Essays in corporate finance

Abstract

This project includes three essays in Corporate Finance. The rst part of the thesis investigates the relationship between Financial Development and Economic Growth for a set of 77 countries over the period 1960-1995. Borrowing the methodology suggested by Beck, Levine and Loayza (2000), I study the previous relationship using a cross-country regression model and a panel technique. My results suggest that Private Credit, de ned as credits by nancial intermediaries to the private sector divided by GDP, has a positive impact over Economic Growth. My ndings also point out that Economic Growth is positively a¤ected by openness to trade and average years of schooling. The relationship between Financial Development and Economic Growth is independent of the degree of nancial development as well as the initial level of income of a given country. Di¤erently from other papers, I can study whether the nance-growth nexus is persistent over time: using a similar dataset for an extended period, 1960-2010, I show that the impact of Private Credit over Growth is signi cative also in the most recent past. The second part of the thesis explores the stock-prices comovements for a set of 7 countries over the period 2000-2014. The study explores how the volatilities and correlations in one coun- try, mainly Italy, are a¤ected by the volatilities and correlations in another country. Di¤erently from other papers, I focus on a larger set of countries and on a sample period that allows to distinguish between the Pre Great Recession period and the Post Great Recession period. The analysis is conducted by considering several GARCH models, for the volatility comovements, and MGARCH models, for the correlation comovements. The best GARCH model in my set- ting is the EGARCH model which provides information on the impact of positive innovations on volatility. Among the MGARCH models, I focus on the CCC model and the DCC model. My results point out that the strenght of the relationship among countries is ampli ed after a crisis event, which is consistent with most of the "contagion" literature. The last part of the thesis analyzes the relationship between long-term debt and average investment during the 2007 crisis. Very few papers have analyzed the real e¤ects of debt ma- turity. To analyze the impact of the debt structure on rms performance I use a matching approach methodology (Abadie-Imbens estimator) which allows to distinguish between a treat- ment group and a control group: the rst one refers to the group of rms whose long-term debt is maturing at the time of the crisis, while, on the other hand, the control group refers to those rms that are out of the treatment but have similar rm characteristics like cash ow, size, Q, cash holdings and long-term leverage. My results show that rms with debt maturing during the period of the crisis experience a much more pronounced fall in investment. Results are tested using a Parallel Trend Test which allows to better de ne whether the results are driven by the maturity argument or not. [edited by author]