Do Measures of Financial Constraints Measure Financial Constraints--论文代写范文精选

最大的私营企业和上市公司低于投资级评级一致性的假设，也有自己经济实力的限制。金融约束如何影响公司行为，回答这一问题需要一种方法来识别有限公司操作合理的准确性。下面的essay代写范文进行讨论。

Abstract 
  Financial constraints are not directly observable, so empirical research relies on indirect measures. We evaluate how well five popular measures (paying dividends, having a credit rating, and the Kaplan-Zingales, Whited-Wu, and Hadlock-Pierce indices) identify firms that are financially constrained, using three novel tests: an exogenous increase in a firm’s demand for credit; exogenous variation in the supply of bank loans; and the tendency for firms to pay out the proceeds of equity issues to their shareholders (“equity recycling”). We find that none of the five measures identifies firms that behave as if they were constrained: public firms classified as constrained have no trouble raising debt when their demand for debt increases, are unaffected by changes in the supply of bank loans, and engage in equity recycling. On the other hand, the behavior of all but the largest privately held firms and public firms with below investment-grade ratings is consistent with (but does not necessarily prove) the hypothesis that they are financially constrained.

  How financial constraints affect firm behavior
  Answering it requires a way to identify constrained firms with reasonable accuracy. Since the financial constraints a firm faces are not directly observable, the empirical literature finds itself having to rely on indirect proxies (such as having a credit rating or paying dividends) or on one of three popular indices based on linear combinations of observable firm characteristics such as size, age, or leverage (the Kaplan-Zingales, Whited-Wu, and Hadlock-Pierce indices). In this paper, we ask a simple question: how well do these measures of financial constraints identify firms that are plausibly financially constrained? The short answer is: not well at all. Our empirical strategy is based on the premise that firms that are financially constrained effectively face an inelastic supply of external capital: raising external capital quickly becomes ever more expensive (reflecting a steep supply curve) and in the limit the firm is shut out of the capital markets (a vertical supply curve).2 

  In contrast, firms able to raise substantial amounts of external capital without much of an increase in the cost of capital are plausibly unconstrained. We propose three tests to identify behavior that is sufficient (but not necessary) to conclude that a firm does not face an inelastic supply of capital curve and thus is not plausibly financially constrained. The traditional way to estimate a supply curve is to exploit exogenous variation in demand. This is precisely what our first test does. Specifically, we use a natural experiment first analyzed by Heider and Ljungqvist (2013), consisting of 43 staggered increases in corporate income taxes levied by individual U.S. states. Debt confers a tax benefit on firms because the IRS allows firms to deduct interest payments from taxable income. All else equal, therefore, an increase in tax rates raises the value of debt tax shields and thereby increases firms’ demand for debt. 

  The observed sensitivity of a firm’s borrowing to tax increases is then a natural measure ofthe local elasticity of the credit supply curve it faces. Our second test uses plausibly exogenous variation in the supply of a specific form of capital: bank loans made in a firm’s home state. The intuition for this test is that an unconstrained firm should not be sensitive to small supply shocks to a specific form of capital (as long as its investment opportunity set remains unchanged): if bank loans become, say, less plentiful, it can easily substitute toward the next best source of funding. A financially constrained firm, on the other hand, will be unable to substitute towards other sources of capital when bank loans become scarcer, as its overall supply curve is inelastic. The source of exogenous variation we exploit for Test 2 is due to changes in state taxes on banks. Banks often have a unique status for state tax purposes (Koch (2005)). 

  They are taxed on a different schedule from corporations and so are subject to their own tax changes, which tend not to coincide with changes in the state corporate income taxes we use in Test 1. When a state increases its bank tax, it reduces the after-tax profit on every loan made to borrowers located in the state, regardless of the lender’s own location. Variation in a state’s bank taxes can thus induce variation in the supply of loans available to firms located in the state. Our third test focuses on the supply of equity. It exploits the recently documented tendency of firms to pay out the proceeds of equity issues to their shareholders, a phenomenon FarreMensa, Michaely, and Schmalz (2013) call “equity recycling.” A firm that pays out much of the proceeds obtained from issuing equity is unlikely to be financially constrained. Section 3 discusses the identifying assumptions and limitations of each test at length. The key identification concern for Tests 1 and 2 is that state-level changes in tax rates coincide with unobserved economic shocks that might themselves affect the local demand and supply of credit. We address this concern by means of a difference-in-differences approach, using as controls only firms that are headquartered in states that border a tax-change state. This helps hold local economic conditions constant, isolating the effect of tax changes on firms’ demand for debt.

  To validate that each test has power and does not mechanically identify every subsample of U.S. firms as financially unconstrained , we use two sets of firms that are plausibly constrained: private (i.e., non-stock market listed) firms and public firms with a junk bond credit rating. As expected, we find that neither private firms (especially small ones) nor junk bond issuers increase their borrowing when their tax rates go up (Test 1); both (small) private firms and junk bond issuers are highly sensitive to variation in the local supply of bank loans (Test 2); and neither private firms nor junk bond issuers engage in equity recycling (Test 3). Our three tests thus appear to have enough power to identify subsamples of firms that are plausibly financially constrained.

Yet when applied to the five most popular measures of financial constraints, all three tests paint a strikingly consistent picture: public firms that the literature classifies as ‘constrained’ do not behave in ways that suggest they face inelastic capital supply curves. Specifically, for each of the five constraints measures, we find that the average ‘constrained’ firm is able to: 
• borrow more when it makes sense to do so (i.e., in response to an increase in state corporate income tax rates); 
• maintain borrowing levels when banks lending in its home state are hit with a tax shock that shifts the local supply of bank loans; 
• raise equity and at the same time increase its payouts to shareholders.
These patterns are hard to reconcile with the notion that these firms are truly financially constrained. What is more, we find little difference in the magnitudes of the responses of ‘constrained’ and ‘unconstrained’ firms when hit with shocks to their credit demand or local bank loan supply. Nor do firms differ systematically in the extent of their equity recycling.3

  51Due网站原创范文除特殊说明外一切图文著作权归51Due所有；未经51Due官方授权谢绝任何用途转载或刊发于媒体。如发生侵犯著作权现象，51Due保留一切法律追诉权。
  更多essay代写范文欢迎访问我们主页 www.51due.com 当然有essay代写需求可以和我们24小时在线客服 QQ:800020041 联系交流。-X