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Miss Roxana Mihet
This paper investigates the effects of national culture on firm risk-taking, using a comprehensive dataset covering 50,000 firms in 400 industries in 51 countries. Risk-taking is found to be higher for domestic firms in countries with low uncertainty aversion, low tolerance for hierarchical relationships, and high individualism. Domestic firms in such countries tend to take substantially more risk in industries which are more informationally opaque (e.g. finance, mining, IT). Risk-taking by foreign firms is best explained by the cultural norms of their country of origin. These cultural norms do not proxy for legal constraints, insurance safety nets, or economic development.
Uroš Herman and Tobias Krahnke
In this paper, we investigate whether a firm’s composition of foreign liabilities matters for their resilience during economic turmoil and examine which characteristics determine a firm’s foreign capital structure. Using firm-level data, we corroborate previous findings from the (international) macroeconomic literature that the composition of foreign liabilities matters for a country’s susceptibility to external shocks. We find that firms with a positive equity share in their foreign liabilities were less affected by the global financial crisis and also less likely to default in the aftermath of the crisis. In addition, we show that larger, more open, and more productive firms tend to have a higher equity share in total foreign liabilities.
Uroš Herman and Tobias Krahnke

economy when analyzing the determinants and effects of a country’s aggregate external capital structure. Next, we show the summary statistics for our key variable of interest for firms above or below median size in Table 3 . These conditional statistics shed light on the differential firm’s existence and composition of foreign liabilities across firm size. Looking at the top panel of Table 3 , we find that large firms (above the median) are more likely to have any foreign liabilities. Almost 40 percent of large firms have foreign debt or equity exposure, while only

Michael Walton, Anusha Nath, and Mr. Ashoka Mody

persistent profits and a positive association between change in the profit rate and market share reflect market power or differential firm efficiency. We explore this distinction in more detail below. The coefficient on the sector concentration variable is insignificant in the Kiviet specification, and when (just) significant in other specifications it has a negative sign, implying higher measured concentration is associated with lower profitability. The profit rate is robustly and positively associated with firm-level growth in sales—more dynamic firms are more

Ms. Enrica Detragiache, Mr. Gianni De Nicolo, and Ms. Senay Agca
We study how credit market deregulation and increased international financial openness have changed corporate borrowing. The evidence comes from a large panel of publicly traded firms in 38 countries over the period 1994-2002. Reforms are measured with a comprehensive new index that tracks six separate dimensions. We find that these transformations have increased leverage and lengthened debt maturity in advanced economies, as expected, suggesting that in these countries corporate credit markets have become deeper. In emerging economies, the picture is more mixed: more international openness has led to more leverage but shorter debt maturity. Financial sector reforms have reduced leverage, while their effects on debt maturity have differed depending on the type of reform. Importantly, the differential impact of openness and reforms on the leverage and debt maturity of firms in advanced and emerging market countries also emerges when we distinguish between firms that are potentially financially constrained and firms that are not. These findings suggest that in emerging economies fundamental institutional weaknesses make it difficult to secure the benefits of international financial openness and domestic financial reforms.
Ms. Enrica Detragiache, Mr. Gianni De Nicolo, and Ms. Senay Agca

of finance, then firms’ financial constraints should be reduced. Thus, we should find that reforms and openness have stronger impact on the leverage and debt maturity of constrained firms. If, instead, financial constraints bind due to the presence of information asymmetries, governance opaqueness and weak creditors’ rights, rather than the restrictions on entry or on the activities of providers of finance, then we may not observe this effect. Therefore, the following tests provide further evidence on the differential firm response to openness and reforms

Michael Walton, Anusha Nath, and Mr. Ashoka Mody
Some see India’s corporate sector as the fundamental driver of recent and future prosperity. Others see it as a source of excessive market power, personal enrichment, and influence over the State, with an ultimately distorting influence. To inform this debate, this paper analyses the correlates of profitability of firms listed on the Bombay Stock Exchange, covering a dynamic period-in terms of firm entry and growth-from the early 1990s to the late 2000s. Overall, the results do not provide support for the systematic exercise of market power via the product market. At least for this period, the story is more consistent with a competitive and dynamic business sector, despite the continued dominance of business houses and public sector firms in terms of sales and assets. Those with opposing views can, with justification, argue that our analysis does not cover influences, such as corporate governance and state-corporate relations, which may paint a less flattering picture of the corporate sector’s role. Those broader themes deserve further attention.
Miss Roxana Mihet

-level variables such as industry competition and industry informational opacity. Similar to Griffin et al. (2012) , we decompose the firm-level controls into firm-level deviations and industry/country-level means to understand the differential firm and industry/country-level effects. More specifically, Firm_Controls_Firm_Var i is a vector comprising of firm size, leverage, profitability, sales growth, and dependence on external finance. Firm_Controls_Indus_Ctry_Mean i is an additional set of controls which will help us understand the differential industry