https://faculty.fuqua.duke.edu/~jgraham/website/SurveyPaper.PDF

The theory and practice of corporate finance: Evidence from the field

China is an important counterexample to the findings in the law, institutions, finance, and growth literature: neither its legal nor financial system is well developed by existing standards, yet it has one of the fastest growing economies. We examine 3 sectors of the economy: the State Sector (state-owned firms), the Listed Sector (publicly listed firms), and the Private Sector (all other firms with various types of private and local government ownership). The law-finance-growth nexus established by existing literature applies to the State and Listed Sectors: with poor legal protections of minority and outside investors, external markets are weak, and the growth of these firms is slow or negative. However, with arguably poorer applicable legal and financial mechanisms, the Private Sector grows much faster than the State and Listed Sectors, and provides most of the economy's growth. This suggests that there exist effective alternative financing channels and governance mechanisms, such as those based on reputation and relationships, to support this growth.

Law, Finance, and Economic Growth in China

https://finance.wharton.upenn.edu/~allenf/download/Vita/finlaw-china-122402.pdf

Law, finance, and economic growth in China

https://sites.temple.edu/lnaveen/files/2014/05/JFE_risktaking_2006.pdf

Managerial incentives and risk-taking ☆

https://www.nber.org/system/files/working_papers/w8178/w8178.pdf

The great reversals: the politics of financial development in the twentieth century

https://www.nber.org/system/files/working_papers/w6234/w6234.pdf

The determinants and implications of corporate cash holdings

We examine the determinants and implications of holdings of cash and marketable" securities by publicly traded U.S. firms in the 1971-1994 period. Firms with strong growth" opportunities and riskier cash flows hold relatively high ratios of cash to total assets. Firms" that have the greatest access to the capital markets (e.g. large firms and those with credit" ratings) tend to hold lower ratios of cash to total assets. These results are consistent with the" view that firms hold liquid assets to ensure that they will be able to keep investing when cash" flow is too low relative to planned investment and when outside funds are expensive. The" short run impact of excess cash on capital expenditures, acquisition spending and payouts to" shareholders is small. The main reason that firms experience large changes in excess cash is" the occurrence of operating losses. There is no evidence that risk management and cash" holdings are substitutes.

The Determinants and Implications of Corporate Cash Holdings

https://www.nber.org/system/files/working_papers/w8222/w8222.pdf

Culture, openness, and finance

Agency theories predict that the value of corporate cash holdings is less in countries with poor investor protection because of the greater ability of controlling shareholders to extract private benefits from cash holdings in such countries. Using various specifications of the valuation regressions of Fama and French (1998), we find that the relation between cash holdings and firm value is much weaker in countries with poor investor protection than in other countries. In further support of the importance of agency theories, the relation between dividends and firm value is weaker in countries with stronger investor protection. ACCORDING TO AGENCY THEORIES, THOSE who control firms do so to further their own interests. When corporate governance works well, those in control of a corporation, whom we refer to as controlling shareholders, find it more beneficial to increase shareholder wealth than to expropriate minority shareholders. In contrast, with poor corporate governance, controlling shareholders can derive substantial private benefits from control at the expense of minority shareholders (see, for instance, Dyck and Zingales (2004) and Nenova (2003)). As Myers and Rajan (1998) argue, liquid assets can be turned into private benefits at lower cost than other assets. Liquid assets therefore represent a promising opportunity to investigate the implications of agency theories. According to these theories, we would expect controlling shareholders to overinvest in liquid assets. Existing empirical evidence by Dittmar, Mahrt-Smith, and Servaes (2003) and Kalcheva and Lins (2004) is consistent with this prediction. ∗ Lee Pinkowitz and Rohan Williamson are associated with Georgetown University and Ren´ e

Does the Contribution of Corporate Cash Holdings and Dividends to Firm Value Depend on Governance? A Cross‐country Analysis

Religions have little to say about shareholders but have much to say about creditors We find that the origin of a country's legal system is more important than its religion and language in explaining shareholder rights However, a country's principal religion helps predict the cross-sectional variation in creditor rights better than a country's openness to international trade, its language, its income per capita, or the origin of its legal system Catholic countries protect the rights of creditors less than other countries, and long-term debt is less important in these countries A country's openness to international trade mitigates the influence of religion on creditor rights Religion and language are also important predictors of how countries enforce rights

/pdf/culture-openness-and-finance-4z05j6aezk.pdf

Rohan Williamson

Papers

The determinants and implications of corporate cash holdings

The Determinants and Implications of Corporate Cash Holdings

Culture, openness, and finance

Does the Contribution of Corporate Cash Holdings and Dividends to Firm Value Depend on Governance? A Cross‐country Analysis

Culture, Openness, and Finance