Browsing by Author "Sertsios, Giorgo"

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    Funding Contagion through Common Owners
    (2023) Larrain, Borja; Sertsios, Giorgo; Urzua I, Francisco
    Funding 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.
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    Ownership Concentration and Firm Value: New Evidence from Owner Stakes in IPOs
    (2024) Larrain, Borja; Roosenboom, Peter; Sertsios, Giorgo; Urzua, Francisco
    We 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.