Copyright (c) 2010 All rights reserved. http://works.bepress.com/matteo_arena Recent documents in Matteo P. Arena en-us Tue, 16 Nov 2010 07:13:48 PST 3600 http://works.bepress.com/matteo_arena/10 http://works.bepress.com/matteo_arena/10 Thu, 09 Sep 2010 09:29:44 PDT We provide new evidence that differences in international tax rates and tax regimes affect multinational firms' debt location decisions. Our sample contains 8287 debt issues from 2437 firms headquartered in 23 different countries with debt-issuing subsidiaries in 59 countries. We analyze firms' marginal decisions of where to issue debt to investigate the influence of a comprehensive set of tax-related effects, including differences in personal and corporate tax rates, tax credit and exemption systems, and bi-lateral cross-country withholding taxes on interest and dividend payments. Our results show that differences in personal and corporate tax rates, the presence of dividend imputation or relief tax systems, the tax treatment of repatriated profits, and inter-country withholding taxes on dividends and interest significantly influence the decision of where to locate debt and the proportion of debt located abroad. Our results are robust to firm and issue specific factors and to the effect of legal regimes, debt market development, and exchange rate risk. Matteo P. Arena http://works.bepress.com/matteo_arena/9 http://works.bepress.com/matteo_arena/9 Fri, 11 Jun 2010 09:11:45 PDT The main purpose of this study is to examine the determinants of the corporate choice between different forms of debt financing. By analyzing the most comprehensive sample of U.S. corporate debt issues to date, I find that firms that issue 144A debt have significantly lower credit quality and higher information asymmetry than firms that issue traditional non-bank private debt. Further, the study shows that traditional private placements, rather than bank loans, are the favorite private debt source for firms with good credit quality. I also show that the firm characteristics of traditional private debt issuers have significantly changed after 1990 through to 2003. My results suggest the following pecking order of debt choices which is conditional on credit quality. High credit quality firms prefer public bond offerings and small firms, with good credit quality, are more likely to issue traditional private debt. A large group of firms characterized by moderate credit quality make extensive use of bank loans and poor credit quality firms preferentially issue 144A debt. Matteo P. Arena http://works.bepress.com/matteo_arena/8 http://works.bepress.com/matteo_arena/8 Mon, 01 Mar 2010 06:30:21 PST This paper investigates the influence of managerial entrenchment on private placements by examining the firm's decision to appoint representatives of the private investors to the board without shareholder approval. By analyzing a sample of U.S. firms that appoint directors in combination with private offerings between 1995 and 2000, we find that firms with greater managerial entrenchment are more likely to bypass shareholder approval. Firms that bypass shareholders are less likely to appoint independent directors or to elect one of these directors as chairman. We also show that the market reacts more positively to the private offering announcement when the firm submits its board candidates for shareholder approval. Further, firms that bypass approval underperform compared to firms that obtain it. Overall our findings suggest that managers avoid shareholder approval to perpetuate entrenchment. Matteo P. Arena http://works.bepress.com/matteo_arena/7 http://works.bepress.com/matteo_arena/7 Mon, 01 Mar 2010 06:27:13 PST We examine how governance characteristics are related to the corporate choice between public and private debt. We find that firms with fewer takeover defenses and larger outside blockholder ownership are more likely to borrow from banks and to issue 144A debt. We also document that public debt cost is more sensitive to takeover exposure than bank debt cost. These results are consistent with the hypothesis that banks mitigate the expected negative effect of takeovers on debt value through covenants and debt renegotiations. Moreover, we show that firms with weaker internal monitoring are less likely to borrow from banks. Matteo P. Arena http://works.bepress.com/matteo_arena/6 http://works.bepress.com/matteo_arena/6 Mon, 18 Jan 2010 07:09:40 PST In this paper we examine the market reaction—price and volume—to the appearance of a firm in the Who’s News column of The Wall Street Journal. We differentiate between those firms whose articles are accompanied by a picture of an executive and a control set of firms whose articles on the same day are not accompanied by a picture. The results show a more pronounced market reaction to the “cum picture” articles, consistent with the incomplete information theory of Merton [1987] and the heuristic-based familiarity hypothesis. There is no evidence of significant long-run abnormal performance for the sample firms. Matteo P. Arena http://works.bepress.com/matteo_arena/3 http://works.bepress.com/matteo_arena/3 Thu, 15 Oct 2009 12:50:16 PDT Matteo P. Arena http://works.bepress.com/matteo_arena/1 http://works.bepress.com/matteo_arena/1 Thu, 15 Oct 2009 12:40:07 PDT In this paper we examine the market reaction—price and volume—to the appearance of a firm in the Who's News column of The Wall Street Journal. We differentiate between those firms whose articles are accompanied by a picture of an executive and a control set of firms whose articles on the same day are not accompanied by a picture. The results show a more pronounced market reaction to the “cum picture” articles, consistent with the incomplete information theory of Merton [1987] and the heuristic-based familiarity hypothesis. There is no evidence of significant long-run abnormal performance for the sample firms. Matteo P. Arena