Counter-credit-risk yield spreads: a puzzle in China's corporate bond market

In this paper, using China's risk-free and corporate zero yields together with aggregate credit risk measures and various control variables from 2006 to 2013, we document a puzzle of counter-credit-risk corporate yield spreads. We interpret this puzzle as a symptom of the immaturity of China's credit bond market, which reveals a distorted pricing mechanism latent in the fundamental of this market. We also find interesting results about relationships between corporate yield spreads and interest rates and risk premia and the stock index, and these results are somewhat attributed to this puzzle.

Systematic examination of publicly-available information reveals the diverse and extensive corporate political activity of the food industry in Australia

BACKGROUND: The political influence of the food industry, referred to as corporate political activity (CPA), represents a potential barrier to the development and implementation of effective public health policies for non-communicable diseases prevention. This paper reports on the feasibility and limitations of using publicly-available information to identify and monitor the CPA of the food industry in Australia. METHODS: A systematic search was conducted for information from food industry, government and other publicly-available data sources in Australia. Data was collected in relation to five key food industry actors: the Australian Food and Grocery Council; Coca Cola; McDonald's; Nestle; and Woolworths, for the period January 2012 to February 2015. Data analysis was guided by an existing framework for classifying CPA strategies of the food industry. RESULTS: The selected food industry actors used multiple CPA strategies, with 'information and messaging' and 'constituency building' strategies most prominent. CONCLUSIONS: The systematic analysis of publicly-available information over a limited period was able to identify diverse and extensive CPA strategies of the food industry in Australia. This approach can contribute to accountability mechanisms for NCD prevention.

Corporate capital structure revisited: incomplete markets and default

After Modigliani and Miller (1958) presented their capital structure irrelevance proposition, analysis of corporate Önancing choices involving debt and equity instruments have generally followed two trends in the literature, where models either incorporate informational asymmetries or introduce tax beneÖts in order to explain optimal capital structure determination (Myers, 2002). None of these features is present in this paper, which develops an asset pricing model with the purpose of providing a positive theory of corporate capital structure by replicating main aspects of standard contractual practice observed in real markets. Alternatively, the imperfect market structure of the economy is tailored to match what is most common in corporate reality. Allowance for default on corporate debt with an associated penalty of seizure of Örmís future cash áows by creditors is introduced, for instance. In this context, a qualitative assessment of Önancial managersídecisions is carried out through numerical procedures.

Essays on asymmetric information problems without the single-crossing property: applications to corporate finance

The objective of this dissertation is to re-examine classical issues in corporate finance, applying a new analytical tool. The single-crossing property, also called Spence-irrlees condition, is not required in the models developed here. This property has been a standard assumption in adverse selection and signaling models developed so far. The classical papers by Guesnerie and Laffont (1984) and Riley (1979) assume it. In the simplest case, for a consumer with a privately known taste, the single-crossing property states that the marginal utility of a good is monotone with respect to the taste. This assumption has an important consequence to the result of the model: the relationship between the private parameter and the quantity of the good assigned to the agent is monotone. While single crossing is a reasonable property for the utility of an ordinary consumer, this property is frequently absent in the objective function of the agents for more elaborate models. The lack of a characterization for the non-single crossing context has hindered the exploration of models that generate objective functions without this property. The first work that characterizes the optimal contract without the single-crossing property is Araújo and Moreira (2001a) and, for the competitive case, Araújo and Moreira (2001b). The main implication is that a partial separation of types may be observed. Two sets of disconnected types of agents may choose the same contract, in adverse selection problems, or signal with the same levei of signal, in signaling models.

Um Estudo sobre a avaliação da condução do processo de parcerias - o caso Telemar Corporate

The partnerships have become the subject of study as an innovative element in the production management and a strategic option in the entrepreneurial activities that characterize this momentum of great instability due to the globalization of the financial dimension and the opening of captive markets all over the world.The objective of this research was to investigate and evaluate the in-fluence and relevance of the factor process approach among the other critical factors identified for the strategic management of partnerships. In view of the service offer of Telecommunications, mainly in the Case Study of Telemar Corporate, that belongs to the Tele Norte Leste Group S.A. (Telemar) responsible for rendering services to the corporate market. A research was performed in the Diretoria de Produtos Empresariais - DPE, a unit of the Telemar Corporate, analyzing these critical factors in 3 clusters related to the constitution of part-nerships: the definition of the strategic objectives, the quality of the human re-sources applied and the management of the partnership processes. The Theoretical Reference contributed to the definition of contemporary concepts on the management and the classification of the partnerships as well as the identification of the critical factors. The research was methodological and exploratory, using in this Case Study the field search through the employment of interviews and questionnaires in a selected sample. It was possible to identify that among the more relevant critical factors the process approach, is the most influential and relevant for the management of the partnerships at Telemar Corporate. It is succeeded by other factors equally important, such as the definition of objectives and the strategic intention that confirms the initial hypothesis of this study.

Essays in corporate risk management

This research investigates the factors that lead Latin American non-financial firms to manage risks using derivatives. The main focus is on currency risk management. With this purpose, this thesis is divided into an introduction and two main chapters, which have been written as stand-alone papers. The first paper describes the results of a survey on derivatives usage and risk management responded by the CFOs of 74 Brazilian non-financial firms listed at the São Paulo Stock Exchange (BOVESPA), and the main evidence found is: i) larger firms are more likely to use financial derivatives; ii) foreign exchange risk is the most managed with derivatives; iii) Brazilian managers are more concerned with legal and institutional aspects in using derivatives, such as the taxation and accounting treatment of these instruments, than with issues related to implementing and maintaining a risk management program using derivatives. The second paper studies the determinants of risk management with derivatives in four Latin American countries (Argentina, Brazil, Chile and Mexico). I investigate not only the decision of whether to use financial derivatives or not, but also the magnitude of risk management, measured by the notional value of outstanding derivatives contracts. This is the first study, to the best of my knowledge, to use derivatives holdings information in emerging markets. The use of a multi-country setting allows the analysis of institutional and economic factors, such as foreign currency indebtedness, the high volatility of exchange rates, the instability of political and institutional framework and the development of financial markets, which are issues of second-order importance in developed markets. The main contribution of the second paper is on the understanding of the relationship among currency derivatives usage, foreign debt and the sensitivity of operational earnings to currency fluctuations in Latin American countries. Unlikely previous findings for US firms, my evidence shows that derivatives held by Latin American firms are capable of producing cash flows comparable to financial expenses and investments, showing that derivatives are key instruments in their risk management strategies. It is also the first work to show strong and robust evidence that firms that benefit from local currency devaluation (e.g. exporters) have a natural currency hedge for foreign debt that allows them to bear higher levels of debt in foreign currency. This implies that firms under this revenue-cost structure require lower levels of hedging with derivatives. The findings also provide evidence that large firms are more likely to use derivatives, but the magnitude of derivatives holdings seems to be unrelated to the size of the firm, consistent with findings for US firms.

Ensaios sobre emissões de corporate bonds (Debêntures) no mercado brasileiro

O objetivo da presente tese é analisar as três questões não respondidas ou tratadas na literatura nacional - os efeitos de rating, as medidas e proxies de liquidez e os desenhos de contratos nas emissões de diferentes ratings -, que ajudam a compreender a formação de taxa de juros de emissão de debêntures. Para alcançar esse objetivo, esta tese está estruturada em três ensaios empíricos. No ensaio de rating, encontraram-se evidências de que: i) o rating afeta o spread independentemente do indexador da emissão; ii) a origem - nacional ou internacional - dos ratings não é relevante; iii) a causalidade rating-spread não é clara nas emissões que ocorrem em ambiente favorável, em que se verifica maior incidência de classificações discrepantes de risco; iv) a expectativa do mercado internacional com relação ao ambiente econômico brasileiro, o tipo de setor e o volume da emissão são importantes variáveis de controle na determinação do spread. No ensaio de liquidez, foram obtidos os seguintes resultados: i) o tamanho de emissão e determinados tipos de emissores, como, por exemplo, setores de energia e petróleo, são proxies de liquidez; ii) controlando determinados tipos de emissores, as debêntures com maior tamanho de emissão são as mais líquidas; iii) a relação entre idade e liquidez não é clara; iv) a diferença entre preços máximos e mínimos das transações não é uma medida de liquidez apropriada. Por fim, no ensaio de contrato, foram detectadas diferenças entre as cláusulas de emissões de diferentes ratings; conseqüentemente, a padronização afeta a taxa de juros das emissoras, uma vez que o rating é um dos principais determinantes da taxa de juros de emissão. Além disso, a padronização pode não ser ótima nas emissões de baixo rating, pois os contratos-padrão não incluem cláusulas restritivas, tais como repactuação programada e garantia, que reduzem o custo de agência entre acionistas e debenturistas.

Do private equity and venture capital backed firms have better corporate governance after going public?

Mercados financeiros e finanças corporativas