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Academic Journal
Finance

“Does firm size matter? Evidence on the impact of liquidity constraints on firm investment behavior in Germany”

This paper examines the link between liquidity constraints and investment behavior for German firms of different sizes from 1970 to 1986. Results indicate that medium sized firms appear to be more liquidity constrained in their investment behavior than either the smallest or largest firms in the study, suggesting that the unique German infrastructure designed to assist the small firm has indeed succeeded in alleviating, to some degree, such liquidity constraints. Findings also support the hypothesis that the emerging competition and internationalism which characterized the German financial markets in the 1980s, have been improving access to capital for some groups of firms.
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1-17 pages 2001 International Journal of Industrial Organization David Audretsch Julie Ann Elston View on: Google Scholar

Academic Journal
Finance

“Does Inclusion in a Smaller S&P Index Create Value?”

This study finds overall increases in equity value surrounding addition to the S&P SmallCap and MidCap indexes from 1996 to 2003 and investigates sources of the value gains. Following addition, there are significant increases in proxy variables for stock liquidity and investor recognition, and changes in these variables are impounded into the permanent component of announcement share price revisions. We also find that changes in capital investment intensity are increasing in changes in stock liquidity, consistent with a reduction in the cost of capital following index addition.
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307-330 pages 2010 The Financial Review John Becker Blease Donna Paul View on: Google Scholar

Academic Journal
Finance

“Effect of price limits: initial public offerings versus seasoned equities”

In this paper, we examine the effect of price limits on initial public offerings (IPOs) using Taiwanese data. On average, it takes 6.24 days for IPOs to reach their equilibrium prices in the presence of a 7% price limit. We compare IPOs with their industry- and size-matched seasoned equities (MSEs) and observe higher volatility levels on subsequent days for IPOs than for MSEs. However, the higher volatility decays within 2 days. Lower price limits interfere with trading and lead to higher trading activity on subsequent days for IPOs than for MSEs. We also observe delayed price discovery for both IPOs and MSEs. Overall, our results provide evidence about the effect of price limits on IPOs and generate important regulatory implications for countries imposing price limits on IPOs.
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295-318 pages 2009 Yong Kim Jimmy Yang View on: Google Scholar

Academic Journal
Finance

“Emerging from bankruptcy with when-issued trading”

We examine the set of firms that emerged from Chapter 11 bankruptcy and traded on a when-issued basis prior to their official return to the regular way in NASDAQ, Amex, or NYSE. We find that this when-issued market is liquid and price efficient. The when-issued closing price is a good indicator of the first closing price in the regular way market. Emerging firms that have when-issued trading experience lower regular way volatility and smaller relative spreads than those without when-issued trading. Our probit regressions show that firm size is an important determinant of the adoption of when-issued trading.
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445-467 pages 2012 The Financial Review Ray Brooks Jimmy Yang View on: Google Scholar

Academic Journal
Finance

“Emerging market crises and US equity market returns”

We find contagion effects are present in US small size portfolios during emerging market crises due to risk and liquidity concerns. Investors display flight from risk during emerging market crises, and as a result, safer larger stocks exhibit positive abnormal returns. We find little evidence of contagion in aggregate excess US market returns, indicating studies that focus on national aggregates may miss important within market dynamics during emerging market crises. The international dynamics that we document have important implications for investors, even when they may have limited global exposure.
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2011 David Berger Harry Turtle View on: Google Scholar

Academic Journal
Finance

“Employees, Firm Size, and Profitability in U.S. Manufacturing Industries”

This study examines the relation between firm size and profitability within 109 SIC four-digit manufacturing industries.  Depending on our measure of profitability, we find that profitability increases at a decreasing rate and eventually declines in up to 47 of our industries.   No relation between profitability and size is found in up to 52 of our industries.  These two categories account for 97 of our 109 industries.  Profitability continues to increase as firms become larger in up to 11 industries.   Hence, the relation between size and profitability is industry specific.  But, regardless of the shape of the size profitability function, we find that profitability is negatively correlated with the number of employees for firms of a given size measured in terms of total assets and sales. 
Details

7-23 pages 2010 John Becker Blease Fred Kaen Ahmad Etebari Hans Baumann View on: Google Scholar

Academic Journal
Finance

“Environmental, Social & Governance (ESG) Initiatives & Firm Performance: The Importance & Role Of Firm Size”

This study employs an Effect Decomposition Regression (EDR) framework to analyze the impact of ESG initiatives on firm performance, focusing on the importance of firm size. A key finding of this study is that firm size matters in characterizing the relationship between ESG and performance. For large firms, ESG has a significant impact on total revenues, which is characterized by a U-shaped relationship where ESG initiatives initially have a negative impact on performance, and as firm investment on initiatives expand, the impact shifts to a positive influence as scores rise. On the other hand, smaller firms exhibit a monotonically increasing or incremental benefit from ESG engagement. This research underscores the necessity of not just controlling for size but examining ESG-performance behavior by firm size. From a policy perspective, it is clear that before universally advocating for ESG as a value enhancing practice for all firms, one must consider firm size.
Details

Julie Ann Elston Ku-Hsieh Chen Yingchao Zhang Pei-Hwa Chen Kang-Hua Hsu