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There is a growing support for the view that the private sector is at least as efficient as the public sector in managing investment risks of large projects. Governments forget that it is the taxpayer who bears all the risks in a public finance scenario of investments. So, it seems unfounded that governments should neglect the cost of investment risk in obtaining finance as the taxpayer might be seen as a shareholder in (public) investments, which by definition are risky. It is this taxpayer-is-shareholder perspective that will be criticized in this paper. This taxpayer approach neglects the variety of funding and financing positions that might be taken by the various actors in investment projects. The paper concludes that some prudence is recommended in supporting private finance initiatives

This study examines the relationship between managerial overconfidence and corporate financing decisions by constructing proxies for managerial overconfidence based on the track records of earnings forecasts in Japanese listed firms. We find that managers have the stable tendency to forecast overly upward earnings compared to actual ones and that their upward bias decreases the probability of issuing equity in the public market by about 4.7 percent per one standard error, which economically has the strongest impact on financing decisions. This tendency is observed when we employ alternative measures for managerial overconfidence and other model specifications. However, in private placements, the choice to offer equity is not always avoided by managers. This implies that managers place private equity with the expectation of the certification effect

The purpose of this paper is to test the effect of informal finance and trade credit on the performance of private firms.

Based on a survey to private firms in 19 cities, the paper empirically tests the promoting effects of informal finance and trade credit on the performance of private firms in China.

It was found that informal finance and trade credit have positive effects on private firms' performance measured by ROA. The net income reinvestment rate of private firms is positively related to whether or not the firm adopts informal financing or trade credit financing. A private firm having limited access to formal finance is more inclined to rely on self‐funds and is more limited by financing choices. Informal financing and trade credit can relieve the tension of cash flow chain but cannot solve the financing constraints. The empirical results also show that bank credit is still not the main financing choice for private firms and has not yet played a promoting role in private firms' performance and growth. Informal finance is more important to promote performance in manufacturing industry, while trade credit is more effective in wholesale and trading industry. The results show the coexistence viability of informal financing channels and formal financial institutions in China.

The policy implication is the Chinese Government should take careful steps to regulate informal financing sources.

After some theoretical literature, such as Lin and Sun, this paper explores for the first time the effect of informal financing channels on the performance of private firms.

This study aims to examine whether debt financing creates incentives for private firms to engage in earnings management via classification shifting. Especially, the authors examine whether debt-induced financial reporting incentives differ depending on the type of debt (i.e. public bonds versus private loans) and whether such incentives are influenced by the characteristics of external auditors (i.e. initial audits and auditor size).

The study uses data on 93,427 Korean private firms from 2001 to 2016. Classification shifting is measured by the positive correlation between non-core expenses and unexpected core earnings estimated with ordinary least squares.

The empirical analyses reveal that private firms engage in classification shifting as do public firms. Importantly, classification shifting is observed only in private firms that have outstanding debt, but not in private firms without debt. Among debt-financing private firms, classification shifting is more prevalent for firms that issue public debt than for firms that only use private debt. In addition, classification shifting of debt-financing private firms is more successful when they are audited by new auditors that are one of the non-Big 4 firms.

The study provides evidence of classification shifting in private firms, which is novel to the literature. However, the inferences in the study depend on the validity of the model for detecting classification shifting.

This study helps lenders enhance their understanding on the financial reporting behaviors of borrowing firms. The results in this study suggest that lenders should be cautious in using core earnings for their investment decisions.

This study contributes to the literature by providing novel evidence of classification shifting in private firms. In addition, the authors contribute to the literature on debt-induced incentives for financial reporting.

Inefficiencies in the power sector resulting from underinvesting and underselling reduce the ability of governments to adequately finance energy projects. The purpose of this paper is to explore mechanisms of energy financing, benefits and challenges associated with innovative financing of energy infrastructure as well as strategies to improve innovative financing of energy infrastructure.

Questionnaires were used to elicit responses from respondents. Seventy-eight responses were retrieved. Mean score ranking, Kruskal–Wallis test and discriminant validity were the analysis conducted.

Partial credit guarantee; partial risk guarantee; credit enhancement; and loan guarantees were the significant mechanisms. Production efficiency; reduce pressure on public budgets; access to management expertise; and self-sustainability of infrastructure facilities were the significant benefits. Lack of transparency and adequate data for risk assessment; high up-front cost; heterogeneity, complexity, and presence of a large number of parties; and lack of a clear benchmark for measuring investment performance were the severest challenges. Complete transparency and accountability; political stability and public view on private provision of energy infrastructure services; and macroeconomic environment were the significant strategies.

This study is beneficial to energy sector as the current government of Ghana hints on willingness to involve private sector in management of the power sector.

The novelty of this study is that it is a pioneering study in Ghana on innovative financing of energy infrastructure.

Philanthropy is taken as a strategic behavior by private enterprises to obtain financial resources from governments. This paper aims to examine the relationship between private enterprise philanthropy and the debt finance, further investigating the way by which governments exchange resources with private enterprises.

The paper opted for an empirical study using a sample of 1,489 Chinese private-listed companies from 2007 to 2010. The study analyzed the relationship between philanthropy and debt finance based on the resource dependence theory and social exchange theory and tested the moderating effect of political connection.

Philanthropy can help private enterprises to get the debt finance, and this effect occurs mainly among the political connected private enterprises; the higher degree of credit allocation marketization is, the less philanthropy can affect the debt finance and the less influence political connection can exert on that relationship. Philanthropy contributes to debt financing mainly because it can help obtain more long-term loan, and this effect is more obvious for politically connected private enterprises in regulated industries.

This paper verifies the action logic of private enterprises philanthropy from the perspective of exchange behavior, which is helpful to understand the motive and influence of private enterprises philanthropy.

This paper aims to suggest the preferred mode of financing for major sub-sectors of infrastructure: roads, seaports, telecommunication and energy by examining which mode of infrastructure financing – public, private or public–private partnership (PPP) – has the maximum positive impact on the overall GDP of India. The same exercise was carried out for the overall infrastructure sector by integrating data from all the four sub-sectors.

The structural vector autoregressive approach was used with the period of analysis taken from 1995 to 2014. The stationary properties of the variables were checked by the Phillips–Perron unit root.

The PPP mode of financing was found to make the maximum positive impact on the GDP of India. Considering the four sub-sectors individually, it was concluded that the private mode of financing in roads, energy and telecom sectors has the maximum positive impact on the GDP, while the PPP gives optimal benefit to the seaports sector.

Results will aid the Indian Government and policymakers to efficiently design and develop their economic policies accordingly.

The study is novel in a sense that it helps to address the lack of research into the area of infrastructure financing in India.

The purpose of this paper is to investigate how the innovative firm’s proprietary information has an impact on its debt financing preference. This study also examines the impact of industry-level competition on the debt financing orders and investigates how two exogenous shocks impacted on innovative firms’ financing policies.

This paper uses the three types of debt data, including bonds, private debt placements and bank loans and patent application data, in the USA from 1987–2008. The number of patents applications and industry-level competition are used as proxies for a firm’s innovation and industry-level sensitivity. In addition, to minimize endogenous concern, this study uses the propensity score matching analysis and difference-in-differences.

The patents are the primary determinants for innovative firms to choose the debt types. The paper shows that innovative firms have the debt preference order – public debt, private placement and bank loans. However, as competition increases, innovative firms devise the order reverse. Finally, the paper provides evidence that the American Inventor’s Protection Act (AIPA) and the tech bubble crash made investors depend more on firms with more patents.

This paper is the first to study the impact of the AIPA on innovative firms’ financial policies using the propensity score matching analysis. The findings imply that both patents and industry-level competition are important factors to understand the capital structures for innovative firms.

The purpose of this paper is to shed light on the deleveraging impact of the anti-corruption campaign since the 18th National Congress of the Communist Party of China (CPC) on private firms with political connections, relative to those without political connections.

In this paper, taking the anti-corruption campaign employed from the end of 2012 as an exogenous shock, the authors design a quasi-experiment difference-in-difference approach to examine how the loss and failure of political connections impacts private firms’ debt financing.

The authors find that the loss and failure of political connections following the anti-corruption campaign since the 18th CPC National Congress causes the yearly new debt ratios of treatment firms with political connections to decrease, relative to those of control firms without political connections. This outcome is more pronounced for provinces with more cadres excluded in the anti-corruption campaign since the 18th CPC National Congress, which rendered politically connected firms susceptible to lose connections with central or provincial cadres. To explore the mechanism, the authors find that following the anti-corruption campaign since the 18th CPC National Congress, politically connected firms limit rent-seeking activities, whereas resource acquisition is weakened. The authors also find that the impact of the anti-corruption campaign since the 18th CPC National Congress on the debt financing of politically connected firms, relative to their counterparts, is more pronounced for groups with high levels of information asymmetry and for less explicit guarantee groups. Finally, politically connected firms are more likely to be dominated by internal funds in dealing with a loss of advantages in debt financing, compared with their counterparts without political connections.

The findings in this study suggest that the loss or failure of previous political connections following Xi’s anti-corruption campaign make politically connected firms lose the advantages in debt financing through the rent-seeking, resource acquisition, information asymmetry, implicit guarantee channels, which provide new evidence for research on the impact of the anti-corruption campaign since the 18th CPC National Congress on private firms’ financing behaviors via the loss or failure of existing political connections.

The findings in the study will have some inspiration for policy makers and entrepreneur.

This study provides new evidence on the different impacts of Xi’s anti-corruption campaign on private firm’s debt financing between politically connected and unconnected firms.

The purpose of this paper is to identify the problems faced by banks, lenders, financial institutions, public authority, developers and concessionaires in course of financing of public–private partnership (PPP) road projects. Subsequently, the reasons that contribute to these problems were analyzed to come up with recommendations for mitigation of these problems.

The methodology adopted is based on identification of financing problems and the reasons thereof, from a systematic and critical review of literature. Financing details including problems faced and reasons behind were extracted from details of one port, one airport and one road project. Data pertaining to financing of PPP road projects have been collected for completed (five projects) as well as projects under implementation (five projects) during a time interval of four months, starting from December 2018 to March 2019. The chosen three projects for case studies were executed in airport project at Kolkata in four years, offshore container terminal at Mumbai port in six years and Tuni Ankapali road project in three years. This period attains importance, as simultaneous progressive development and innovation in the PPP mode of project execution was taking place rapidly.

The commercial banks in India dominate in providing debt to the PPP infrastructure projects, especially in the road sector. The non-banking financial companies and other intermediaries were still in their infancy then, and a corporate bond market was growing steadily, though slowly. Financing problems faced by the developers resulted in unwarranted time and cost overruns emanating from delay in land acquisition and grant of approvals, with these being the two major barriers to private sector participation. Even schedule overrun finally resulted in increased construction and financing cost.

Demand for upgradation, building and expansion of transportation infrastructure (roads) exists to keep pace with economic development. Problems like lack of a developed market for financing, inadequate institutional capacity, lack of personnel having domain expertise and absence of exclusive legislation to govern the implementation of PPP road projects are encountered by the sponsors and developers. Delay in land acquisition and environment clearance inhibits any decisive action by the lenders and investors, as these two are integrally linked to the decisions to be taken with respect to the financing of projects. Investors and bankers are generally apprehensive of their investment getting locked in or ending up as non-performing assets. Identification and proposed mitigation of these problems may likely smoothen the rough edges for the financing of projects, resulting in smoother implementation.