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'Investor Protection and Corporate Governance' analyzes the impact of corporate governance on firm performance and valuation. Using unique datasets gathered at the firm-level—the first such data in the region—and results from a homogeneous corporate governance questionnaire, the book examines corporate governance characteristics, ownership structures, dividend policies, and performance measures. The book's analysis reveals the very high levels of ownership and voting rights concentrations and monolithic governance structures in the largest samples of Latin American companies up to now, and new data emphasize the importance of specific characteristics of the investor protection regimes in several Latin American countries. By and large, those firms with better governance measures across several dimensions are granted higher valuations and thus lower cost of capital. This title will be useful to researchers, policy makers, government officials, and other professionals involved in corporate governance, economic policy, and business finance, law, and management.

Cross-listed firms in the United States have a higher investment-to-price sensitivity than do firms that never cross-list. This difference is strong, does not exist prior to the cross-listing date, and does not vanish afterward. Moreover, it does not appear to be primarily driven by improvements in governance, disclosure, and access to capital associated with a U.S. crosslisting. Instead, we argue that a cross-listing enhances managers' reliance on stock prices because it makes stock prices more informative to them. Consistent with this explanation, U. S. cross-listings that are more likely to strengthen the informativeness of stock prices for managers feature a higher investment-to-price sensitivity.

We examine whether strong networks among incumbent venture capitalists (VCs) in local markets help restrict entry by outside VCs, thus improving incumbents' bargaining power over entrepreneurs. More densely networked markets experience less entry, with a one-standard deviation increase in network ties among incumbents reducing entry by approximately one-third. Entrants with established ties to target-market incumbents appear able to overcome this barrier to entry; in turn, incumbents react strategically to an increased threat of entry by freezing out any incumbents who facilitate entry into their market. Incumbents appear to benefit from reduced entry by paying lower prices for their deals.

We examine how shocks to the supply of credit impact corporate financing and investment using the collapse of Drexel Burnham Lambert, Inc.; the passage of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989; and regulatory changes in the insurance industry as an exogenous contraction in the supply of below-investment-grade credit after 1989. A difference-in-differences empirical strategy reveals that substitution to bank debt and alternative sources of capital (e.g., equity, cash balances, and trade credit) was limited, leading to an almost one-for-one decline in net investment with the decline in net debt issuances. Despite this sharp change in behavior, corporate leverage ratios remained relatively stable, a result of the contemporaneous decline in debt issuances and investment. Overall, our findings highlight how even large firms with access to public credit markets are susceptible to fluctuations in the supply of capital.

Small and medium-sized enterprises (SMEs) are the main engine of local economic development. However, SME growth remains an issue as labor productivity is low in emerging economies. Due to information asymmetries, constraints in access to external finance prevent a larger participation in the economy, hindering SMEs from expanding their business operations. In the absence of collateral requirements, small and medium-sized firms may rely on exporting activities to signal lenders project quality since this may indicate that firms have good projects to invest. The main purpose of this study was to investigate the impact of project quality on both SME labor productivity and on the relationship between lack of adequate access to external finance and labor productivity. Our results indicate a positive relationship between project quality and labor productivity. We also found that SMEs that applied for bank loans but were rejected have lower levels of labor productivity than SMEs that obtained financing. In addition, constrained SMEs that export internationally were found to have higher labor productivity than constrained firms with lower access to export markets, although the role of project quality in explaining labor productivity for constrained SMEs may be due to direct export sales in most part.

Black women entrepreneurs play a vital role in the U.S. economy, launching businesses across diverse industries more expeditiously than their counterparts. Despite this growth, the lived experiences of Black female entrepreneurs in the beauty industry are permeated by challenges from conception through all stages of business development, including leadership deficiencies, capital constraints, and systemic barriers that threaten sustainability and profitability. The purpose of this qualitative, phenomenological study was to explore how Black women entrepreneurs apply effective leadership practices to access capital, enhance leadership skills, and navigate operational challenges. The theoretical framework for this inquiry was Transformational Leadership Theory, serving as a lens to examine how leadership practices shape business growth and operations. Guided by the research question: What effective leadership practices do Black women entrepreneurs in the U.S. beauty industry employ to access capital for investing in leadership development training, thereby enhancing their leadership skills, mitigating operational challenges, and improving profitability? Data was collected through semi-structured interviews with ten business owners and analyzed using Braun and Clarke’s (2006) thematic analysis. Five key themes emerged: mentorship, education and training, funding, sustainability, and business operations. Findings revealed that limited access to capital, leadership development, and mentorship hindered business growth. Leveraging leadership practices fosters profitability and long-term sustainability. This study contributes to the literature on women’s leadership by highlighting how Black women entrepreneurs can leverage effective leadership practices to expand their businesses and promote equity in underrepresented sectors. Keywords: Black women entrepreneurs, beauty industry, leadership development, access to capital, operational challenges, business sustainability

This paper examines whether crowdfunding campaigns present an effective means of accessing capital for minority and female entrepreneurs. Access to capital is critical for entrepreneurial success at start-up and growth stages. However, biases and information asymmetries in entrepreneurial finance can lead to funding gaps for underrepresented founders. We examine minority and female entrepreneurs’ access to capital via crowdfunding, which is an alternative to more traditional capital sources. Further, we leverage signaling theory as a guiding framework to determine whether entrepreneur characteristics may serve as signals of entrepreneurial success and increase the odds of campaign success. Using Reg CF campaign data (2016–2023), we document significant funding gaps for minority and female campaigns relative to non-minority led campaigns. On average, non-minority led campaigns raise $379,059, which is, 23% more than minority and 34% more than women led campaigns. Minority led campaigns attract slightly more investors than non-minority campaigns however, contributions are smaller. Females, on average, attract fewer investors. Moreover, attributes such as firm assets and founder experience influence campaign success. Despite a gender and racial funding gap, crowdfunding success rates may be significantly greater than traditional funding sources such as Venture Capital. Determining viable alternatives to traditional capital raises is critical to understanding how to better support minority and female entrepreneurs who are routinely underfunded relative to non-minority entrepreneurs. In doing so, we work toward closing the racial and gender wealth gap and supporting the contribution these ventures provide to overall economic activity.

Using unique, panel data and a randomised experiment, we assess the effects of relief aid and access to capital on the recovery of Sri Lankan microenterprises following the December 2004 tsunami. Our results show that a lack of access to capital inhibits the recovery process; firms receiving randomly allocated grants recover profit levels almost 2 years before other damaged firms. Access to capital is particularly important for the retail sector; the role of capital in recovery for manufacturing and services sectors may be limited by disruptions in supply chains. Our data show that business recovery is much slower than commonly assumed, underscoring the role targeted aid may play in hastening microenterprise recovery following such disasters.

PurposeThe purpose of this paper is to examine the effects of working capital management on firm valuation, profitability and risk.Design/methodology/approachThe paper uses a panel data set of 497 firms covering the period 2007 to 2016. The authors test the effects of working capital management on firm valuation, profitability and risk using the panel data methodology that includes firm and year fixed effects regressions.FindingsThe authors find a significantly negative relationship between net working capital (NWC) and firm valuation, profitability and risk. The results suggest that, in managing working capital, firm managers must make a trade-off between their objectives for profitability and risk control. Working-capital management is of particular importance in firms with less access to capital; it is also important when firms are expanding their investments during periods of economic recovery.Originality/valueThis paper contributes to the literature in several ways. First, to my knowledge, it provides the most comprehensive investigation, to date, on the relationship between working capital management and firm valuation, profitability and risk in an emerging market. Second, this study documents the existence of an optimal level of NWC in an emerging market. Third, firm performance, as measured in both market and accounting value, can be improved with efficient working capital management. Finally, the study includes the impact of the business cycle in an analysis of the effects of working capital management on firm performance.