Capital market and corporate misbehaviour

Capital Market-Driven Corporate Finance

Much of empirical corporate finance focuses on sources of the demand for various forms of capital, not the supply. Recently, this has changed. Supply effects of equity and credit markets can arise from a combination of three ingredients: investor tastes, limited intermediation, and corporate opportunism. Investor tastes when combined with imperfectly competitive intermediaries lead prices and i...

Financial Constraints and Corporate Disclosure: Evidence from Capital Market Segmentation∗

The sharp distinction drawn between firms rated narrowly above (BBB–) and below (BB+) the investment-grade cutoff provides variation in debt financing availability unrelated to firm fundamentals. We exploit this market segmentation to identify an asymmetric effect of debt capital supply on voluntary disclosure: BB+ firms step up disclosure in response to high-yield bond mutual fund outflows. Th...

Relationship Capital and Competition in the Corporate Securities Underwriting Market

This paper examines how relationship capital drives competition among underwriting banks in the corporate bond underwriting market. The recent deregulation and subsequent re-entry by commercial banks into this market in the U.S. raises policy interest in measuring competitive e ect of the deregulation. The theories of relationship and reputation imply that (1) the entrants' products are di eren...

Corporate Governance , Capital Market Discipline and the Returns on Investment

Corporate Governance, Capital Market Discipline and the Returns on Investment* by Klaus Gugler, Dennis C. Mueller and B. Burcin Yurtoglu We analyze the impact of corporate governance institutions, ownership structures and external capital market constraints on company returns on investment by using a sample of more than 19,000 companies from 61 countries across the world. We show that (1) of th...

Corporate Social Responsibility and Corporate Financial Performance: Evidence from Indian Capital Market