Publication:
Corporate Risk around the World

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dc.contributor.authorClaessens, Stijn
dc.contributor.authorDjankov, Simeon
dc.contributor.authorNenova, Tatiana
dc.date.accessioned2014-08-28T19:49:00Z
dc.date.available2014-08-28T19:49:00Z
dc.date.issued2000-01
dc.description.abstractWeaknesses in the corporate sector have increasingly been cited as important factors in financial crises in both emerging markets and industrial countries. Analysts have pointed to weak corporate performance and risky financing patterns as major causes of the East Asian financial crisis. And some have argued that company balance sheet problems may also have played a role, independent of macroeconomic or other weaknesses, including poor corporate sector performance. But little is known about the empirical importance of firm financing choices in predicting and explaining financial instability. Firm financing patterns have long been studied by the corporate finance literature. Financing patterns have traditionally been analyzed in the Modigliani-Miller framework, expanded to incorporate taxes and bankruptcy costs. More recently, asymmetric information issues have drawn attention to agency costs and their impact on firm financing choices. There is also an important literature relating financing patterns to firm performance and governance. Several recent studies have focused on identifying systematic cross-country differences in firm financing patterns - and the effects of these differences on financial sector development and economic growth. They have also examined the causes of different financing patterns, particularly countries' legal and institutional environments. The literature has devoted little attention to corporate sector risk characteristics, however, aside from leverage and debt maturity considerations. Even these measures have been the subject of few empirical investigations, mainly because of a paucity of data on corporate sectors around the world. Building on data that have recently become available, the authors try to fill this gap in the literature and shed light on the risk characteristics of corporate sectors around the world. They investigate how corporate sectors' financial and operating structures relate to the institutional environment in which they operate, using data for more than 11,000 firms in 46 countries. They show that: 1) the origins of a country's laws, the strength of its equity and creditor rights, and the nature of its financial system can account for the degree of corporate risk-taking. 2) In particular, corporations in common law countries and market-based financial systems have less risky financing patterns. 3) Stronger protection of equity and creditor rights is also associated with less financial risk.en
dc.identifierhttp://documents.worldbank.org/curated/en/2000/01/438992/corporate-risk-around-world
dc.identifier.doi10.1596/1813-9450-2271
dc.identifier.urihttps://hdl.handle.net/10986/19855
dc.languageEnglish
dc.language.isoen_US
dc.publisherWorld Bank, Washington, DC
dc.relation.ispartofseriesPolicy Research Working Paper;No. 2271
dc.rightsCC BY 3.0 IGO
dc.rights.urihttp://creativecommons.org/licenses/by/3.0/igo/
dc.subjectACCOUNTING
dc.subjectAGENCY PROBLEMS
dc.subjectASYMMETRIC INFORMATION
dc.subjectBALANCE SHEET
dc.subjectBANKING SYSTEM
dc.subjectBANKRUPTCY
dc.subjectBANKRUPTCY PROCEEDINGS
dc.subjectBOOK VALUE
dc.subjectCAPITAL FLOWS
dc.subjectCAPITAL GAINS
dc.subjectCAPITAL MARKETS
dc.subjectCAPITALIZATION
dc.subjectCASH FLOW
dc.subjectCASH FLOWS
dc.subjectCONTRACT ENFORCEMENT
dc.subjectCORPORATE FINANCE
dc.subjectCORPORATE GOVERNANCE
dc.subjectCOUNTRY COMPARISONS
dc.subjectCREDIT RISK
dc.subjectCREDITOR
dc.subjectCURRENT ASSETS
dc.subjectDEBT
dc.subjectDEBT FINANCING
dc.subjectDEBTOR
dc.subjectDEVELOPED COUNTRIES
dc.subjectDIVIDENDS
dc.subjectECONOMIC GROWTH
dc.subjectECONOMIC RESEARCH
dc.subjectEMERGING MARKETS
dc.subjectEMPIRICAL EVIDENCE
dc.subjectEMPIRICAL INVESTIGATIONS
dc.subjectEMPLOYMENT
dc.subjectEQUITY MARKETS
dc.subjectEXCHANGE RATES
dc.subjectFINANCIAL CRISES
dc.subjectFINANCIAL CRISIS
dc.subjectFINANCIAL INSTITUTIONS
dc.subjectFINANCIAL INTERMEDIARIES
dc.subjectFINANCIAL LEVERAGE
dc.subjectFINANCIAL LEVERAGE RATIOS
dc.subjectFINANCIAL MARKETS
dc.subjectFINANCIAL RISK
dc.subjectFINANCIAL RISKS
dc.subjectFINANCIAL SECTOR
dc.subjectFINANCIAL STRUCTURE
dc.subjectFINANCIAL STRUCTURES
dc.subjectFINANCIAL SYSTEMS
dc.subjectGDP
dc.subjectGDP DEFLATOR
dc.subjectGNP
dc.subjectGNP PER CAPITA
dc.subjectINFLATION
dc.subjectINTEREST COVERAGE RATIO
dc.subjectINTEREST RATE
dc.subjectINVENTORIES
dc.subjectINVENTORY
dc.subjectLAWS
dc.subjectLEGAL FRAMEWORK
dc.subjectLEGAL PROTECTION
dc.subjectLIQUIDITY
dc.subjectMACROECONOMIC POLICIES
dc.subjectMARKET VALUE
dc.subjectMORAL HAZARD
dc.subjectNET WORKING CAPITAL
dc.subjectOPERATING INCOME
dc.subjectOPERATING LEVERAGE
dc.subjectOPERATIONAL RISKS
dc.subjectPROFITABILITY
dc.subjectPROFITABILITY MEASURES
dc.subjectPROPERTY RIGHTS
dc.subjectQUICK RATIO
dc.subjectREGRESSION ANALYSIS
dc.subjectREORGANIZATION
dc.subjectRETURN ON ASSETS
dc.subjectRETURN ON EQUITY
dc.subjectRETURN ON INVESTMENT
dc.subjectRISK TRANSFER
dc.subjectSAVINGS
dc.subjectSHAREHOLDERS
dc.subjectSHORT TERM DEBT
dc.subjectSTOCK MARKETS
dc.subjectTAX RATES
dc.subjectTIME SERIES
dc.subjectTRANSITION ECONOMIES
dc.subjectVALUATION
dc.subjectWAGES
dc.titleCorporate Risk around the Worlden
dspace.entity.typePublication
okr.crossref.titleCorporate Risk around the World
okr.date.disclosure2000-01-31
okr.date.doiregistration2025-04-10T10:25:31.611741Z
okr.doctypePublications & Research::Policy Research Working Paper
okr.doctypePublications & Research
okr.docurlhttp://documents.worldbank.org/curated/en/2000/01/438992/corporate-risk-around-world
okr.globalpracticeFinance and Markets
okr.guid907571468739464629
okr.identifier.doi10.1596/1813-9450-2271
okr.identifier.externaldocumentum000094946_0001290532172
okr.identifier.internaldocumentum438992
okr.identifier.reportWPS2271
okr.language.supporteden
okr.pdfurlhttp://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2000/02/14/000094946_0001290532172/Rendered/PDF/multi_page.pdfen
okr.sectorOther Finance
okr.sectorFinance
okr.topicEconomic Theory and Research
okr.topicFinance and Financial Sector Development::Financial Intermediation
okr.topicBanks and Banking Reform
okr.topicFinance and Financial Sector Development::Housing Finance
okr.topicEnvironmental Economics and Policies
okr.topicInternational Terrorism and Counterterrorism
okr.topicPayment Systems and Infrastructure
okr.unitFinancial Sector Strategy and Policy Department
okr.volume1
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relation.isAuthorOfPublication.latestForDiscoveryfba0bfb1-41f5-551c-b01c-0969f2250f0c
relation.isSeriesOfPublication26e071dc-b0bf-409c-b982-df2970295c87
relation.isSeriesOfPublication.latestForDiscovery26e071dc-b0bf-409c-b982-df2970295c87
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