Suchergebnisse

Political representation in the national assemblies is geographic, & elected representatives care about who gains & who loses in their electoral districts. Since legislators are re-election oriented, their chances of electoral success are directly associated with the net benefits delivered to their constituents. From this perspective, geography is not only the basis for political organization & representation, but also the hallmark of distributive politics. In this context, it is likely that locally elected politicians & party leaders standing in national elections would tend to cooperate in pre-election dates. In this paper, we argue that local administrators have an incentive to manipulate local government outlays in connection with national election dates to enhance the re-election prospects of their national party leaders. In particular, given the matching character of national grants with local investment spending, we expect that, in pre-election dates, local policymakers would be induced to raise investment outlays beyond their standard growth rate. This would determine inefficient local public spending as a result of the geographically based system of democratic representation. The case study under investigation is the behavior of Italian local policymakers in connection with national election dates. 1 Table, 30 References. Adapted from the source document.

Italy cannot spend the European funds as it should. The largest delays are in the least developed regions. To understand what the main reasons for these delays are, we have examined the ROPs of Sicily, the region with the greatest delay in terms of expenditure of the two programs, the ERDF and the ESF OPs.

Purpose
Using a sample of US firms more likely to be affected by agency problems, the purpose of this paper is to investigate the relationship between corporate value and financial policies and to study whether credit market freedom (CMF) affects this relationship.


Design/methodology/approach
The authors identify a sub-sample of non-financial US firms potentially affected by agency problems using a joint criterion of over-investment and high cash-holdings. A generalized method of moment econometric framework is then used to estimate the impact of cash-holdings and leverage policies on firm value for this sub-sample. This exercise is also performed by taking into account the level of CMF of the state where the firm operates.


Findings
The results show that the relationship between cash-holdings – or leverage – and firm value is "U-shaped." In addition, when the authors focus on the role played by the level of CMF, the authors find a number of interesting facts: CMF facilitates the firms' access to external finance, thereby relaxing the need of internal funds for investing; the relationship between cash-holdings and firm value is "U-shaped" only in states enjoying high levels of CMF; the probability of observing firms more likely to be affected by agency problems is higher in states with high levels of CMF.


Research limitations/implications
The empirical findings provide important insights to policymakers, shareholders and practitioners. To policymakers, the results suggest that providing institutional environments with greater CMF can enhance the firm access to external finance, the level of corporate investment and the economic growth. To shareholders, the findings highlight that the conflicts of interest between managers and shareholders may be more severe in states with higher CMF; therefore, adequate financing policies and corporate governance mechanisms must be used to mitigate these conflicts and maximize the firm value. Finally, to practitioners, the evidence suggests that, in valuing a firm, they must take into consideration whether the economic environment provides managers with more freedom to stockpile cash and invest sub-optimally.


Originality/value
The paper contributes to the corporate finance and governance literature in two respects. First, it provides new evidence on the shape of the relationship between cash holdings and firm value for firms affected by empire-building managers. Second, at the best of the knowledge, it is the first corporate finance study, which analyzes the role played by the CMF at the state level on the capital structure and the level of investment of the firms.