Firm Size Matters for Financial Constraints: Evidence from Brazil

Crisóstomo, Vicente Lima; López‐Iturriaga, Félix J.; González, Eleuterio Vallelado

doi:10.7177/sg.2012.v7.n3.a16

Cited by 5 publications

(7 citation statements)

References 88 publications

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“…This explains the two-fold impact of tight monetary policy, i.e., the smaller firms are more impacted by tight monetary policy than larger firms in terms of both access to finance and cost of finance and will need to put up more collateral to finance investments. The results corroborate the findings of Gertler and Gilchrist (1994), Bougheas (2006), andCrisóstomo (2012). The results also support the hierarchy of finance theory as pronounced by Oliner and Rudebusch (1992).…”

Section: Regression Results: Firms Constrained By Sizesupporting

confidence: 89%

“…Even in the presence of viable investment opportunities, the investors may be unwilling to place their money in these firms (Bernanke et al (1996) due to the firm's inability to provide adequate collateral. The size of the firm may be a better proxy (Fazzari et al, 1988;Crisóstomo, 2012) to assess the balance sheet channel's impact as it directly correlates to a firms' ability to arrange collateral to generate funds for investments. The results highlight the balance sheet channel's existence as the impact on smaller firms' cash flows, and thereby investments are much more pronounced compared to larger firms.…”

Section: Regression Results: Firms Constrained By Leveragementioning

confidence: 99%

“…Following Fazzari et al (1988), the following equation is used in the study, which has already been used by Prasetyantoko (2007) and Crisóstomo (2012).…”

Section: Methodsmentioning

confidence: 99%

“…Hadlock and Pierce (2010) highlighted firm size as a critical determinant of financial constraints affecting investments. Crisóstomo (2012) argued that size inhibited the firm from investing in R&D. Bryson (2009) also concluded that large firms only reacted towards growth in sales, while the investment behavior of small firms is more sensitive to the cost of capital. Moreover, the balance sheet channel comes into play as smaller firms have less collateral to guarantee credits.…”

Section: Introductionmentioning

confidence: 99%

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Monetary policy transmission: Balance sheet channel and investment behavior of firms in Pakistan

Rafique

Quddoos

Ali

et al. 2021

EJEM

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Purpose ─ This study investigates the relevance of the balance sheet channel of monetary policy transmission concerning non-financial firms at the Pakistan Stock Exchange (PSX), a firm-level data.Methods ─ This paper estimates a family of panel data regression models and constructs a dummy variable for monetary policy tightness.Findings ─ The result indicates a positive relationship between cash flows and investment during periods of monetary tightness. The impact on cash flows is visibly more pronounced than that of the quantitative effect of an increase in capital cost, which gives rise to a balance sheet channel. Three financial constraints, namely size, leverage, and dividend policy, are used to segregate firms into financially constrained and unconstrained firms.Implication ─ The results highlight the balance sheet channel impact on smaller firms' cash. The cash flows of highly leveraged firms were impacted more during the tight monetary policy periods and thereby were more prone to decline in investments. Results on constraints of dividend policy are, however, inconclusive.Originality ─ The paper contributes to the literature by investigating the relevance of the balance sheet channel of monetary policy transmission concerning non-financial firms using firm-level data. It also contributes to the literature by constructing a dummy variable to measure monetary policy tightness.

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Section: Regression Results: Firms Constrained By Sizesupporting

confidence: 89%

Section: Regression Results: Firms Constrained By Leveragementioning

confidence: 99%

“…Following Fazzari et al (1988), the following equation is used in the study, which has already been used by Prasetyantoko (2007) and Crisóstomo (2012).…”

Section: Methodsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Monetary policy transmission: Balance sheet channel and investment behavior of firms in Pakistan

Rafique

Quddoos

Ali

et al. 2021

EJEM

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“…Para reduzir a influência de eventuais outliers, as variáveis BETA, KD e ROE foram winsorizadas em 5% e 95% (Crisóstomo et al, 2012;Silveira et al, 2006).…”

Section: Lineker Costa Passos  Rafael Sales Almendra  Marcia Martinunclassified

Disclosure of market risks and cost of capital of companies

Passos

Almendra

Luca

et al. 2017

BASE

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Este é um artigo de acesso aberto, licenciado por Creative Commons Atribuição 4.0 Internacional (CC BY 4.0), sendo permitidas reprodução, adaptação e distribuição desde que o autor e a fonte originais sejam creditados. RESUMOSob os preceitos da Teoria da Divulgação, o estudo tem o objetivo de analisar a relação entre o nível de evidenciação dos fatores de risco de mercado e o custo de capital das empresas participantes do Novo Mercado e dos Níveis 1 e 2 de governança corporativa da BM&FBovespa. A investigação difere da maioria dos estudos, pois analisa tanto o custo de capital próprio como o de terceiros, destacando-se ainda, a relevância da evidenciação dos fatores de risco para a eficiência do mercado de capitais. Foram avaliados dados de 2014 de 151 empresas, utilizando--se Análise de Correspondência e Regressão Linear Múltipla. O nível de disclosure dos fatores de risco de mercado foi identificado a partir dos Formulários de Referência das empresas, e os dados do custo de capital foram extraídos da Economática®. Verificou-se que o nível de disclosure dos riscos de mercado das empresas assinala relação positiva com o custo de capital de terceiros, representado por Kd. Não foi encontrada relação entre o nível de disclosure e o custo de capital próprio, mensurado pelo Beta. Os resultados sugerem a pouca maturidade do mercado de capitais brasileiro ao lidar com os direcionadores da Teoria da Divulgação, em que a evidenciação, não obstante efeitos considerados negativos, proporciona maior credibilidade.Palavras-chave: disclosure, risco de mercado, custo de capital. ABSTRACTUnder the principles of Disclosure Theory, the study aims at analyzing the association between the disclosure level of market risk factors and the cost of capital of companies listed on "Novo Mercado" and segments 1 and 2 of corporate governance of BM&FBovespa. The research differs from most studies because it analyzes both the cost of equity capital as cost of capital debt. It also stands out the relevance of disclosure of risk factors for capital market efficiency. We evaluated the data of 151 companies for the financial year 2014, using the correspondence analysis and the multiple linear regression. The disclosure level of market risk factors of the sample companies was identified from their respective reference forms, and the data of the cost of capital were extracted from Economática® base. It was verified that the disclosure level of market risks of the companies indicates a positive relation with the cost of capital debt, represented by Kd. No relation was found between the level of disclosure and the cost of equity capital, measured by DISCLOSURE DOS RISCOS DE MERCADO E O CUSTO DE CAPITAL DE EMPRESAS 1 DISCLOSURE OF MARKET RISKS AND COST OF CAPITAL OF COMPANIES DISCLOSURE DOS RISCOS DE MERCADO E O CUSTO DE CAPITAL DE EMPRESAS INTRODUÇÃOEm mercados financeiros eficientes, nos quais as informações evidenciadas refletem-se integralmente nos preços (Fama, 1976), considera-se que toda informação importante deve ser disponibilizada para seus...

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