We investigate the determinants of the banks' propensity to make long-term business loans in an emerging market context. Using a large sample of Russian banks, we find that the median bank allocates only 0.5% of its assets in long-term business loans and that there is wide cross-sectional variation in this ratio among banks. A bank's ability to extend long-term business loans depends on its size, capitalization, and the availability of long-term liabilities rather than its type of ownership. These results highlight the importance of bank-level (supply side) constraints in extending vital long-term credit to firms.

Purpose The purpose of this paper is to develop and validate new robust measures of investors’ preference for the form of regular corporate payout. Then, the paper adds to the empirical evidence on catering theory by examining managers’ catering to such preference. Design/methodology/approach The authors use the matching method to control for firm characteristics. The authors apply two robustness tests to validate the measures. The authors use the rigorous multivariate analysis. Findings US investors’ preference for regular dividends vs regular stock repurchases, being different forms of corporate payout, varies over time. Managers cater to investors’ preference for payout form. The findings are consistent with the catering theory of Baker and Wurgler (2004a). The number of firms that pay cash dividends regularly continue to outnumber the ones that purchase their shares regularly. Research limitations/implications The study only uses US data. It does not cover other countries. Practical implications The measures can be used in several future research endeavors, such as examining investors’ payout-form preferences in other countries (see Booth and Zhou, 2017) and exploring their determinants, the corporate governance characteristics of firms that cater to investors’ preference vs firms that do not, etc. Social implications The study contributes to understanding investors’ preferences and corporate payout behavior which is prerequisite to efficient policy formulation. Originality/value The proxies for investors’ payout-form preference control for firm characteristics and are unrelated to investors’ time-varying risk preferences. Also, they are robust to measurement issues. Moreover, the study covers a period of 40 years.

Efficient estimation of the equity cost of public corporations is an essential component of calculating the required rate of return of real investment projects, and therefore the basis for a rational investment policy. The accepted methodology relies on the CAPM model to define the return risk premium, and the OLS method to estimate the beta risk coefficient required for calculating the premium. This study challenges the use of the OLS method for this task by demonstrating its vulnerability to the impact of stock return outliers caused by large, unpredictable, company-specific events. That impact is verified on a sample of U.S. pharmaceutical companies by comparing the OLS estimation performance with that of our proposed method based on Huber's Robust M (HRM) estimator, a related statistical method that follows a mixed return model identifying regular and outlier return components. Using the HRMestimated beta as a benchmark, we demonstrate that (1) outliers can substantially bias the OLS beta, (2) the bias is negatively correlated with company size, and (3) the size of the bias is often moderated but not eliminated by extending the estimation period. The latter finding suggests that a robust method like HRM is preferable where estimators ought to represent the behavior of the majority of historical data despite the presence of outliers. The risk of trusting the OLS beta is especially high when estimation must rely on a small sample. JEL: G12

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