Research articles for the 2019-02-23

Does Mandatory Recognition of Off-Balance-Sheet Items Affect Capital Structure Choice?
Axenrod, Michael,Kisser, Michael
We investigate whether mandatory recognition of previously disclosed off-balance sheet items affects corporate capital structure decisions. Specifically, we use the introduction of the Statement of Financial Accounting Standard No. 158 as an exogenous shock to financial reporting decisions as it requires sponsors of defined benefit (DB) pension plans to recognize the level of plan funding explicitly on the balance sheet. While we find that leverage decreases following the regulation, we show that this change is not driven by active managerial leverage reductions but instead by passive increases in the market value of equity. Our findings suggest that the mandatory recognition revealed no new information to lenders and shareholders.

Employment Growth Under Financial Constraint: Evidence From Ethiopian Manufacturing SMEs
Ezezew, Melesse Wondemhunegn
This paper examines the effects of business development services and endogenous access to external sources of finance on employment growth in small and micro manufacturing enterprises in Amahara region, Ethiopia. Based on a sample of 1,321 respondents covering the 11 zonal capital towns of the region, the key findings include: 1) a large fraction (60.5 percent) of small and micro manufacturing enterprises are financially constrained 2) Even though a significant fraction of the enterprises in the sample reported having exposure to some type of industrial extension service, this exposure has no significant effect on employment growth 3) Women participation in the management/ownership of small and micro manufacturing enterprises is relatively low (about 29 percent) and male-operated enterprises are significantly more likely to report expansion in employment than their female- operated counterparts 4) Access to external finance has positive and significant effect on employment growth in the metal-wood work subsector, in family/group operated enterprises, and in those enterprises that started operation with a mix of own capital and borrowed money.

The Role of Cooperatives In The Sharia Finance Productive Small Businesses Trade Sector In Indonesia
Munawar Albadri, Abdul Aziz
The fundamental problems faced by the small business trade sector in Indonesia are the lack of access to capital sources and the weak role of financial institutions services. Microfinance institutions which be expected tend to more dominant in consumptive financing rather than productive financing. While sharia microfinance institutions do not act optimally. Not yet know how the contribution of the sharia cooperative management in development sharia cooperative performance and its effect in increasing productive financing distribution to empower small business trade sector in Cirebon City and Regency.