Sunk costs and market structure: price competition, advertising and the evolution of concentration

We compare the dividend policies of publicly- and privately-held firms in order to help identify the forces shaping corporate dividends, and shed light on the behavior of privately-held companies. We show that private firms smooth dividends significantly less than their public counterparts, suggesting that the scrutiny of public capital markets plays a central role in the propensity of firms to smooth dividends over time. Public firms pay relatively higher dividends that tend to be more sensitive to changes in investment opportunities than otherwise similar private firms. Ultimately, ownership structure and incentives play key roles in shaping dividend policies.

https://papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID1906727_code294874.pdf?abstractid=927802&mirid=1&type=2

Corporate Dividend Policies: Lessons from Private Firms

The maturity structure of corporate debt

The financial and innovation literature generally claims that venture capital (VC) investments spur the growth of new technology-based firms (NTBFs). However, it has proved difficult so far to separate the "treatment" effect of the VC investment from the "selection" effect attributable to the ability of the VC investor to screen high growth NTBFs. The aim of this work is to test whether VC investments have a positive treatment effect on the growth of employment and sales of NTBFs. For this purpose we consider a 10-year longitudinal data set for 538 Italian NTBFs, most of which are privately held. The sample includes both VC-backed and non-VC-backed firms. We estimate Gibrat-law-type dynamic panel-data models augmented with time-varying variables that capture the VC status of firms. To control for the endogeneity of VC investments we use several GMM estimators. The econometric results strongly support the view that VC investments positively influence firm growth. The treatment effect of VC investments is of large economic magnitude, especially on growth of employment. Most of it is obtained immediately after the first round of VC finance. Conversely, the selection effect of VC appears to be negligible in the Italian context.

Venture Capital Financing and the Growth of High-Tech Start-Ups: Disentangling Treatment from Selection Effects

https://isiarticles.com/bundles/Article/pre/pdf/48175.pdf

Venture capital financing and the growth of high-tech start-ups: Disentangling treatment from selection effects

Recent theories of firm dynamics emphasize the role of financial variables as determinants of firm growth. Empirically examining these relationships has been difficult, since there is a lack of financial data on the small, young, and private firms. Using a unique administrative data set, this paper considers the growth of new firms in Canadian manufacturing from a financial perspective. We find that financial factors, such as leverage and initial financial size, impact growth rates for new firms. Further, the inclusion of leverage has little impact on the economic significance of the conditional age and size relationships with firm growth.

https://papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID1435591_code397286.pdf?abstractid=879284&mirid=1&type=2

Age Effects, Leverage and Firm Growth

https://gcoe.ier.hit-u.ac.jp/CAED/papers/id090_Huynh_Petrunia.pdf

Age effects, leverage and firm growth

Recent theories of industry dynamics emphasize the role of financial frictions in determining post entry performance of firms. Testing these theories has been difficult because of the lack of financial data on small, young and private firms. Using a unique data set, T2LEAP, this paper considers the survival of new firms in Canadian manufacturing from a financial perspective. Duration analysis quantifies the effects of firm, industry and aggregate factors. Findings show that nonlinear effects are found with firm leverage. Finally, likelihood decompositions offer insights into the contributing factors to firm hazard for nine entry cohorts during the period 1985–1997.

The Impact of Initial Financial State on Firm Duration Across Entry Cohorts

Recent theories of industry dynamics emphasize the role of financial frictions in determining post entry performance of firms. Testing these theories has been dicult because of the lack of financial data on the small, young and private firms. Using a unique data set, this paper considers the survival of new firm in Canadian manufacturing from a financial perspective. Duration analysis quantifies the eects of firm,

/pdf/the-impact-of-initial-financial-state-on-firm-duration-1y1u45lmlq.pdf

This paper investigates the validity of Gibrat’s Law holding for firms in manufacturing and retail trade sectors. The object is to expand our knowledge of Gibrat’s Law to include non-manufacturing firms. A unique longitudinal firm-level database, which contains information on Canadian incorporated establishments, enables the inter-industry comparison. The findings of the analysis are that Gibrat’s Law is violated in both manufacturing and retail sectors. Violations of Gibrat’s Law for both sectors include (i) growth rates that depend on firm size (ii) growth variability that depends on firm size and (iii) a negative persistence of firm growth. Finally, age effects or selection effects are not the causes of these violations.

Robert J. Petrunia

Papers

Age Effects, Leverage and Firm Growth

Age effects, leverage and firm growth

The Impact of Initial Financial State on Firm Duration Across Entry Cohorts

The Impact of Initial Financial State on Firm Duration Across Entry Cohorts

Does Gibrat’s Law Hold? Evidence from Canadian Retail and Manufacturing Firms