Browsing by Author "Moro, Andrea"
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Item Open Access “All that glitters is not gold!”: The (unexplored) determinants of equity crowdfunding(Springer, 2023-08-11) Civardi, Camilla; Moro, Andrea; Winborg, JoakimDrawing from the rich literature in behavioural finance and extensive analysis of forum data from a UK equity crowdfunding platform, we present a comprehensive framework that delineates the investment decision-making process of equity crowdfunders. Our framework captures the utilitarian, emotional, and expressive investment motives that drive crowdfunders, their behaviours and actions during and after the campaign, as well as the challenges they encounter in fulfilling their investment goals. Our work highlights the crucial need to explore the extent to which entrepreneurs and crowdfunding platforms cater to the diverse investment motives and expectations of the crowd. We offer practical insights to entrepreneurs and platforms on how they can better align their strategies with the expectations and needs of equity crowdfunders.Item Open Access C-level managers and born-digitals' scaling: The case of Initial Coin Offerings (ICOs)(Elsevier, 2023-10-31) Gartner, Johannes; Moro, AndreaThis research contributes to the Management of Technology (MOT) literature by scrutinizing the interrelation between education, experience, and the scaling aptitudes of high-tech companies. The study hinges on a comprehensive analysis of data collected from 1987 C-level executives and 3644 born-digital firms that pursued funding via blockchain-based Initial Coin Offerings (ICOs). Employing structural equation modeling, we systematically tested our hypotheses, contrasting the scaling trajectories of companies that successfully procured funding against those that fell short. Our findings reveal that amongst the diverse managerial competencies, only the leadership acumen of CEOs plays an important role in fostering the scaling of tech-companies across the spectrum, leaving the proficiencies of CFOs and CTOs with negligible impact. More crucially, the competencies of a CEO magnify in importance in relation to a tech-company's scaling potential post the securing of funds. The insights gained from this study not only enrich the existing body of knowledge on scaling and ICOs within the MOT literature but also hold considerable practical value for crafting effective scaling strategies in the high-tech industry.Item Open Access Conceptualising a framework of trust-based auditing by focusing on service quality, scepticism and ethics.(Cranfield University, 2018-12) Spiteri Bailey, Michelle; Moro, Andrea; Wisniewski, Tomasz PiotrA number of financial scandals exposed over the past years have been perpetrated with the active involvement of auditors, negatively affecting the perception of trust and usefulness of the audit. The scope of this research is to understand auditors’ and clients’ perceptions of trust in the audit and identify factors to restore trust. Such a research has not yet been conducted in Malta, characterised mainly by small family businesses where all registered commercial companies, regardless of size, need to have audited financial statements. This study conceptualises a framework of trust-based auditing, based primarily on factors such as ability, benevolence and integrity. Perceptions and opinions from auditors and their respective clients were collected using a questionnaire. The information collected determines whether a framework based on service quality, ethical behaviour and professional scepticism leading to audit usefulness could be established and to determine a set of client attributes perceived to increase trust. Results revealed that whereas auditors perceive that service quality, ethical behaviour and professional scepticism increase trust, their clients, on the other hand, opined that service quality is inversely linked to reputation and the latter is inversely related to trust. Auditors perceive all observable factors as equally and positively influencing service quality, ultimately increasing trust. Clients perceive reputation as a substitute to trust and service quality as a substitute for reputation. They also expressed the view that increasing the independence of auditors will increase unethical behaviour. Findings revealed that auditors and clients agree that assessing the company’s creditworthiness and performing a review for possible bias, fraud or error, increases audit usefulness, and to a lesser extent trust. A set of management attributes perceived by both auditors and clients to increase service quality and ultimately trust in the audit were also identified. These attributes mainly include the importance of adequate support by management and accurate record keeping by the client.Item Open Access Corporate governance regulation, legal origin and small business access to credit: a cross-european comparison(Financial Management Association, 2016-10-31) Maresch, Daniela; Moro, Andrea; Fink, MatthiasIn this cross-European study, we investigate the impact of two specific corporate governance mechanisms (shareholder rights and regulations on related-party transactions) on firms’ decision to apply for credit and the banks’ lending decision. We argue that this impact is contingent upon the legal origin that shapes the regulatory institutional setting in which the corporate governance mechanisms are embedded. We perform a cross-European comparison based on 45,596 firm-level observations from 13 countries. Logit regression reveals that corporate governance does not directly influence the banks' lending decision or the firms' decision to apply for credit. Rather, the impact of corporate governance on firms’ credit access unfolds through regulatory institutional contexts that are shaped only by specific legal origins. Our findings help to explain why firms in different countries are financed so differently by highlighting the relevance of the embeddedness of corporate governance mechanisms in regulatory institutional settings. For research, our findings call for more multi- level work. For business practice, our findings imply that a well-designed governance regime regarding shareholder protection can foster firms’ access to bank finance, and thus innovation and economic growth. For legislators, we highlight the importance of ensuring a fit between corporate governance mechanisms and the specifics of the national regulatory environment.Item Open Access Creditor protection, judicial enforcement and credit access(Taylor & Francis (Routledge): SSH Titles, 2016-09-09) Moro, Andrea; Maresch, Daniela; Ferrando, AnnalisaWe investigate the impact of the legal system on whether firms obtain the credit they apply for or not. Data comprise unique information provided directly by 48,590 firms from 11 European countries. We look at the strength of creditor protection, the strength of property rights, the time taken to resolve a dispute, the dispute resolution process’s costs and the number of procedures the plaintiff faces using data provided by the World Bank and the Heritage Foundation. The results suggest that the more efficient the judicial enforcement system is, and the higher the creditor protection is, the lower the probability that the firms are partially or totally denied credit. Our results are robust to selection bias (Heckman selection) as well as different controls and different estimation techniques. We find that these variables have considerable economic impact: the probability of obtaining credit is up to 40% higher in countries with more robust legal systems.Item Open Access Does a manager's gender matter when accessing credit? Evidence from European data(Elsevier, 2017-04-17) Moro, Andrea; Wisniewski, Tomasz Piotr; Mantovani, Guido MassimilianoFirms can be credit constrained either because a loan has been denied by the lender or because they decide not to apply for such a loan due to expected rejection. Using a large sample of European small and medium enterprises, we investigate the relationship between gender and credit constraints. Although no evidence is found that financial institutions are biased against female managers, female-run firms are less likely to file a loan application, as they anticipate being rejected. As a consequence, firms managed by women obtain less bank financing.Item Open Access Does religiosity affect financing activity? Evidence from Indonesia(Wiley, 2022-11-27) Fatwa Wijaya, Ibrahim; Moro, Andrea; Belghitar, YacineWe examine the role of religiosity on the financing activities in both Islamic and conventional banks in Indonesian provinces by using five different measures of religiosity: number of Islamic schools, hajj application, number of Islamic seminary schools, number of Mosques, and number of certified halal products. Based on regression analysis, the results show that both Islamic and conventional banks provide more financing in religious provinces. Religiosity also helps in reducing the volume of non-performing financing. Our the results are still qualitatively valid after taking into account endogeneity issue that emanates from omitted variables (i.e., unobservable beliefs, ideas, and attitudes), and possible reverse causality between religiosity and the total amount of financing at the province level.Item Open Access Does religiosity and trust affect financing activities? Evidence from Indonesia.(Cranfield University, 2020-12) Wijaya, Ibrahim Fatwa; Moro, Andrea; Belghitar, YacineIslam religiosity and trust are inextricable linked since Islamic teachings promote trustworthy behaviour. Existing literature has shown that perceived trustworthiness of a party has positive impacts on the business-to-business relationship, especially in financing relationships. So far, however, there has been limited discussion on the role of religiosity and trust to support financing activities in the Islamic context. Empirical paper number 1 examines the impact of Islam religiosity on financing availability and non- performing financing in both Islamic and conventional banks. I contribute to the literature by using more suitable Islam religiosity proxies at province level, namely Islamic school, Islamic seminary school, mosque, Hajj application, and halal certificate and by finding that Islamic and conventional banks in stronger Islam religiosity areas provide more financing and have less non-performing financing. Empirical paper number 2 explores the magnitude of values-based trust vis-à-vis competence-based trust on financing availability in the context of Islamic culture, an issue that has limited discussion in current literature. I find that values-based trust plays stronger role than competence-based trust in Islamic culture. Finally, existing literature on trust and bank lending has not taken into account the characteristics of financing products in their studies. The third empirical paper discusses the role of trust on financing availability in three different Islamic financing products, i.e., Murabaha, Ijara, and Profit-loss sharing. I find that values-based trust is more important than competence-based trust in Ijara, but competence-based trust plays stronger role than values-based trust in both Murabaha and Profit-loss sharing.Item Open Access Financial intermediation, capital composition and income stagnation: The case of Europe(Elsevier, 2019-01-11) Samatas, Andreas; Makrominas, Michalis; Moro, AndreaWe look into the role of financial intermediation in inducing the European financial crisis of 2008 by exploring the effects of overall lending, and the allocation of credit to specific categories of borrowers, namely households vs. firms. We find that for the EU26 during the period 1995–2008, excessive household leverage through mortgage lending exerted a “crowding-out” effect on availability of credit to support innovation and productive investment. The crowding out effect ultimately translated into a GDP growth that was decoupled from real household income. In this article we explain that shifting credit towards mortgages and away from corporate projects is consistent with rational behaviour based on historical trends aimed at minimizing short-term risk for each individual bank. Nevertheless, as a whole, the sum of individual risk-reducing attitudes generated a long-term systemic risk.Item Open Access FinTech projects and initial coin offerings: a research note(Pepperdine University, Graziado School of Business and Management, 2019-10-09) Moro, Andrea; Wang, DaoWe explore the determinants of success of Initial Coin Offerings (ICO) defined as whether the ICO was successful in raising the funds. We look at financial and technical information disclosed by the ICO as well as the information disclosed by third parties about the ICO and the level of legal protection granted. We discover that even if both hard information (financial and technical) and soft information (social media and legal protection) matter, nevertheless a more relevant role is played by the technical information. Based on our analysis, we identify areas that need further investigation in the context of ICOs.Item Open Access Funding innovation and the regulatory environment – the role of employment protection legislation(Elsevier, 2022-03-23) Moro, Andrea; Maresch, Daniela; Ferrando, Annalisa; Udell, Gregory F.Access to external finance is essential for firms to engage in innovation processes and to grow. The regulatory environment plays a vital role in facilitating this access. We explore the role of employment protection legislation in the probability that firms obtain bank credit. We propose that restrictions on structuring employees’ work schedules and dismissing employees reduce access to credit by increasing the credit risk incurred by lenders. Our findings are based on 21,332 observations (European Central Bank SAFE dataset and World Bank Doing Business dataset) and reveal that a higher level of employment protection legislation is negatively related to the probability of firms obtaining bank credit. These results are robust to confounding, endogeneity, and selection bias, as well as to alternative specifications.Item Open Access Modelling trust evolution within small business lending relationships(Springer, 2018-09-01) Tang, Ying; Moro, Andrea; Sozzo, Sandro; Li, ZhiyongTrust is a key dimension in the principal-agent relationship and it has been studied extensively. However, the dynamics, evolution, and intrinsic motivation and mechanisms have received less attention. This paper investigates the intrinsic motivation of trust and it proposes a theoretical model of trust evolution that is based on the notion of ‘trust response’ and ‘trust spiral’. We then specifically focus on trust within the lending relationship between banks and small businesses, and we run numerical simulations to further illustrate the evolution of involved mutual trust over time. Our model provides implications for future research in both trust evolution and small business lending relationships.Item Open Access Much Ado about nothing? Interest and non-interest products and services: Their impact on small banks’ margins(Cogent OA, 2017-06-09) Fredriksson, Antti; Maresch, Daniela; Moro, AndreaWe investigate the impact of interest and non-interest products and services on the margin a bank can derive from a specific customer. The analysis is based on 4,277 observations of relationships between small cooperative banks and small and medium-sized enterprises (SME) in Finland from 2001 to 2005. The results show that only long-term loans significantly contribute to the bank’s margin, whereas short-term loans as well as other additional products and services do not affect the bank’s margin, and cash management services even seem to reduce the bank’s margin. The findings suggest that small cooperative banks did concentrate on their core business during the first years of this millennium, i.e. lending, instead of diversifying their activities to increase their margin. However, by taking only financial considerations into account, small cooperative banks might forget about the non-financial impacts of their decisions, which may involve a considerable loss of information about SMEs.Item Open Access Narrative Finance - The use of narrative to inform investment judgement. How stories move markets - the system behind the Boeing 737 MAX shock news.(Cranfield University, 2023-07) Harris, Richard; Moro, Andrea; Belghitar, YacineNARRATIVE FINANCE: The use of narrative to inform investment judgement Narrative Finance is the term coined for research into this new sub-discipline of financial economics - for it is the “voice of the market.” The information embedded within text and speech is pervasive in determining asset prices. This contribution to financial research highlights ways to use financial narratives to inform investment judgement. Financial narrative is modelled as a disruptive force by uniquely applying General System Theory to illustrate the complex architecture of the financial system. The energy budget of a material narrative is seen to be expended in the work carried out to adjust asset prices. Investors can use the departure and recovery of prices from the dynamic equilibrium upon the receipt of news as an investment indicator; described herein as Decoupling Theory. The signal of a narrative is mapped as it travels through the non- linear financial system (and back as feedback). Narrative nomenclature is devised to describe dominant, dormant, and legacy narratives, the Narrative Cycle, Narrative Signal, Narrative Phases, and the Narrative Tree. This theory was tested against the shock news of the two Boeing 737 MAX 8 accidents, which provided two proxy narrative signals and investment outcomes from a single event cause. The empirical output includes the proof of theory for the narrative morphology and phases, the extraction of fast and frugal investment narrative indicators, the importance of feedback, and the matching of narrative frequency to market movements. These metrics can help investors make better judgements and decisions by narrowing the probabilities in nowcasting and forecasting models. Narrative Finance is an intellectual descendant of classical finance and behavioural economics and contributes an alternative method of valuing investments to the toolbox of investors, academics, and securities regulators.Item Open Access National culture and small firms' use of trade credit: evidence from Europe(Elsevier, 2021-07-16) Moro, Andrea; Belghitar, Yacine; Mateus, CesarioWe examine the use of trade credit in Western Europe by relying on a sample of 182,296 small firms for the period 2003–2013. Building on information asymmetry theory, we explore how a country's culture can impact SMEs use of trade credit. We discover that countries' cultural norms play a key role in explaining trade credit differences in Europe. We find that in countries with high power distance, high individualism, high masculinity, and high uncertainty avoidance rely more on trade credit.Item Open Access The role of bitcoin in well diversified portfolios: A comparative global study(Elsevier, 2018-10-11) Kajtazi, Anton; Moro, AndreaThis research explores the effects of adding bitcoin to an optimal portfolio (naïve, long-only, semi-constrained with and without bitcoin shorting) by relying on the mean-CVaR approach. We explore bitcoin's role in portfolios of U.S., European and Chinese assets. We back-test to compare the performance of portfolios with and without bitcoin for each scenario. The results show that by adding bitcoin, the portfolio performance improves; but this is due more to the increase in returns than in the reduction of volatility. In addition, the improvement is linked to bitcoin's performance in 2013. We conclude that bitcoin may have a role in portfolio diversification even though our analysis confirms bitcoin speculative characteristics.Item Open Access Spillover effects of government initiatives fostering entrepreneurship on the access to bank credit for entrepreneurial firms in Europe(Elsevier, 2020-03-06) Moro, Andrea; Maresch, Daniela; Fink, Matthias; Ferrando, Annalisa; Piga, Claudio A.We explore the role of government initiatives fostering entrepreneurship—in the form of tax advantages and government support—in influencing the probability that entrepreneurial firms obtain bank credit and are not discouraged from applying for a loan. We propose that government initiatives fostering entrepreneurship should allow entrepreneurial firms to access more bank credit by reducing the risk incurred by lenders. We simultaneously estimate the probability of obtaining credit when a firm applies for a loan and the probability that the firm has been discouraged when it does not apply for a loan. In both cases we control for endogeneity. Our results are based on 18,872 observations (from the European Central Bank (ECB) SAFE dataset and Global Entrepreneurship Monitor – GEM) and show that government initiatives improve the probability of entrepreneurial firms obtaining bank credit but do not affect the probability of being discouraged from borrowing. The results also suggest that government initiatives fostering entrepreneurship are of most benefit to younger, smaller, high-growth, and more innovative firms that operate in contexts where the demand for, and accordingly the competition for, bank credit is strongest.Item Open Access To tweet or not to tweet? the determinants of tweeting activity in initial coin offerings(Wiley, 2023-01-26) Moro, Andrea; Radić, Nemanja; Truong, VinhOur research explores the causes of Twitter activity in highly technological start-ups that finance their activities via initial coin offerings (ICOs). By relying on weekly data of 297 ICOs for the period 2015–2020 (35,459 observations), we examine how major exogenous events affect the number of tweets issued by the start-up. Then, we explore how the community of followers reacts to the tweets. We discover that events external to firms reduce ICOs’ tweeting activity. Moreover, our evidence indicates that the followers’ reaction is positively related to the tweets issued by the firm and negatively related to major events unrelated to the firm. Interestingly, followers’ reaction has an inverted U-shaped relation with the firm’s Twitter volume, suggesting that excessive Twitter activity can harm the further dissemination of tweets. Our results, robust to alternative estimation techniques, emphasize the important role of Twitter as an information disseminator, legitimizer, and endorser for highly opaque firms.Item Embargo Trade credit and firm efficiency: evidence from Chinese manufacturing firms(Taylor & Francis, 2023-02-02) Tang, Ying; Xu, Lu; Guo, Shijun; Moro, AndreaOur work focuses on the impact of trade credit financing on firm efficiency exploiting a sample of Chinese manufacturing listed firms for the period 2004 to 2018. We find that trade credit significantly improves firm efficiency. This positive association is stronger in firms located in regions with higher levels of social trust, during periods with higher economic policy uncertainty and in times of economic downturn. We reveal three economic mechanisms underlying our baseline findings: alleviating financial constraints, mitigating agency conflicts, and reducing transaction costs.Item Open Access Trade credit in China: Exploring the link between short term debt and payables(Elsevier, 2019-11-04) Tang, Ying; Moro, AndreaTrade credit constitutes an essential element of short-term financing for most firms, especially for small and medium-sized enterprises. This paper investigates the dynamics between short-term bank debt and payables among 1525 Chinese small and medium-sized listed companies over the period of 2008–2016. The results suggest that an increase in stock and receivables is financed by both bank credit and payables. In addition, we find that bank credit and payables substitute each other. We also uncover a strong substitution effect among weak firms, possibly linked to the fact that weak firms struggle to access additional bank finance and thus are forced to rely on suppliers to support their growth. The substitution effect between payables and bank credit is robust to different cash conversion cycles and to the firm's liquidity.