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Marc Deloof

University of Antwerp, Department of Accountancy and Finance, Faculty Member

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I’m a Professor of Corporate Finance at the University of Antwerp. From 2012 to 2015 I was also Head of the Department of Accounting and Finance. Prior to joining the University of Antwerp in 2000, I was a Post-Doctoral Research Fellow of the Flemish Fund for Scientific Research (FWO) after receiving my PhD from the Free University of Brussels in 1996. I was also Visiting Professor at the Hull University Business School, the University of Calabria and the University of International Business and Economics in Beijing, and held part-time positions at the Louvain School of Management, the Vlerick Business School, Ghent University, and Hasselt University.

I very much like doing research. While I have a broad interest in the fields of corporate finance and corporate governance, my research focuses on entrepreneurial finance, (multinational) business group finance and financial history. I have supervised several PhD students and published in a wide range of international academic journals. These include journals in the fields of finance (such as Journal of Corporate Finance, Journal of Banking and Finance, Financial Management), accounting (such as Review of Accounting Studies, Journal of Business Finance and Accounting), small business (such as Small Business Economics, Family Business Review) and economic history (such as Journal of Economic History, Explorations in Economic History).

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University of Antwerp

Gunseli Tumer-alkan

Ghent University

Carlo Brambilla

Università degli Studi dell'Insubria

Patrice Baubeau

Université Paris Nanterre

Rotterdam school of Management, Erasmus University

Yukihiro Yasuda

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Papers by Marc Deloof

Do Universal Banks Create Value? Universal Bank Affiliation and Company Performance in Belgium, 1905-1909

We investigate the impact of universal banks on the performance and the risk of affiliated compan... more We investigate the impact of universal banks on the performance and the risk of affiliated companies in an unregulated environment with booming financial markets. For a unique sample of 129 Belgian companies listed in the period 1905-1909, we find that universal bank affiliation had a positive impact on the market-to-book ratio and return-on-assets. The effect on performance was positively related

Who's Afraid of Foreigners? Religion, Trust, and Directors in Multinational Corporations

SSRN Electronic Journal, 2000

For a sample of 781 Belgian subsidiaries of multinational corporations (MNCs) from 13 different c... more For a sample of 781 Belgian subsidiaries of multinational corporations (MNCs) from 13 different countries, we investigate how religion and trust in the parent country of the MNC affect the likelihood that the board of directors of the Belgian subsidiary includes parent country nationals, and the likelihood that the managing director of the subsidiary is a parent country national. Consistent with our hypotheses, we find that the likelihood of parent country (managing) directors is greater if the parent company is located in a Catholic country, a country where interpersonal trust is lower, or a country characterized by higher power distance.

External financing, information disclosure and the timeliness of annual shareholder meetings and financial statement filings in Belgium

Business Elites, Political Connections, and Economic Entrenchment: Evidence from Belgium 1858-1909

by Marc Deloof and Mihaela Ghita

SSRN Electronic Journal, 2000

Pre-World War I Belgium was characterized by a strong concentration of power in the hands of a sm... more Pre-World War I Belgium was characterized by a strong concentration of power in the hands of a small elite with ties to business, banks, and politics. We find that political and upper class connections were widespread amongst listed firms, especially connections with the ruling political party. Connected firms had higher growth levels and a higher probability of survival.

Leases and Debt: Complements or Substitutes? Evidence from Belgian SMEs

Journal of Small Business Management, 2007

This study investigates the lease-debt relationship for Belgian small and mediumsized enterprises... more This study investigates the lease-debt relationship for Belgian small and mediumsized enterprises (SMEs). Traditional finance theory suggests that leases and corporate debt are substitutes: both leases and debt are fixed, contractual obligations that reduce the firm's debt capacity. More use of leases should therefore be associated with less non-lease debt financing. However, some empirical studies find that for large firms, leases and debt are complements. A theoretical explanation for this so-called "leasing puzzle" is based on the tax advantage of leasing over debt. However, in Belgium, tax differences between lessor and lessee do not affect the choice between leases and debt, because the lessee is considered to be the fiscal owner of the assets. He may write off these assets for tax purposes, and the interest part of the lease payments are deductible from his taxable income. Leases and debt can therefore be expected to be substitutes. This hypothesis is tested for a sample of 5,595 firm-year observations for 1,119 Belgian nonfinancial SMEs in the 1995-1999 period. The results indeed provide strong support for the substitution hypothesis: more debt is associated with less leases.

Bank affiliations and corporate dividend policy in pre-World War I Belgium

Business History, 2010

We investigate the impact of universal banks on the dividend policy of affiliated companies, in a... more We investigate the impact of universal banks on the dividend policy of affiliated companies, in an environment characterised by poor investor protection, booming stock markets and strong banks. Our results, based on a unique sample of 428 listed companies in pre-World War I Belgium, are consistent with the hypothesis that companies with good investment opportunities and a bank director on

Venture Capital, Private Equity and Earnings Quality

Working Papers of Faculty of Economics and Business Administration Ghent University Belgium, Feb 22, 2004

B-9000 GENT Tel.

D/2004/6482/02 Venture Capital, Private Equity and Earnings Quality

De impact van groepsaffiliaties op de effectieve belastingdruk van Belgische ondernemingen

Private Equity Investments and Disclosure Policy

Working Papers of Faculty of Economics and Business Administration Ghent University Belgium, Feb 14, 2005

ABSTRACT In the current study, we dynamically analyze unlisted firms&#39; voluntary disclosur... more ABSTRACT In the current study, we dynamically analyze unlisted firms&#39; voluntary disclosure decisions around private equity (PE) participation. First, we disentangle the role of disclosure in attracting PE investments. In addition, we examine the extent to which a firm&#39;s disclosure policy is affected by the changing corporate setting and intensified corporate governance after having received PE. We find no evidence that firms would employ increased disclosure to signal their quality in the years preceding the PE financing. However, we document a significant switch to increased financial disclosure from the PE investment year onwards, consistent with the hypothesis that PE investor presence positively affects portfolio firms&#39; disclosure decisions. Further, we show that the proportional PE ownership stake is positively related to increased disclosure, but only at very high ownership levels. We explain these results in that both internal and external information demands call for higher public disclosure in PE firms. We conclude that the changing information environment resulting from a PE investment stimulates increased public financial disclosure. Our results contribute to illustrate how an indisputable change in governance resulting from a PE investment affects inter-temporal corporate disclosure decisions in unlisted firms.

Private equity investment and disclosure policy

Several studies have already addressed the question whether R&D subsidies lead to additionality e... more Several studies have already addressed the question whether R&D subsidies lead to additionality effects or crowd out firms’ private investment. This paper provides insights into the impact of R&D grants on private R&D expenditure, distinguishing between research and development activities. We employ parametric treatment effects models and IV regression methods. The hypothesis that firms respond differently to R&D subsidies depending on the nature of the R&D activity is confirmed. R&D subsidies are found to mainly contribute to an increase in development expenditure. By contrast, crowding out effects for the research part cannot be rejected.

Business groups, taxes and accruals management

SSRN Electronic Journal

This paper provides evidence that Belgian firms belonging to a business group have a lower effect... more This paper provides evidence that Belgian firms belonging to a business group have a lower effective tax rate (ETR) and face a less positive association between pre-tax income and ETRs than independent firms. These findings suggest that individual group members apply efficient tax planning techniques in order to minimize taxes at the group level. We hypothesize that group firms strategically adjust firm-level reported earnings levels in response to tax incentives. We find evidence consistent with this hypothesis, in that the intrinsic negative association between total accruals and operating cash flows is more (less) pronounced for group firms facing a positive (zero) marginal tax rate status, compared to independent firms. In addition, we find that a group firm s net tax-paying situation is more important in its discretionary accruals reporting decisions, compared to independent firms. Finally, we identify intra-group receivables as relevant tax-reducing accruals components. Result...

The value of government ownership during the global financial crisis

Journal of Corporate Finance, 2015

ABSTRACT This paper examines the value of government ownership in Europe during the global financ... more ABSTRACT This paper examines the value of government ownership in Europe during the global financial crisis. This crisis was an exogenous shock for European firms, which allows us to observe an out-of-equilibrium effect on the costs and benefits of government ownership. Using a comprehensive sample of 4,737 listed firms in 28 European countries over the period 2005–2009, we find that firms with government ownership experienced a smaller reduction in firm value than firms without government ownership. This effect was driven by firms located in countries where the risk of expropriation by the government is lower, that is, countries with less corruption and better investor protection.

Financial Reporting, Disclosure, and Corporate Governance

Oxford Handbooks Online, 2013

Business Groups, Taxes and Accruals Management

SSRN Electronic Journal, 2000

This paper provides evidence that Belgian firms belonging to a business group have a lower effect... more This paper provides evidence that Belgian firms belonging to a business group have a lower effective tax rate (ETR) and face a less positive association between pre-tax income and ETRs than independent firms. These findings suggest that individual group members apply efficient tax planning techniques in order to minimize taxes at the group level. We hypothesize that group firms strategically adjust firm-level reported earnings levels in response to tax incentives. We find evidence consistent with this hypothesis, in that the intrinsic negative association between total accruals and operating cash flows is more (less) pronounced for group firms facing a positive (zero) marginal tax rate status, compared to independent firms. In addition, we find that a group firm's net tax-paying situation is more important in its discretionary accruals reporting decisions, compared to independent firms. Finally, we identify intra-group receivables as relevant tax-reducing accruals components. Results are robust to alternative model specifications, variable definitions and measures.

Cross-jurisdictional income shifting and tax enforcement: evidence from public versus private multinationals

Review of Accounting Studies, 2014

ABSTRACT This paper examines the impact of tax enforcement and public listing status on income sh... more ABSTRACT This paper examines the impact of tax enforcement and public listing status on income shifting by multinational corporations (MNCs). For a sample of over 8,000 subsidiaries that are majority-owned by 959 European MNCs over the period 1998–2009, we find strong evidence of income shifting from high to low tax countries and that income is shifted more out of high-tax countries when local tax enforcement is weak. In addition, we show that private MNCs exploit weak tax enforcement more to shift income out of the parent country compared to public MNCs. Combined, our results suggest that tax enforcement plays a crucial role in MNC income shifting decisions and that shifting is more aggressive when MNCs are less affected by nontax shifting costs as is the case in private MNCs.

Earnings Management Contagion in Multinational Corporations

SSRN Electronic Journal, 2000

In this study, we examine whether corporate governance characteristics of multinational corporati... more In this study, we examine whether corporate governance characteristics of multinational corporations (MNCs) and the institutional structure in their home-country influence earnings management by their domestic and foreign-owned subsidiaries. We perform our analyses on a large sample of both publicly traded and privately held majority-owned subsidiaries of listed MNCs across Europe. Our results are consistent with the conjecture that subsidiary-level earnings management is higher when the subsidiary-country institutional quality is weak.

Corporate governance and cash policies of multinational corporations

This study investigates cash policies of multinational corporations (MNCs) for a large sample of ... more This study investigates cash policies of multinational corporations (MNCs) for a large sample of European MNCs and their subsidiaries in the period 1998-2004. The results are consistent with the hypothesis that cash holdings depend on a trade-off between the superior knowledge of the subsidiary over headquarters and the agency costs of discretionary behavior by the subsidiary’s management. We find that

De impact van groepsaffiliaties op de effectieve belastingdruk van Belgische ondernemingen

The Value of Stable Ownership During the Global Financial Crisis

SSRN Electronic Journal, 2000

Do Universal Banks Create Value? Universal Bank Affiliation and Company Performance in Belgium, 1905-1909

We investigate the impact of universal banks on the performance and the risk of affiliated compan... more We investigate the impact of universal banks on the performance and the risk of affiliated companies in an unregulated environment with booming financial markets. For a unique sample of 129 Belgian companies listed in the period 1905-1909, we find that universal bank affiliation had a positive impact on the market-to-book ratio and return-on-assets. The effect on performance was positively related

Who's Afraid of Foreigners? Religion, Trust, and Directors in Multinational Corporations

SSRN Electronic Journal, 2000

For a sample of 781 Belgian subsidiaries of multinational corporations (MNCs) from 13 different c... more For a sample of 781 Belgian subsidiaries of multinational corporations (MNCs) from 13 different countries, we investigate how religion and trust in the parent country of the MNC affect the likelihood that the board of directors of the Belgian subsidiary includes parent country nationals, and the likelihood that the managing director of the subsidiary is a parent country national. Consistent with our hypotheses, we find that the likelihood of parent country (managing) directors is greater if the parent company is located in a Catholic country, a country where interpersonal trust is lower, or a country characterized by higher power distance.

External financing, information disclosure and the timeliness of annual shareholder meetings and financial statement filings in Belgium

Business Elites, Political Connections, and Economic Entrenchment: Evidence from Belgium 1858-1909

by Marc Deloof and Mihaela Ghita

SSRN Electronic Journal, 2000

Pre-World War I Belgium was characterized by a strong concentration of power in the hands of a sm... more Pre-World War I Belgium was characterized by a strong concentration of power in the hands of a small elite with ties to business, banks, and politics. We find that political and upper class connections were widespread amongst listed firms, especially connections with the ruling political party. Connected firms had higher growth levels and a higher probability of survival.

Leases and Debt: Complements or Substitutes? Evidence from Belgian SMEs

Journal of Small Business Management, 2007

This study investigates the lease-debt relationship for Belgian small and mediumsized enterprises... more This study investigates the lease-debt relationship for Belgian small and mediumsized enterprises (SMEs). Traditional finance theory suggests that leases and corporate debt are substitutes: both leases and debt are fixed, contractual obligations that reduce the firm's debt capacity. More use of leases should therefore be associated with less non-lease debt financing. However, some empirical studies find that for large firms, leases and debt are complements. A theoretical explanation for this so-called "leasing puzzle" is based on the tax advantage of leasing over debt. However, in Belgium, tax differences between lessor and lessee do not affect the choice between leases and debt, because the lessee is considered to be the fiscal owner of the assets. He may write off these assets for tax purposes, and the interest part of the lease payments are deductible from his taxable income. Leases and debt can therefore be expected to be substitutes. This hypothesis is tested for a sample of 5,595 firm-year observations for 1,119 Belgian nonfinancial SMEs in the 1995-1999 period. The results indeed provide strong support for the substitution hypothesis: more debt is associated with less leases.

Bank affiliations and corporate dividend policy in pre-World War I Belgium

Business History, 2010

We investigate the impact of universal banks on the dividend policy of affiliated companies, in a... more We investigate the impact of universal banks on the dividend policy of affiliated companies, in an environment characterised by poor investor protection, booming stock markets and strong banks. Our results, based on a unique sample of 428 listed companies in pre-World War I Belgium, are consistent with the hypothesis that companies with good investment opportunities and a bank director on

Venture Capital, Private Equity and Earnings Quality

Working Papers of Faculty of Economics and Business Administration Ghent University Belgium, Feb 22, 2004

B-9000 GENT Tel.

D/2004/6482/02 Venture Capital, Private Equity and Earnings Quality

De impact van groepsaffiliaties op de effectieve belastingdruk van Belgische ondernemingen

Private Equity Investments and Disclosure Policy

Working Papers of Faculty of Economics and Business Administration Ghent University Belgium, Feb 14, 2005

ABSTRACT In the current study, we dynamically analyze unlisted firms&#39; voluntary disclosur... more ABSTRACT In the current study, we dynamically analyze unlisted firms&#39; voluntary disclosure decisions around private equity (PE) participation. First, we disentangle the role of disclosure in attracting PE investments. In addition, we examine the extent to which a firm&#39;s disclosure policy is affected by the changing corporate setting and intensified corporate governance after having received PE. We find no evidence that firms would employ increased disclosure to signal their quality in the years preceding the PE financing. However, we document a significant switch to increased financial disclosure from the PE investment year onwards, consistent with the hypothesis that PE investor presence positively affects portfolio firms&#39; disclosure decisions. Further, we show that the proportional PE ownership stake is positively related to increased disclosure, but only at very high ownership levels. We explain these results in that both internal and external information demands call for higher public disclosure in PE firms. We conclude that the changing information environment resulting from a PE investment stimulates increased public financial disclosure. Our results contribute to illustrate how an indisputable change in governance resulting from a PE investment affects inter-temporal corporate disclosure decisions in unlisted firms.

Private equity investment and disclosure policy

Several studies have already addressed the question whether R&D subsidies lead to additionality e... more Several studies have already addressed the question whether R&D subsidies lead to additionality effects or crowd out firms’ private investment. This paper provides insights into the impact of R&D grants on private R&D expenditure, distinguishing between research and development activities. We employ parametric treatment effects models and IV regression methods. The hypothesis that firms respond differently to R&D subsidies depending on the nature of the R&D activity is confirmed. R&D subsidies are found to mainly contribute to an increase in development expenditure. By contrast, crowding out effects for the research part cannot be rejected.

Business groups, taxes and accruals management

SSRN Electronic Journal

This paper provides evidence that Belgian firms belonging to a business group have a lower effect... more This paper provides evidence that Belgian firms belonging to a business group have a lower effective tax rate (ETR) and face a less positive association between pre-tax income and ETRs than independent firms. These findings suggest that individual group members apply efficient tax planning techniques in order to minimize taxes at the group level. We hypothesize that group firms strategically adjust firm-level reported earnings levels in response to tax incentives. We find evidence consistent with this hypothesis, in that the intrinsic negative association between total accruals and operating cash flows is more (less) pronounced for group firms facing a positive (zero) marginal tax rate status, compared to independent firms. In addition, we find that a group firm s net tax-paying situation is more important in its discretionary accruals reporting decisions, compared to independent firms. Finally, we identify intra-group receivables as relevant tax-reducing accruals components. Result...

The value of government ownership during the global financial crisis

Journal of Corporate Finance, 2015

ABSTRACT This paper examines the value of government ownership in Europe during the global financ... more ABSTRACT This paper examines the value of government ownership in Europe during the global financial crisis. This crisis was an exogenous shock for European firms, which allows us to observe an out-of-equilibrium effect on the costs and benefits of government ownership. Using a comprehensive sample of 4,737 listed firms in 28 European countries over the period 2005–2009, we find that firms with government ownership experienced a smaller reduction in firm value than firms without government ownership. This effect was driven by firms located in countries where the risk of expropriation by the government is lower, that is, countries with less corruption and better investor protection.

Financial Reporting, Disclosure, and Corporate Governance

Oxford Handbooks Online, 2013

Business Groups, Taxes and Accruals Management

SSRN Electronic Journal, 2000

This paper provides evidence that Belgian firms belonging to a business group have a lower effect... more This paper provides evidence that Belgian firms belonging to a business group have a lower effective tax rate (ETR) and face a less positive association between pre-tax income and ETRs than independent firms. These findings suggest that individual group members apply efficient tax planning techniques in order to minimize taxes at the group level. We hypothesize that group firms strategically adjust firm-level reported earnings levels in response to tax incentives. We find evidence consistent with this hypothesis, in that the intrinsic negative association between total accruals and operating cash flows is more (less) pronounced for group firms facing a positive (zero) marginal tax rate status, compared to independent firms. In addition, we find that a group firm's net tax-paying situation is more important in its discretionary accruals reporting decisions, compared to independent firms. Finally, we identify intra-group receivables as relevant tax-reducing accruals components. Results are robust to alternative model specifications, variable definitions and measures.

Cross-jurisdictional income shifting and tax enforcement: evidence from public versus private multinationals

Review of Accounting Studies, 2014

ABSTRACT This paper examines the impact of tax enforcement and public listing status on income sh... more ABSTRACT This paper examines the impact of tax enforcement and public listing status on income shifting by multinational corporations (MNCs). For a sample of over 8,000 subsidiaries that are majority-owned by 959 European MNCs over the period 1998–2009, we find strong evidence of income shifting from high to low tax countries and that income is shifted more out of high-tax countries when local tax enforcement is weak. In addition, we show that private MNCs exploit weak tax enforcement more to shift income out of the parent country compared to public MNCs. Combined, our results suggest that tax enforcement plays a crucial role in MNC income shifting decisions and that shifting is more aggressive when MNCs are less affected by nontax shifting costs as is the case in private MNCs.

Earnings Management Contagion in Multinational Corporations

SSRN Electronic Journal, 2000

In this study, we examine whether corporate governance characteristics of multinational corporati... more In this study, we examine whether corporate governance characteristics of multinational corporations (MNCs) and the institutional structure in their home-country influence earnings management by their domestic and foreign-owned subsidiaries. We perform our analyses on a large sample of both publicly traded and privately held majority-owned subsidiaries of listed MNCs across Europe. Our results are consistent with the conjecture that subsidiary-level earnings management is higher when the subsidiary-country institutional quality is weak.

Corporate governance and cash policies of multinational corporations

This study investigates cash policies of multinational corporations (MNCs) for a large sample of ... more This study investigates cash policies of multinational corporations (MNCs) for a large sample of European MNCs and their subsidiaries in the period 1998-2004. The results are consistent with the hypothesis that cash holdings depend on a trade-off between the superior knowledge of the subsidiary over headquarters and the agency costs of discretionary behavior by the subsidiary’s management. We find that

De impact van groepsaffiliaties op de effectieve belastingdruk van Belgische ondernemingen

The Value of Stable Ownership During the Global Financial Crisis

SSRN Electronic Journal, 2000