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We examine innovation following the Great Depression using data on a century's worth of U.S. patents and a difference-in-differences design that exploits regional variation in the crisis severity. Harder-hit areas experienced large and persistent declines in independent patenting, mostly reflecting the disruption in access to finance during the crisis. This decline was larger for young and inexperienced inventors and lower-quality patents. In contrast, innovation by large firms increased, especially among young and inexperienced inventors. Overall, the Great Depression contributed to the decline in technological entrepreneurship and accelerated the shift of innovation into larger firms. [ABSTRACT FROM AUTHOR]

Exports at firm level improve the financial performance and contribute to economic growth. Exporting activities can require additional financing and pose a challenge to manufacturing firms, affecting their managerial financing decisions. This study explores the impact of export intensity on leverage using a dataset of manufacturing firms. The results of two-step system GMM reveal that export intensity has a negative influence on leverage. We find that a firm size positively impacts leverage, while cash holding has a negative connection with leverage. Finally, we note that board size exhibits a positive relationship with leverage. These findings suggest important policy implications for export promotion, specifically for a small open economy. The results are robust to different sensitivity checks. [ABSTRACT FROM AUTHOR]

Purpose: This study investigates the interaction between trade credit and short-term bank loans among European Union (EU) firms, spanning small, medium, and large sizes. The research aims to determine whether these financing sources operate as substitutional alternatives or complementary resources within varying firm scales. Design/methodology/approach: The research is based on yearly financial data from the BACH database for three size groups of firms in the period 2000-2020. Methods include panel data models estimated for total sample and for individual size groups to capture the indirect impact of size on the relationship between short-term institutional financing and trade credit. Additionally, the study distinguishes between the supply and demand of trade credit. Findings: The research discovered complementary relationships between net trade credit and short-term bank loans for small and medium-sized firms, which contradicted the initial expectation of substitution, while large firms did exhibit the expected complementary effect. However, the impact of trade credit supplied and demanded varied across firm sizes, with small and large firms showing no significant effects while medium-sized firms displayed substitution effects. Research limitations/implications: The dataset employed in the study contains aggregated data rather than individual firm-level financial information. This choice represents a compromise between information richness and the need for harmonization to ensure comparability. Practical implications: The findings could be valuable for individuals engaged in the management of short-term corporate finances. Understanding the variations in managing receivables and payables, particularly influenced by firm size, can contribute to improved comprehension of business finance and its operational dynamics. This, in turn, can aid in effectively managing the trade-off between trade credit and short-term institutional financing. Originality/value: This research adds to the current body of knowledge primarily by employing a multi-faceted approach that encompasses three size categories and explores trade credit from both the perspectives of supply and demand. This approach provides insights into corporate short-term financing strategies, encompassing the interplay between trade credit and bank loans. [ABSTRACT FROM AUTHOR]

Based on GMM-system estimates of a large panel data set of Italian small- and medium-sized firms (SMEs) observed in the years 2001-2008, the analysis confirms that the growth of smaller firms is more dependent on internal resources than that of larger firms. In this regard, we adopt the standard model used to test the law of proportionate effect, augmented by the cash flow variable, to examine both the growth profile of Italian SMEs and the growth-cash flow nexus. We also show that for the SMEs in the Southern "backward" regions of Italy, the dependence of firm growth on inside finance is more intense than for firms operating in the more developed regions of the country. We conclude remarking that the tightness of the financial arrangement allows a downgraded size distribution, as the right-skewed firm size distribution of the Southern SMEs seems to suggest. [ABSTRACT FROM AUTHOR]

This paper uses new confidential Census data to revisit the relationship between firm size, cyclicality, and financial frictions. First, we find that large firms (the top 1 percent by size) are less cyclically sensitive than the rest. Second, high and rising concentration implies that the higher cyclicality of the bottom 99 percent of firms only has a modest impact on aggregate fluctuations. Third, differences in cyclicality are not simply explained by financing, and in fact appear largely unrelated to proxies for financial strength. We instead provide evidence for an alternative mechanism based on the industry scope of the very largest firms. [ABSTRACT FROM AUTHOR]

Most analyses of tax evasion examine individual behavior, not firm behavior, given obvious and recognized data issues. We use data from the Business Environment and Enterprise Performance Survey to examine tax evasion at the firm level, focusing on a novel determinant of firm tax evasion: the financial constraints (or credit constraints) faced by the firm. Our empirical results indicate across a range of alternative specifications that more financially constrained firms are more likely to be involved in tax evasion activities, largely because evasion helps them deal with financing issues created by financial constraints. We further show that the effects of financial constraints are heterogeneous across firm ownership, firm age, and firm size. Lastly, we present some suggestive evidence on the possible channels through which the impact of financial constraints on firm tax evasion may operate, including a reduction of information disclosure through the banking system, an increase in the use of cash for transactions, and an increase in bribe activities in exchange for tax evasion opportunities. [ABSTRACT FROM AUTHOR]

The study aims at verifying whether the firm size and debt maturity affect the relationship between capital structure and its main determinants. Using panel data models, the impact of the primary factors on leverage is compared across three size groups of firms and for different measures of debt in order to identify the size effect and the debt maturity effect in these relationships. The study covers 11 EU countries during the period 2000-2013. Findings provide evidence that financing choices of small firms provide more support for the pecking-order theory, whereas medium and large-sized firms tend to follow the trade-off predictions on leverage. It also appears that the trade-off theory is more applicable for short-term debt, while pecking order - for long-term debt. [ABSTRACT FROM AUTHOR]

This empirical study of security issues by UK companies between 1959 and 1974 focuses on how companies select between financing instruments at a given point in time. It throws light on a number of interesting questions. First, it demonstrates that companies are heavily influenced by market conditions and the past history of security prices in choosing between debt and equity. Second, it provides evidence that companies appear to make their choice of financing instrument as if they have target levels of debt in mind. Finally, the results are consistent with the notion that these target debt levels are themselves a function of company size, bankruptcy risk, and asset composition. [ABSTRACT FROM AUTHOR]

Recent research has documented the failure of market beta to capture the cross-section of expected returns within the context of a two-pass estimation methodology. However, the two-pass methodology suffers from the errors-in-variables (EIV) problem that could attenuate the apparent significance of market beta. This article provides a new correction for the EFV problem that is robust to conditional heteroscedasticity. After the correction, I find more support for the role of market beta and less support for the role of firm size in explaining the cross-section of expected returns. While the EIV correction leads to a diminished role of firm size, the size variable remains a significant force in explaining the cross-section of expected returns. [ABSTRACT FROM AUTHOR]

This article explores the impact that size, growth and industry have on the financial structure of manufacturing companies. The author conducts a cross-section analysis of U.S. manufacturing companies for the year 1961-1962 to provide empirical data. Research on financial structure theory is advanced through the analysis of financial ratios in an attempt to provide information that would be useful in conducting international and historical growth comparisons. The financial ratios examined fall into four general categories which include profitability, turnover, leverage and liquidity.

Objective - This study aims to examine and analyze the influence of severity, free assets, company size, asset retrenchment and CEO expertise on the success of recovery companies experiencing financial distress that are listed on the Indonesian Stock Exchange (IDX). Methodology/Technique - The population used in this study are all companies listed on the Indonesian Stock Exchange between 2011 and 2016. This study uses a simple logistic regression analysis to test the hypotheses. Findings - The results indicate that free assets and CEO expertise have a significant and positive effect on the success of a company's recovery. Meanwhile, variable severity, asset retrenchment and firm size do not affect the success of the company's recovery. Type of Paper: Empirical. [ABSTRACT FROM AUTHOR]

The paper proposes a framework that can be utilized for deciding upon the optimal scale of operations for a firm. The basic premise of the paper is that a firm that operates in a stable economic environment and a stable mode of business operations experiences a varying elasticity of scale that, after some scale level, becomes less than one and continues to decline with further increases in scale. A firm operating in such a stable system can search for its optimal scale of operations. The paper's premise does not refute the possibility that a firm can experience a shift from a lower elasticity of scale to a higher one; but this shift is not part of the mechanics of a stable system. Rather, it is due to some shock to the economic environment and/or the firm's mode of operations. Firms that operate under the assumption that they face a constant elasticity of scale, when in fact the elasticity varies, expose themselves to detrimental consequences. The model is in congruence with the Tobin's q criteria and can shed some light on why average q is a poor estimate for marginal q. The model sheds some light on the small-firm effect and on a major difference between internal and external growth. [ABSTRACT FROM AUTHOR]

We investigate whether financing constraints affect the size distribution of Chinese industrial firms from 1998 to 2007. Although the firm size distribution does not followZipfdistribution in China, it is approachingZipfdistribution over time. In general, financing constraints have a robustly negative effect on the size distribution of firms. Furthermore, firms in Western China grow significantly more equally after controlling for financing constraints. However, the effect of financing constraints in Central China is significantly negative, and the effect of financing constraints on firm size distribution in Eastern China is insignificant. We thus expect a non-linear relationship between financing constraints and firm size distribution. [ABSTRACT FROM PUBLISHER]

Purpose – The purpose of this study is to examine if the cash flow and short-term accruals and long-term accruals together have a role to play in explaining the change in dividends. Design/methodology/approach – The authors’ mainly used the same models developed by Atieh and Hussain (2008) and expanded on this model by including contextual factors: firm growth, firm size, gearing and quality of earnings. Using 344 observations from Jordanian firms, the association of variables with dividend changes was analyzed using the generalized least square regression. Findings – The results reveal consistency with previous studies that disaggregated earnings outperforms the cash flow model in explaining the changes in dividends. Also, the explanatory power of the Lintner (1956) model is improved by replacing earnings with cash flow and short-term and long-term accruals, which is in line with previous studies. Regarding the effect of contextual factors, the superiority of the accrual model is affected by the contextual factors proposed, except for geared firms. The accrual model is superior for high growth, large firms and poor quality of earnings. Originality/value – The paper contributes to the existing literature that the Lintner (1956) model’s explanatory power can be improved by replacing earnings with its components mainly cash flows and short-term and long-term accruals. These results support the evidence related to developed markets. The paper also provides evidence of the importance of firm characteristics on the information content of the components of earnings. [ABSTRACT FROM AUTHOR]

This paper examines the impact of the deregulation of compulsory industrial licensing in India on firm-size dynamics and reallocation of resources within industries. Following deregulation, resource misallocation declines and the left-hand tail of the firm-size distribution thickens significantly, which suggests increased entry by small firms. However, the dominance and growth of large incumbent firms remains unchallenged. Quantile regressions reveal that the distributional effects of deregulation on firm size are significantly nonlinear. The reallocation of market shares toward a small number of large firms and a large number of small firms is characterized as the shrinking middle in Indian manufacturing. Small and medium-sized firms may continue to face constraints in their attempts to grow. [ABSTRACT FROM AUTHOR]