming system of parities arising when comparing traditional and new generations. The article presents the results of an empirical analysis of the 215 projects for the construction of facilities for renewable energy. The significance and direction of the impact of these factors on the growth in investment volumes of transactions are determined. The author considers leasing as an effective financial instrument for overcoming stereotypes of renewable energy and as a promising direction for accelerated implementation of investment projects.

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