This paper studies the micro-level dynamics of firms’ borrowing during sudden stops. Using data on the universe of loans in the Uruguayan economy, we provide evidence on three channels of transmission driving these episodes: a lender channel, which links borrowing adjustments to the balance sheets of financial intermediaries; a collateral channel, which links these dynamics to changes in collateral values; and a risk channel, which connects them to changes in external risky borrowing costs. We show that the lender channel significantly strengthens during sudden stops, suggesting that the distinctiveness of these episodes, relative to regular business cycles, may lie in acceleration mechanisms tied to financial intermediaries’ balance sheets. Finally, we document that the channels tend to be stronger for unsecured loans and risky firms, suggesting an important role of risk in driving the credit dynamics observed during sudden stops.
Consider a network of n single-server queues where tasks arrive independently at each server at rate λ_n. The servers are connected by a graph that is resampled at rate μ_n in a way that is symmetric with respect to the servers, and each task is dispatched to the shortest queue in the graph neighborhood where it appears. We aim to gain insight in the impact of the dynamic network structure on the load balancing dynamics in terms of the occupancy process which describes the empirical distribution of the number of tasks across the servers. This process evolves on the underlying dynamic graph, and its dynamics depend on the number of tasks at each individual server and the neighborhood structure of the graph. We establish that this dependency disappears in the limit as n →∞ when λ_n / n → λ and μ_n →∞, and prove that the limit of the occupancy process is given by a system of differential equations that depends solely on λ and the limiting degree distribution of the graph. We further show that the stationary distribution of the occupancy process converges to an equilibrium of the differential equations, and derive properties of this equilibrium that reflect the impact of the degree distribution. Our focus is on truly sparse graphs where the maximum degree is uniformly bounded across n, which is natural in load balancing systems.
In several queueing systems, arriving tasks have both service and timing requirements, and depart whenever one of them is attained. In several applications, the partial work performed by the system on tasks during their stay is still useful, even if the task is not completed. We analyze these partial service queues with abandonment under a many-server setting and characterize the equilibrium performance of several policies through fluid models. In particular, we show that deadline-oblivious policies like Least-Attained-Service and Last-Come-First-Served exhibit the same equilibrium performance as Earliest-Deadline-First. This striking property means that designers may avoid the difficult job of estimating deadlines without performance penalties. The conclusions are validated by numerical experiments.
This paper studies the impact of public support for innovation on the firm’s decision to establish non-technological strategic alliances. These alliances are crucial for firm efficiency and growth as they provide access to new markets, distribution channels, and expertise. We provide a theoretical discussion of the potential mechanisms at play (absorptive capacity and certification effect) and test them using Uruguayan data spanning the years 2007 to 2015. Our empirical findings present evidence of a positive causal effect of public support for innovation and a firm’s propensity to engage in non-technological strategic alliances. Additionally, we show that the absorptive capacity mechanism drives the effect while we find no evidence supporting the certification effect.
Purpose This paper investigates how audit firms identified and communicated the impacts of the COVID-19 pandemic in the key audit matters (KAMs) sections of audit reports, distinguishing whether such disclosure is highlighting or downplaying the COVID risks. Design/methodology/approach We analyze the KAM disclosures made for a sample of 34 Spanish IBEX-35 listed companies for the year 2020. Qualitative content analysis was conducted to derive a taxonomy of audit firms' attitudes on whether they highlighted or downplayed the importance of COVID-19 risk regarding company disclosures. To do so, the following categories were established: aligned COVID risk, generalist, conservative, aligned no COVID risk and potentially omissive. Findings The study findings indicate that 26% of total KAMs referred to COVID-19, and were concentrated in certain higher-risk business sectors. The results of this analysis provide initial evidence that most audit firms emphasized pandemic issues consistent with company disclosures. However, there was some variability, suggesting there is a need for clearer reporting standards amid such crises. Research limitations/implications The proposed alignment taxonomy conceptually enriches the literature on the assessment of financial transparency practices. Practical implications This study has significant implications for policymakers (for example, in assessing how auditors have communicated COVID-19-related issues) and for the auditors concerned (to identify the strengths and weaknesses of their approach) Social implications Among other implications, we highlight the crucial governance role played by risk disclosure in maintaining stakeholder legitimacy during periods of business and social turbulence. Originality/value To our knowledge, this is the first research conducted to determine the behavior of auditors in this respect, and to classify their attitudes accordingly.
