Browsing by Author "Larrain, Borja"
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- ItemCEO compensation and large shareholders: Evidence from emerging markets(2012) Gallego, Francisco; Larrain, BorjaGallego, Francisco, and Larrain, Borja-CEO compensation and large shareholders: Evidence from emerging markets
- ItemDo IPOs Affect the Prices of Other Stocks ? Evidence from Emerging Markets(OXFORD UNIV PRESS INC, 2009) Braun, Matias; Larrain, BorjaWe show that the introduction of a large asset permanently affects the prices of existing assets in a market. Using data from 254 initial public offerings (IPOs) in 22 emerging markets, we find that portfolios that covary highly with the IPO experience a decline in prices relative to other portfolios during the month of the issue. The effects are stronger when the IPO is issued in a market that is less integrated internationally and when the IPO is bigger. This evidence is consistent with the idea that shocks to asset supply have a significant effect on asset prices.
- ItemFunding Contagion through Common Owners(2023) Larrain, Borja; Sertsios, Giorgo; Urzua I, FranciscoFunding contagion is the impaired ability of a firm to raise external funds when negative shocks hit other firms under the same owner. We study this possibility with pairs of private firms in unrelated industries that share a large common shareholder. We find that a firm's debt growth and financial leverage go down when the partner firm experiences negative shocks. Our results are consistent with creditors contracting the credit supply because of cash flow cross-pledging between related firms. Funding contagion increases when control rights are strong, and the credit market is less developed. (JEL G30, G32) Received: February 17, 2021; Editorial decision: July 18, 2023 by Editor: Andrew Ellul. Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.
- ItemOwnership Concentration and Firm Value: New Evidence from Owner Stakes in IPOs(2024) Larrain, Borja; Roosenboom, Peter; Sertsios, Giorgo; Urzua, FranciscoWe study the relationship between ownership concentration and firm value using hand-collected data on the stakes of owner-managers before and after initial public offerings (IPOs). We instrument for the reduction in stake using market returns shortly before IPOs. Short-run market returns are plausible instruments because owners engage in market timing by selling more when prior returns are high, but high short-run returns are unlikely to directly affect firm value years after the IPO. As predicted by agency theory, a large reduction in ownership concentration at the IPO is negatively related to valuation. Future asset growth is low when owners have low stakes.
- ItemOwnership networks and labor income(2023) Huneeus, Federico; Larrain, Borja; Larrain, Mauricio; Prem, MounuWe document a novel relationship between networks of firms linked through ownership (i.e., business groups) and labor income using matched employer-employee data for Chile. Business group affiliation is associated with higher wages, even after controlling for firm size and individual worker effects. The group premium is stronger for top workers; hence, group firms have higher wage dispersion. The premium remains present when comparing group firms and matched stand-alone firms, and in within-firm comparisons using transitions in and out of groups. Our results are consistent with workers reaching higher productivity and wages by leveraging their skills on the group's organizational structure (JEL G32, J31).
- ItemSTOCK MARKET DEVELOPMENT AND CROSS-COUNTRY DIFFERENCES IN RELATIVE PRICES(MIT PRESS, 2010) Larrain, BorjaWe document a positive correlation between stock market capitalization and price levels (wages) within the group of countries with poorly developed stock markets and a negative correlation between these two variables within the group of countries with more developed stock markets. This paper argues that there is a causal relationship behind these correlations. Stock markets initially stimulate growth, pushing the demand for nontradables and increasing prices and wages. Stock markets also promote a shift toward more capital-intensive technologies in the tradable sector, increasing the migration of workers to services and eventually putting downward pressure on wages and prices.
- ItemThe internal labor markets of business groups(2021) Huneeus, Federico; Larrain, Borja; Larrain, Mauricio; Prem, MounuThis paper provides micro evidence of labor mobility inside business groups. We show that worker flows between firms in the same group are stronger than with unaffiliated firms. Moreover, the reallocation of top workers between group firms is more sensitive to international shocks. Top workers that move within the group in response to shocks reach higher positions and earn higher wages. We find suggestive evidence that productivity increases when firms receive same-group top workers. Our results are consistent with the hypothesis that, in response to changing opportunities, joint ownership eases the redeployment of workers endowed with general management skills.
- ItemWorld betas, consumption growth, and financial integration(ELSEVIER SCI LTD, 2011) Larrain, BorjaWe define a country's beta as the covariance of domestic consumption growth with world consumption growth scaled by the world's variance. Beta is related to a country's risk-taking position in models of international financial integration. Empirically, we find that an increase in beta leads to an increase in average consumption growth. This beta-growth relationship is present only among countries with high levels of financial openness, and is absent among the rest. However, we cannot fully discard the presence of non-financial factors (e.g., trade openness) as determinants of the beta-growth relationship. (C) 2011 Elsevier Ltd. All rights reserved.