Why do Holding Companies Trade at a Discount? A Clinical Study (*)

Rommens, An; Deloof, Marc; Jegers, Marc

doi:10.2139/ssrn.493942

Cited by 4 publications

(2 citation statements)

References 18 publications

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“…Its main goal was to promote the development of clinical studies on cases of corporate governance in Europe that would allow researchers to better understand the complexities of companies and their behaviour, something that is often impossible to achieve using "traditional" methods (formal models and econometric analyses/statistics). Clinical studies such as those by McConnell and Schwartz (1992), Esty (1999), Rommens et al (2003) and Mills (2005) examine concrete examples in relation to a specific theoretical question. Despite this, certain clinical studies look at a group of cases and use analyses that are more similar to those used in empirical studies.…”

Section: B a Clinical Study Approachmentioning

confidence: 99%

Financing circular economy projects: a clinical study.

Pinto¹,

Alves²,

Castendo³

2022

ERBE

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This paper interconnects the literature on circular economy and sustainable finance. In addition to describing the reasons behind circular economy projects, this paper surveys the literature on financing circularity. The financial industry plays a significant and increasing role in promoting sustainability by supporting sustainable investment projects. To obtain funds for circular economy projects, sponsors face additional challenges due to business and financial complexities inherent to such projects. We characterise and describe firms' reasons for developing circular economy projects as well as how these projects are funded by using a clinical study focused on three projects. Extant literature presents 3Rs (Reduce, Reuse and Recycle); the reduction of cost and pollution; improvement in competitiveness, innovation, and processes; improvement of ESG ratings, and enhance reputation. All these reasons are positively correlated and address resource scarcity, impact on environment, and economic concerns. Innovative circular projects are typically funded via a mix of sustainable equity -venture capital funds, impact investors, EU funds -and debt -sustainable bonds (green and ESG bonds) and loans.

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Section: B a Clinical Study Approachmentioning

confidence: 99%

Financing circular economy projects: a clinical study.

Pinto¹,

Alves²,

Castendo³

2022

ERBE

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“…Several papers using different methodologies suggest that there are no consistent riskreducing and cost-lowering benefits with holding companies. For example, Rommens et al (2004) note that if the costs of a holding company outweigh its benefits, the holding company destroys value. They highlight that holding companies play an important role in corporate finance in Belgium and other Continental European countries, but they often trade at a discount to their estimated net asset value.…”

Section: Introductionmentioning

confidence: 99%

Holding Companies and Debt Financing: A Comparative Analysis Using Option-Adjusted Spreads

Boliari

Topyan

2022

JRFM

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This work investigates and compares the total risk attributable to holding and operating companies, using data from the United States. By proxying overall risk by the option-adjusted spread on corporate bonds, we hypothesize that operating companies face a higher risk. Our data were obtained from Bloomberg and comprise 17,800 corporate bonds. Our methodology entails stratified univariate comparisons of the means of the option-adjusted spreads of sub-samples of operating companies versus holding companies. The principal bases of stratification are issue size, bond maturity, and creditworthiness proxied by the Standard and Poor ratings. With very few exceptions, our results report insignificant t-statistics, thus making us unable to reject the null hypothesis that the operating companies have the same business risk as holding companies. When bond rating, maturity, and size are controlled, there is no consistent cost reduction attributable to holding companies, and contrary to common belief, this is more visible for smaller firms. Our work suggests that there is no evidence consistently favoring holding-company financing compared to operating ones.

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The Value of Industrial Shareholdings in a Universal Bank: The Case of Deutsche Bank in the 1990s

Späthe

2011

SSRN Journal

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Why do Holding Companies Trade at a Discount? A Clinical Study (*)

Cited by 4 publications

References 18 publications

Financing circular economy projects: a clinical study.

Financing circular economy projects: a clinical study.

Holding Companies and Debt Financing: A Comparative Analysis Using Option-Adjusted Spreads

The Value of Industrial Shareholdings in a Universal Bank: The Case of Deutsche Bank in the 1990s

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