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In this paper, we investigate the link between uncertainty in industrial policy and firm investment by focusing on China's five-year plan (FYP). Our sample period is from 1998 to 2017. In our investigation, we examine whether a change in the FYP is a source of uncertainty in industrial policy because of the difficulties in FYP predictability. Our main finding is that there are systematic decreases in investments in the year prior to a new FYP. The finding is robust to endogeneity. We also find that the relation between the uncertainty in industrial policy and investment is heterogeneous in the cross section. This heterogeneity is caused by information advantages about new FYP, dependence on government subsidies, investment irreversibility and industry competition. Further, investment rebounds after resolving the uncertainty but are dampened by adjustment costs.

We investigate the determinants of dividend payments in Belgium between 1838 and 2020. As the institutional environment changes drastically over time, we explore whether the determinants of dividend payments depend on the environment in which firms operate. Large firms, firms that are not informationally opaque, firms with a high share denomination and firms with liquid shares are more likely to pay. However, the importance of these characteristics changed over time. Surprisingly, firms seemingly do not use dividends for signaling. Our results indicate that the omnipresence of universal banks in pre-war Belgium might have lowered the need for a signal.

We investigate firms' initial stock and bond issues in public capital markets and explain fluctuations in these IPOs over time. We study Belgium from 1839 to 1935, which provides a setting with poor investor protection, no tax distortions, and changing regulations. We find that economic growth induces stock and bond IPOs and that the issuers time offerings such that they coincide with favorable market conditions. Even though in 1873, regulation was abruptly relaxed, we find no evidence of increases in the number of IPOs. Finally, we show that stock and bond IPOs do not interact when controlling for the determinants of these IPOs.

In this article, we investigate the effect of local financial development on cash holdings of Italian small and medium-sized enterprises (SMEs). Consistent with the hypothesis that local financial development reduces the need to hold precautionary cash because it facilitates access to bank debt, we find that local financial development measured by the density of bank branches in Italian provinces has a negative effect on corporate cash holdings. This effect is driven by SMEs with bank debt. Furthermore, the negative effect of local financial development on cash holdings only exists for younger and smaller SMEs, which are more likely to benefit from increased local financial development. Our work highlights that local financial development is an important driver of policies on holding cash by SMEs and is particularly relevant during crisis periods, such as the recent COVID-19 crisis.

We investigate the effects of local banking development on the debt financing of new firms using a large sample of Italian firms. Controlling for potential endogeneity issues, we find that new firms are more likely to use bank debt and have higher leverage in provinces with more bank branches relative to population. However, it is important to account for bank heterogeneity. For instance, more foreign banks in a province actually reduce access to bank debt. Taken together, our study provides new and nuanced evidence on the role of local banking development for the debt financing of new firms.

We investigate whether investor protection and taxation legislation affect dividend policy, using a unique sample of all Belgian firms listed on the Brussels Stock Exchange between 1838 and 2012. Investor protection was very weak in Belgium before World War I, but gradually improved over time. Dividend taxation was introduced only in 1920. While it is generally believed that investor protection and taxation affect dividend policy, we find that dividend policy has been remarkably stable over time, even after controlling for firm characteristics. Changes in investor protection and taxation legislation seem to have had little impact on dividend policy.

Dividend policy is not set de novo each year, but dividends are smoothed from one year to another. This smoothing leads to a short-term persistence in dividend policy. In this paper, we investigate the persistence of a dividend policy in the long run by using a unique sample of firms listed on the Brussels Stock Exchange (BSE) since 1824. The imprinting theory argues that firms develop certain persistent characteristics at important moments in their life cycle. Our investigation provides evidence that the initial dividend policy, measured at a firm’s first listing, has an effect on the future dividend policy. This effect persists for many years but decreases over the firm’s life cycle. However, a new stable slowly changing persistent component in dividend policy is formed.

Research Question/Issue: This paper studies the relationship between country‐level unemployment insurance and cash holdings of privately held firms. When public unemployment insurance is weak, firms may provide alternative unemployment insurance by committing not to lay off workers in bad times. We hypothesize that one way firms can do so is by holding larger cash balances. Research Findings/Insights: Using a large sample covering 388,940 private firms from 32 countries around the world over the 2007–2014 period, we find a negative relationship between public unemployment insurance and cash holdings. This effect is driven by countries where public unemployment insurance is weak or nonexistent. We also find that privately held firms keep a larger part of their new debt issues as cash when public unemployment insurance is weak. Theoretical/Academic Implications: We contribute to a growing literature on an institution‐based view of comparative corporate governance. We show that national governance factors and, more specifically, public unemployment insurance, which protects employees (an important but relatively ignored stakeholder), influences firm cash holdings in a private firm context. Practitioner/Policy Implications: Our findings have important implications for policy design. Specifically, they suggest that labor market institutions designed to support employees can also indirectly benefit their employers because these institutions allow firms to reduce the opportunity cost related to holding larger cash balances.

This paper investigates the timing of a firm’s first security issue in public capital markets. We explain fluctuations over time in initial public offerings of bonds and stocks. We study Belgium in the period 1839-1935, a setting with poor investor protection, no tax distortions and changing governmental regulations. We find that economic growth leads to stock and bond IPOs and that both types of issues are timed to coincide with favorable market conditions. These effects are the strongest when the securities market has reached a mature level of development. We also find that bond IPOs coincide with more stock IPOs. Finally, our results suggest that a deregulation shock in 1873, which deregulated security markets and made it much easier to set up a firm and list securities, did not directly affect the number of IPOs, but facilitated a booming securities market in later years.

Using a large sample of multinational corporations (MNCs), we examine the location of earnings management within the firm. We posit and find that MNCs manage their consolidated earnings through an orchestrated reporting strategy across subsidiaries over which they exert significant influence. Specifically, we find that headquarters' influence on subsidiary earnings management increases with the degree of subsidiary integration and the extent of earnings management opportunities. Most importantly, we provide evidence that MNCs exploit regulatory arbitrage opportunities arising from cross-country differences in institutional quality. We document that, in response to exogenous improvements in the quality of their home-country institutions, MNCs rebalance their reporting strategies by clustering earnings management in subsidiaries from countries with more lenient regulations. Taken together, our findings yield important insights on the drivers of earnings management location within the firm and highlight the need for better cross-country coordination in regulatory design. JEL Classifications: F23; G15; G34; G38; M41; M48.

Entrepreneurial finance is a distinctive aspect of corporate finance, notably with respect to informational asymmetries and investor involvement in portfolio companies. Entrepreneurial finance research has explored four levels of analysis: the entrepreneur or entrepreneurial firm, the organization providing finance to the entrepreneurs, the organizations providing funds to these organizations, and the region or country in which the entrepreneurial firms or investors are established. We discuss recent developments in forms of entrepreneurial finance. We summarize the contributions of the papers published in this issue on entrepreneurial finance at different points in the life cycle, including work on trade credit, debt finance, micro-cap IPOs, venture capital, and angel finance. Also, we highlight avenues for future research focusing on funding gaps, accelerators, crowdfunding, secondary buyouts, boards, and exits.

We re-examine dividend growth and return predictability evidence using 165 years of data from the Brussels Stock Exchange. The conventional wisdom holds that time-varying dividend yield is predominately explained by changes in expected returns and that expected dividend growth is only weakly forecastable. However, we find robust dividend growth predictability evidence in every time period. A lack of dividend smoothing is the most important reason for the disconnect with previous evidence. Furthermore, we find return predictability in the post-World War II period when we adjust the dividend yields for changing index composition, business cycle variation and structural breaks. This is explained by a simultaneous increase in equity duration, induced by an increasing importance of growth stocks.

We study the payment of bonuses to directors of Belgian firms listed on the Brussels Stock Exchange in 1925-1934. Directors received substantial cash bonuses which were positively related to firm performance, measured by accounting income and changes in the market value of equity. If shareholders were expropriated via the payment of excessive director bonuses, we would expect a larger drop in stock market performance during the Great Depression for firms paying higher bonuses. However, our findings suggest that bonuses were a valuable tool for aligning the interest of directors and shareholders in an environment characterized by weak legal investor protection.

We investigate the effects of the recent financial crisis on start-up financing and survival using a dataset that covers all Belgian new business registrations between 2006 and 2009. We find that bank debt is the single most important source of funding, even for start‐ups founded during the crisis. However, start‐ups founded in crisis years use less bank debt and have a higher likelihood of bankruptcy, even after controlling for their creditworthiness. These effects are stronger for start-ups that are more dependent on bank debt, such as start-ups founded in bank dependent industries and start‐ups founded by entrepreneurs who are more likely to be financially constrained.

International audience; This paper examines the impact of tax enforcement and public listing status on income shifting by multinational corporations (MNCs). For a sample of over 8,000 subsidiaries that are majority-owned by 959 European MNCs over the period 1998–2009, we find strong evidence of income shifting from high to low tax countries and that income is shifted more out of high-tax countries when local tax enforcement is weak. In addition, we show that private MNCs exploit weak tax enforcement more to shift income out of the parent country compared to public MNCs. Combined, our results suggest that tax enforcement plays a crucial role in MNC income shifting decisions and that shifting is more aggressive when MNCs are less affected by nontax shifting costs as is the case in private MNCs.

We investigate monthly returns of Belgian stocks listed on the Brussels stock exchange in the period 18382010. Our dataset is based on official quotation lists of the stock exchange, and it takes into account all common stocks that were ever listed on the stock exchange during the period considered. This allows us to investigate the performance of the market as a whole in a consistent way over the nineteenth and twentieth centuries. We find that stock returns strongly depend on dividend income. While real capital appreciation tends to be negative, the dividend yield is remarkably stable over time. Stocks were less risky in the nineteenth century than in the twentieth century. While the equity premium is overall positive, the reward for equity risk is very volatile over time. Even in the long-run equity investors frequently earned a negative return. There are no consistent differences between returns on small stocks and large stocks.

ABSTRACT This study investigates the impact of headquarterssubsidiary interdependencies on performance evaluation and reward systems in multinational enterprises. Headquarterssubsidiary interdependencies refer to the extent to which headquarters and subsidiaries depend on each other to accomplish their tasks. When headquarterssubsidiary interdependencies are present, it becomes more difficult to reward the performance of subsidiary managers because these interdependencies induce noise on subsidiary-level accounting performance measures, while at the same time high levels of goal alignment between headquarters and subsidiary managers are required. Based on survey data from 82 foreign subsidiaries operating in Belgium with headquarters in 14 different countries, our partial least squares path modelling results show that as headquarterssubsidiary interdependencies increase, headquarters use more participative performance evaluation and consider more the effects of uncontrollable factors on subsidiaries performance when rewarding subsidiary managers. More importantly, while prior research suggests that interdependencies induce noise on unit-level accounting performance measures, our results indicate that participative performance evaluation may mitigate the noise so that headquarters still rely on subsidiary formula-based compensation using accounting measures to reward subsidiary managers.

This study investigates the financial disclo- sure policy of small and medium-sized enterprises listed on a stock market with very low disclosure requirements: the Free Market of the Euronext Stock Exchange. In contrast to firms listed on a regulated stock market, firms on the Free Market do not have any obligation to disclose periodic or price-sensitive i nformation. We investigate the determinants of voluntary fi nancial disclosure and its influence on stock liquidity. Our results suggest that firms disclose more financial info rmationwhentheyarelikely to benefit from disclosure. Firms especially disclose when they issue equity. Voluntary disclosure also has a significant positive effect on stock liquidity, consistent with disclosure reducing information asymmetry

Drawing on a set of insurance contracts brokered in Antwerp in 1562–1563, we demonstrate that by that time Antwerp hosted a sophisticated, large, and international market for marine insurance in which small and large traders could acquire and sell insurance, backed by the intermediation of a large broker, Juan Henriquez who functioned as an open-access institution. Using information from Henriquez's ledgers which was also available to underwriters, we find that insurance premiums reflected the underlying risk and that agents were able to determine the effect of different contract parameters.

We investigate how the presence of an-outside CEO is related to the financing policy of privately held family firms, taking into account the degree of family control via the board of directors. For a sample of 367 Belgian firms we find that family firms with an outside CEO have a lower leverage, although they take more entrepreneurial risk. The negative relation between the presence of an outside CEO and leverage is more pronounced for long-term debt than for short-term debt. Family control via the board of directors reduces the effect of an outside CEO on entrepreneurial risk and leverage. (C) 2017 Elsevier Ltd. All rights reserved.

We investigate whether the Great Recession induced a “flight home” effect in internal capital markets of European multinational firms. Using a difference-in-difference approach, we find a significant reduction in group borrowings by subsidiaries of European multinationals in Italy since 2008, compared to a propensity score matched sample of subsidiaries of local business groups. While the reduction in group borrowings by multinational subsidiaries is partially counterbalanced by an increase in bank borrowings, multinational subsidiaries reduced their investments more than local group subsidiaries. These effects are significantly stronger for subsidiaries of multinationals headquartered in a European country that has been hit harder by the Great Recession. The reduction in group borrowings is larger when the foreign parent is located at a greater distance from subsidiary.

In this article, we calculate a market-weighted return index for the 20 largest stocks listed on the Brussels Stock Exchange over the period 1833–2005, based on a new, unique and high-quality database. We find that this index captures the most important stylised facts of the value-weighted return of all shares listed on the Brussels Stock Exchange in this period. Our results support the empirical practice of concentrating on just the largest stocks. The indices we construct are based on one of the longest Belgian time series available. The indices take into account the exact dividends, the timing of the dividend cash flows and all capital operations. We are therefore able to decompose total returns into capital gain returns and dividend returns, which is not possible with most historical return series. We show that, to construct a credible return index, it is crucial to fully take into account dividends. http://dx.doi.org/10.1017/S0968565011000187 Published for the European Association for Banking and Financial History

1) Contact Information Name: Marc Deloof Preferred E-mail Address: marc.deloof@ua.ac.be Mailing Address: Department of Accounting and Finance, Prinsstraat 13, 2000 Antwerp, Belgium Professional Title: Associate Professor 2) Educational Background Current Institutional Affiliation: University of Antwerp Highest Degree Obtained: PhD Current Number of Refereed Publications: 11 3) Disciplinary Expertise: Finance Accounting 4) Governance Expertise: (check all that apply) Board of Directors Ownership Structure Market for Corporate Control Legal System 5) Country Expertise: (check all that apply) Other: Belgium 6) Theoretical expertise: (check all that apply) Agency Theory Transaction Cost Theory Efficient Markets Theory 7) How interested are you in joining our editorial review board which requires members to review roughly one manuscript per month, and provide four-week or less review turnaround times? In turn for your service, you help to raise the stature of the journal, your name is printed on the inside cover of the journal and on Blackwell?s website, you receive free paper copies of the journal, and gain insight into cutting-edge issues related to international corporate governance. Very Interested 8) How interested are you in serving as an ad-hoc reviewer for CGIR in the future? While the expectations for this role are less formal and acknowledgement of your services come once a year on a thank you page in the December issue, you do make a valuable contribution to the journal, keep in touch with cutting-edge research, and position yourself for a role as a future editorial board member in the future, if you so desire. Very Interested (Deloof, Marc)

This study examines the dividend policies of privately held Belgian companies, differentiating between stand-alone companies and those affiliated with a business group. We find that privately held companies typically do not pay dividends. Compared to public companies, they are less likely to pay dividends and they have lower dividend payouts. Our results also suggest that group companies pay more dividends than stand-alone companies, consistent with the hypothesis that tax-exempt group firms redistribute dividend payments on the group's internal capital market. Group companies pay higher dividends if they have minority shareholders. © 2010 Blackwell Publishing Ltd.

In this article the authors study the impact of a family business transfer on the financial structure and performance based on a sample of 152 small- to medium-sized businesses. The aim is to identify the effects of a succession by relying on panel data gathered over the period 1991 to 2006 resulting in more than 2,000 firm–year observations. The main findings are that a transfer from the first to the second generation negatively influences the debt rate of the company, whereas in successions between later generations this effect is reversed. With respect to firm growth, analyses indicate that in first-generation companies the growth rate decreases after the transition, whereas in next-generation firms no effect on the growth level can be identified. Finally, no evidence is found that a family firm's profitability is affected by succession, which shows that a transfer should not necessarily be seen as a negative event in the life cycle of a family business.

We investigate the determinants of corporate financial reporting in an unregulated setting. Prior to the First World War, limited liability companies in Belgium were obliged to publish financial statements, but financial reporting was virtually unregulated. Investor protection was generally very poor. Nevertheless, Belgian stock markets were booming. While the amount of information disclosed in the financial statements was generally low relative to the current levels of disclosure, there was significant variation in financial reporting across firms. Our results suggest that financial reporting was significantly affected by universal bank affiliations, bond financing and stock returns. Dividends were a substitute for income statement transparency

This paper examines the relation between private equity (PE) investors' involvement and their portfolio firms' earnings quality. We operationalize earnings quality through comparative analyses of conditional loss recognition timeliness. For a sample of unlisted Belgian firms, we find that PE involvement increases a firm's willingness to recognize losses more timely as compared to industry, size and life-cycle matched non-PE backed firms. Further, we document more powerful earnings quality effects for firms backed by independent and captive PE-investors as compared to firms backed by government-related PE-investors. Finally, we find no systematic variation in earnings quality across different levels of PE ownership. Our results are robust to the inclusion of various controls and remain unaffected when we consider the endogeneity of PE investments and compare pre- and post PE investment years. The current results provide novel evidence towards the understanding of PE investors' governance implications for portfolio firms' earnings quality

We investigate the valuation and the pricing of initial public offerings (IPOs) by investment banks for a unique dataset of 49 IPOs on Euronext Brussels in the 19932001 period. We find that for each IPO several valuation methods are used, of which Discounted Free Cash Flow (DFCF) is the most popular. The offer price is mainly based on DFCF valuation, to which a discount is applied. Our results suggest that DDM tends to underestimate value, while DFCF produces unbiased value estimates. When using multiples, investment banks rely mostly on future earnings and cash flows. Multiples based on post-IPO forecasted earnings and cash flows result in more accurate valuations.

Manuscript Type: Empirical Research Question/Issue: It is fairly well established that business group affiliation can compensate for relatively weak institutions in emerging markets, and in Japan. However, business groups are also common in the EU, and there have not yet been any studies of business group affiliation and firm performance in the EU. Consequently, we investigate how business group affiliation affects firm performance in Belgium. Research Findings/Insights: We find that operating profitability of group companies is significantly lower than that of stand-alone companies, while group companies have more volatile profits than stand-alone companies. Operating profitability of group companies does not depend on the extent of group diversification. Internal capital markets transfer funds from good performers to poorly performing group companies. The impact of group affiliation on profitability does not depend on group age or group ownership. Theoretical Implications: Our study is, to the best of our knowledge, the first to investigate how affiliation with a business group affects company performance in a developed country other than Japan. The results raise the question why business groups endure in so many developed countries with good investor protection and well-developed capital markets. Some explanations proposed in the literature are not confirmed. Practical Implications: Our study offers insights to policy makers and practitioners on the value and the role of business groups in developed countries. The results raise doubts about the value of these groups in such countries and suggest that policy makers may want to consider dismantling business groups in EU countries.

This study investigates whether modern theories can explain capital structure in a historical environment which was characterized by poor investor protection, booming stock markets and strong banks, and in which taxes did not affect leverage. Our results, based on a unique, hand-collected sample of 556 firm-year observations for 129 listed companies in Belgium before World War I, are remarkably similar to findings for present-day samples. Leverage was positively related to asset tangibility, firm size and firm age, and it was negatively related to profitability and prior stock returns. Bank relationships were associated with lower leverage.

We investigate the evolution of entrepreneurial firms’ debt policies over a period of 15 years after startup, considering leverage, debt specialization, debt maturity and debt granularity. Our analysis is based on a unique sample covering all non-financial Belgian firms founded between 1996 and 1998. We find that the debt policy of entrepreneurial firms is remarkably stable over time. The debt policy in the initial year of operation is a very important determinant of future debt policies, even after controlling for traditional contemporaneous determinants. The founder-CEO has an important impact on the stability of debt policies: the influence of initial debt policies on future debt policies is significantly reduced when the founder-CEO is replaced or when (s)he dies. Combined, our findings support imprinting theory.

We investigate how board characteristics were related to the value of listed Belgian firms in the 19281931 period, when investor protection was weak and firms were hit by the largest financial crisis of the 20th century. We find that firms typically had a large board and many directors held multiple directorships. Most boards included bank directors. While large, busy boards and bankers on the board were positively related to firm value before the crisis, their value significantly decreased from 1929 onwards, suggesting that these boards were less suited to face a crisis. Board busyness seems to be the main driver of negative board effects during the crisis. We also find that riskier firms which had busier and larger boards experienced a larger drop in value.

We examine the determinants of the debt-equity choice and the debt maturity choice for a sample of small, privately held firms in a creditor oriented environment. Our results, which are based on 4,706 firm-year observations for 1132 Belgian firms in the period 19962000, generally confirm the role of asymmetric information and agency costs of debt as major determinants of the financial structure of privately held firms. High growth firms and firms with less tangible assets have a lower debt ratio. We also find that more profitable firms have less debt. Firms tend to match the maturity of debt with the maturity of their assets. Growth options do not seem to influence debt maturity, which would suggest that the underinvestment problem is resolved by lowering leverage and by bank monitoring, not by reducing debt maturity. Credit risk is also an important determinant of debt maturity: firms with higher credit risk borrow more on the short term. Finally, in contrast to most studies on the financial structure of companies, we find that larger firms tend to have a higher debt ratio and a shorter debt maturity.

International audience; In recent years, shareholders, regulators, and academics have become increasingly interested in how multinational enterprises (MNEs) can ensure sound corporate governance throughout all entities within a firm. One important mechanism available to MNEs for improving their global governance is the subsidiary board of directors. However, to date scant academic research has focused on the roles of subsidiary boards and the factors that influence their involvement in different roles. Using survey data from a sample of MNE subsidiaries operating in Belgium with headquarters in 14 different countries, we find that a subsidiary board performs four roles: control, strategy, coordination, and service. Further, a subsidiary board is more involved in control, strategy, and service roles if the subsidiary operates only in the local market, independently from the headquarters (the local implementer subsidiary). In particular, the board of the local implementer subsidiary is more involved in strategy and coordination roles when more directors are headquarters country nationals. Our findings collectively suggest that the subsidiary board facilitates a subsidiary's pursuit of its strategic objective and helps to manage the headquarters–subsidiary agency problem. Moreover, subsidiary directors' characteristics influence the subsidiary board's ability to perform its roles.

In Belgian corporate groups, complex pyramidal structures and interlocking ownership lead to separation of ownership and control. This may generate incentives for the controlling shareholder to divert resources within the group through intragroup equity sales. This in turn could lead to significant private benefits at the expense of the minority shareholders. We test this hypothesis by investigating the stock price reaction to the announcement of equity sales in Belgian groups. Our results suggest that intragroup equity sales create value for minority shareholders. Equity sales between group members and non-group members do not seem to affect the value for minority shareholders in Belgian groups.

The determinants of liquid reserves are investigated for a sample of 1038 large Belgian non-financial firms in the 1992–94 period. The results confirm the hypothesis that the terms of payment of intragroup claims can be adjusted to the firm’s liquidity needs, thereby reducing the need for liquid reserves. Furthermore, the results confirm the transaction motive for holding liquid reserves, but only partially confirm the precautionary motive. Finally, the results indicate that liquid reserves play a significant role in the financing of new investments, as predicted by the pecking order model of Myers and Majluf (1984).

For a sample of large Belgian non-financial firms quoted on the Brussels stock exchange, it is found that investment of firms borrowing on an internal capital market is not determined by internal cash flow, while cash flow has a significant effect on investment for the other firms in the sample. Further analysis indicates that the cash flow effect is caused by overinvestment, not by financing constraints. No evidence is found that firms borrowing on an internal capital market in turn transfer surpluses of funds to other group members by investing in financial fixed assets. © 1998 John Wiley & Sons, Ltd.

This study provides evidence that Belgian firms affiliated to a business group (holding) manage their earnings more than stand-alone firms. Earnings management is especially more prevalent in fully owned group firms compared to group firms with minority shareholders. This evidence is consistent with the hypothesis that controlling shareholders face fewer constraints to manage earnings if opportunistic earnings management cannot adversely affect the value of minority shareholders and is inconsistent with the claim that group firms would engage in earnings management to hide controlling shareholders' self-serving transactions.On the incentive part, we find that group firms strategically manage earnings in response to tax incentives. More specifically, we show that signed discretionary accruals of group firms depend significantly more on the marginal tax rate status of the firm as compared to independent firms. Finally, we document that earnings management is particularly facilitated through intra-group transactions. © 2014 University of Illinois. All rights reserved.

Information serves an important role in the governance process and, despite the presence of disclosure regulations, there are many private and public firms that voluntarily provide more information than required. This chapter considers the advantages and disadvantages of voluntary disclosure at the firm and societal levels. It studies the empirical literature on the connection between a firm’s disclosure policies and its corporate governance, which reveals mixed evidence. The chapter determines that unforeseen events may be important and calls for further studies on disclosure in private firms.

We use the recent financial crisis to investigate financing constraints of private small and medium-sized enterprises (SMEs) in Belgium. We hypothesize that SMEs with a large proportion of long-term debt maturing at the start of the crisis had difficulties to renew their loans due to the negative credit supply shock, and hence could invest less. We find a substantial variation in the maturity structure of long-term debt. Firms which at the start of the crisis had a larger part of their long-term debt maturing within the next year experienced a significantly larger drop in investments in 2009. This effect is driven by firms which are ex ante more likely to be financially constrained. Consistent with a causal effect of a credit supply shock to corporate investments, we find no effect in placebo periods without a negative credit supply shock.

We investigate the value of stable ownership for a large sample of European firms from 2005 to 2010, using the global financial crisis as an exogenous shock and using pre-and post-crisis periods as benchmarks. Controlling for ownership concentration, we find that stable blockholder ownership results in higher stock returns during the crisis, but not before and after the crisis. The positive effect of stable ownership applies to both family blockholders and institutional blockholders. While the beneficial effect of stable ownership generally does not depend on investor protection, stable institutional blockholders are more valuable in countries with weaker investor protection. During the financial crisis, ownership stability is also associated with lower idiosyncratic risk and higher investments.

This study investigates the financial disclosure policy of small and medium-sized enterprises listed on a stock market with very low disclosure requirements: the Free Market of the Euronext Stock Exchange. In contrast to firms listed on a regulated stock market, firms on the Free Market do not have any obligation to disclose periodic or price-sensitive information. We investigate the determinants of voluntary financial disclosure and its influence on stock liquidity. Our results suggest that firms disclose more financial information when they are likely to benefit from disclosure. Firms especially disclose when they issue equity. Voluntary disclosure also has a significant positive effect on stock liquidity, consistent with disclosure reducing information asymmetry.