Johnson's Campello Offers Insights to European Central Bankers on Corporate Liquidity During and After the Financial Crisis

2/7/2012 3:18:00 PM

Murillo Campello’s keynote address at Banque de France conference to focus on risk management and consider the future, as corporations continue to hoard cash

Johnson at Cornell University’s Murillo Campello will give a keynote address to European bankers on February 10, 2012, at a conference hosted by the Banque de France, titled “Firms’ Financing and Default Risk During and After the Crisis.” Campello, the Lewis H. Durland Professor of Management and professor of finance, is an internationally recognized scholar of financial economics. His research has been cited by prominent policy authorities, such as the Federal Reserve Chairman, mentioned in Congressional hearings, described in the” Economic Report of the President”, and used to advise the U.S. Supreme Court.



Campello’s keynote address will focus on the ways in which firms managed liquidity and crafted their own financial policies during and after the financial crisis—policies and practices that have resulted in huge corporate cash reserves.

“U.S. firms have more than $2 trillion in cash sitting on their balance sheets, cash they are holding due to uncertainties in the economy that make it difficult to invest or build from the ground up,” Campello says. “The question is: how will they use the cash, when they are ready to spend, and can and will they make good choices, in the absence of tight monitoring and credit-market scrutiny?”

One thing seems fairly certain, Campello says: there will likely be a tsunami cash-based merger-and-acquisition activity, as the global economy stabilizes, where cash trapped in large companies is used to buy existing firms.

“We may see hostile takeovers, in particular, especially in Asia and South America, where economic growth is occurring and U.S. corporate cash is currently parked for tax reasons,” he says. “Regardless it will be good to be in investment banking, in the next few years.”

In addition to his keynote address, Campello also will participate in a closing roundtable debate on firms’ financing practices going forward. His address and roundtable discussion are among a number of presentations by finance scholars, invited to the conference to help bankers assess recent research on the evolution of firms' financing during the financial crisis, and of implications of the crisis for their default risk and survival.

rating
  Comments