Business Commons^™

Corporate Opacity And Cost Of Debt For Family Firms, Liangbo Ma, Shiguang Ma, Gary G. Tian

Faculty of Business - Papers (Archive)

This paper uses a sample of Chinese firms to examine the impact of corporate opacity on the relationship between family control and firms' cost of debt. We find that family control is associated with a lower cost of debt on average, and a negative impact exists mainly in firms with relatively low corporate opacity. We further provide evidence that the moderating effect of corporate opacity becomes more pronounced when investors' perception of controlling families' moral hazard of expropriation is higher. Our results are robust to alternative opacity proxies and controlling for endogeneity of family control using the instrumental variable method. …

Convergence In Sovereign Debt Ratios Across Heavily Indebted Eu Countries: Evidence From Club Convergence, N Apergis, Arusha Cooray

Faculty of Business - Papers (Archive)

We study the convergence of sovereign debt accumulation in five European Monetary Union (EMU) countries using quarterly data from June 2009 to June 2013, with a focus on debt ratio convergence following the 2009 sovereign debt crisis and the adoption of fiscal consolidation programmes. We test the Phillips and Sul (2007) club convergence hypothesis. We find the evidence of a lack of debt convergence for Greece and Portugal. Our results support the view that there is not a uniform austerity prescription for all, especially, without emphasizing friendly growth policies, which makes these countries more prone to investors' sentiments.

Ownership Control And Debt Maturity Structure: Evidence From China, Wenjuan Ruan, Grant Cullen, Shiguang Ma, Erwei Xiang

Faculty of Business - Papers (Archive)

Purpose - The authors examine the debt maturity structure of Chinese listed companies during the period when bond market was under-developed and the majority of commercial banks were owned by the state. The purpose of this paper is to answer why and how the different ownership control types impact the firms' preference and accessibility to either long- or short-term debts.

Design/methodology/approach - The univariate analysis was used to test the differences of debt maturity choices for firms grouped by ownership control types, profitability and institutional development. Then, logit regression and ordinary least squares regression were applied to examine the determinants …

The Impact Of Information Opacity On The Relation Between Founding-Family Control And Cost Of Debt, Liangbo Ma, Shiguang Ma, Gary Tian

Faculty of Business - Papers (Archive)

The literature finds mixed empirical evidence for systematic relations between founding - family ownership and cost of debt. Using a sample of 3380 privately (non-state) controlled but publicly listed firms in China between 2004 and 2010, we find that, on average, founding-family controlled firms pay significantly lower cost of debt, relative to non-founding-family controlled firms. Further investigation reveals that the negative relation between founding-family control and cost of debt exists mainly in firms that are relatively less opaque. Our results are robust to different measures of cost of debt and information opacity. We further generate evidence that in regions with …

Australia's External Debt: Is It A Symptom Or A Cause Of Economic Slowdown?, Khorshed Chowdhury

Faculty of Business - Papers (Archive)

Amidst the debate surrounding the 'debt problem' in Australia, the key analytical issue of whether external debt is a symptom or a cause of economic slowdown has been ignored. Sachs (1990) and Kenen (1990) argued that the external 'debt overhang' is a primary cause of economic slowdown and acts as an obstacle to economic growth. The second view is by Bulow and Rogoff (1990) who argue that the external debts are a symptom of poor economic management and performance rather than a primary cause of stifled economic growth. The statistical tests of causal relationships between the GDP growth rate and …