A Note on Credit Risk of Vertical Keiretsu Firms: Preliminary Evidence from the Japanese Automobile Industry

Takezawa, Naoya; Takezawa, Nobuya

doi:10.1007/s10690-005-4248-5

Cited by 2 publications

(2 citation statements)

References 12 publications

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“…The option amount is a put option at the exercise price, and the shareholder is equivalent to holding a call option with the company's assets. Assuming that the company's assets obey the Itô process ( 32 , 37 ), the distribution law of assets can be obtained, followed by the company's expected default rate.…”

Section: Data Source and Methodologymentioning

confidence: 99%

“…The smaller the probability of default is, the lower the credit risk. When the value of the company's assets is less than the point of default, the default distance is negative, and it is considered that the company does not breach the contract ( 32 , 33 , 37 ). This approach is the analysis basis and conclusion support for the empirical results obtained later.…”

Section: Data Source and Methodologymentioning

confidence: 99%

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The Reduction of Credit Risk in the Health Care Industry in China: Are We Returning to the Pre-COVID-19 Era?

Lei

Tang

Hai-yan

et al. 2022

Front. Public Health

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This study aims to evaluate the changes in the credit risk of the health care industry in China due to the COVID-19 epidemic by the modified KMV (named by Kealhofer, Mcquown, and Vasicek) model to calculate the default distances. We observe that the overall default distance mainly first decreased and then increased before and after the COVID-19 epidemic control in China; after the epidemic was controlled, the overall credit risk was reduced by 22.8%. Specifically, as shown in subdivided industries, health care equipment and health care facilities have larger credit risk fluctuations, while health care suppliers, health care distributors, and health care services have smaller fluctuations. These results can contribute to our understanding of why the COVID-19 epidemic in China could be controlled earlier, and software facilities are more important than hardware facilities in public health safety. Our methodological innovation is to use the GARCH (generalized autoregressive conditional heteroskedasticity) model and threshold regression model to modify the important parameters of the KMV model. This method has good accuracy in the Chinese environment.

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Section: Data Source and Methodologymentioning

confidence: 99%

Section: Data Source and Methodologymentioning

confidence: 99%

The Reduction of Credit Risk in the Health Care Industry in China: Are We Returning to the Pre-COVID-19 Era?

Lei

Tang

Hai-yan

et al. 2022

Front. Public Health

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Impact of cash holdings and ownership concentration on firm valuation

Ameer

2012

Review of Accounting and Finance

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PurposeThe purpose of this paper is to investigate the impact of firms' cash holdings and ownership concentration on the firms' valuation using an unbalanced panel dataset of non‐financial listed firms in Australia.Design/methodology/approachThe author used a generalized method of moments approach suitable for unbalanced panel dataset to examine the impact of firms' cash holdings and ownership concentration on firms' q‐ratios after controlling for the impact of financing, dividend and investment decisions, respectively.FindingsThe paper finds a positive relationship between cash holdings and q‐ratio of Australian firms. The ownership structure moderates the effect of cash holdings on q‐ratio in asymmetric fashion, i.e. for widely held firms, there is a positive relationship between cash holdings and q‐ratio; while for closely held firms, there is significant negative relationship between cash holdings and q‐ratio. Furthermore, changes associated with corporate governance reforms, also effect q‐ratio besides ownership structure. The paper also examined the impact of cash holdings on the market value of the firms over time. As the author predicted, increase in the cash holdings has a negative effect on the firms' market valuation, and this effect slows down over time. Overall, the empirical analysis finds support for similar findings documented for the developed countries in the literature.Research limitations/implicationsThe sample consists of non‐financial listed firms over the period of 1995 to 2010.Practical implicationsThe results imply that widely‐owned firms have lower cash holdings because managers are able to access capital market easily compared to firms with concentrated ownership, which might have complex agency and information asymmetry problems. These findings are consistent with the agency costs. Managers in less widely‐held firms have more discretion over cash holding policies, and the value reduction imposed on these firms may reflect shareholders' recognition of the possibility of managerial expropriations.Originality/valueThis is believed to be the first paper to explore agency costs of cash holdings for Australian firms.

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A Note on Credit Risk of Vertical Keiretsu Firms: Preliminary Evidence from the Japanese Automobile Industry

Cited by 2 publications

References 12 publications

The Reduction of Credit Risk in the Health Care Industry in China: Are We Returning to the Pre-COVID-19 Era?

The Reduction of Credit Risk in the Health Care Industry in China: Are We Returning to the Pre-COVID-19 Era?

Impact of cash holdings and ownership concentration on firm valuation

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