{"id":614379,"date":"2024-03-26T20:13:57","date_gmt":"2024-03-26T17:13:57","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/corporations-use-government-grants-to-lighten-debt-load\/"},"modified":"2024-03-26T20:13:57","modified_gmt":"2024-03-26T17:13:57","slug":"corporations-use-government-grants-to-lighten-debt-load","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/corporations-use-government-grants-to-lighten-debt-load\/","title":{"rendered":"#Corporations use government grants to lighten debt load"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a348b99d66b2\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a348b99d66b2\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/corporations-use-government-grants-to-lighten-debt-load\/#New_corporate_obligations\" >New corporate obligations<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/corporations-use-government-grants-to-lighten-debt-load\/#Under-disclosure\" >Under-disclosure<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/corporations-use-government-grants-to-lighten-debt-load\/#Stakeholders_stiffed\" >Stakeholders stiffed<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/buradabiliyorum.com\/en\/corporations-use-government-grants-to-lighten-debt-load\/#More_transparency_on_the_way\" >More transparency on the way?<\/a><\/li><\/ul><\/nav><\/div>\n<div>\n<div class=\"article-gallery lightGallery\">\n<div data-thumb=\"https:\/\/scx1.b-cdn.net\/csz\/news\/tmb\/2019\/grant.jpg\" data-src=\"https:\/\/scx2.b-cdn.net\/gfx\/news\/hires\/2019\/grant.jpg\" data-sub-html=\"Credit: CC0 Public Domain\">\n<figure class=\"article-img\">\n            <img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/scx1.b-cdn.net\/csz\/news\/800a\/2019\/grant.jpg\" alt=\"grant\" title=\"Credit: CC0 Public Domain\" width=\"800\" height=\"453\"\/><figcaption class=\"text-darken text-low-up text-truncate-js text-truncate mt-3\">\n                Credit: CC0 Public Domain<br \/>\n            <\/figcaption><\/figure>\n<\/p><\/div>\n<\/div>\n<p>Local and state governments have a variety of tools at their disposal to attract businesses or entice them to stay. One is tax relief. Austin, for example, helped lure electric automaker Tesla in part with property tax rebates worth $14 million over 10 years.<\/p>\n<section class=\"article-banner first-banner ads-336x280\">\n         <!-- \/4988204\/Phys_Story_InText_Box --><\/p>\n<\/section>\n<p>In a study released today from Texas McCombs, Dean and Accounting Professor Lillian Mills finds that another kind of government aid\u2014cash grants\u2014has a different kind of impact. It helps companies lighten their balance sheets by borrowing less.<\/p>\n<p>Corporations that get government cash infusions have debt that&#8217;s 2%-3% lower than companies that haven&#8217;t received them, the study shows. The reason is that companies that receive the grants can factor the money into their financing upfront, making them less likely to borrow additional funds for capital investments.<\/p>\n<p>That&#8217;s good <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">news<\/a> for the companies, but veils of corporate secrecy often hide it, says Mills. &#8220;Traditionally, corporations have not voluntarily disclosed the government assistance they receive, which makes it difficult for shareholders to value the benefit effectively.&#8221;<\/p>\n<p>To pierce the veil, with co-author Ryan Hess, Ph.D. &#8217;21, of Oklahoma State University, Mills analyzed data on corporate financial awards from federal, state, and local governments from 2003 to 2013. The data was compiled from public records by the nonprofit Good Jobs First. Some other findings:<\/p>\n<h2><span class=\"ez-toc-section\" id=\"New_corporate_obligations\"><\/span>New corporate obligations<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>As a condition of getting a grant, a company often has to make measurable commitments. It might agree to hire a certain number of new employees locally or set wages at a certain level, with penalties if it doesn&#8217;t hit targets.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Under-disclosure\"><\/span>Under-disclosure<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>In most cases, companies aren&#8217;t publicly disclosing the grants they receive or the obligations they take on.<\/p>\n<p>This under-disclosure is a problem, says Hess. &#8220;We don&#8217;t really have a good idea as to who&#8217;s receiving the assistance. At the same time, we&#8217;re seeing that government assistance is just continuing to grow.&#8221;<\/p>\n<p>In 2022, the U.S. government gave assistance totaling over $37 billion, compared with $9 billion in 2003, according to Good Jobs First.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Stakeholders_stiffed\"><\/span>Stakeholders stiffed<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Information on grants and obligations is important for shareholders, investors, and the public alike, Hess says. Lacking such information, investors might overvalue a company. If assistance goes away in the future, the company may have to take on more debt, dragging down its stock price.<\/p>\n<p>&#8220;As an investor, if you&#8217;re aware of government assistance, you may want to do more digging,&#8221; says Hess.<\/p>\n<p>People need to know where their tax dollars are going, he adds, as well as what conditions their city&#8217;s major employers have to stick to. If a company fails to meet an obligation and loses its grant, it might not be able to stay in the community, hurting the local economy.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"More_transparency_on_the_way\"><\/span>More transparency on the way?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Stakeholders might find such information more accessible in the near future, Mills says. The Financial Accounting Standards Board (FASB), which sets corporate accounting rules, is developing one on disclosing government grants.<\/p>\n<p>&#8220;We look forward to seeing how the disclosure of government assistance evolves under the FASB&#8217;s new accounting standard on government assistance,&#8221; Mills says. &#8220;Stakeholders of both the corporations and the jurisdictions awarding assistance should benefit.&#8221;<\/p>\n<p>The study is <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/publications.aaahq.org\/accounting-horizons\/article\/doi\/10.2308\/HORIZONS-2020-098\/12336\/Government-Assistance-A-Growing-Underdisclosed\">published<\/a> in the journal <i>Accounting Horizons<\/i>.<\/p>\n<div class=\"article-main__more p-4\">\n                                                                                        <strong>More information:<\/strong><br \/>\n                                                Ryan V. Hess et al, Government Assistance: A Growing, Underdisclosed Financing Source, <i>Accounting Horizons<\/i> (2024). <a rel=\"nofollow noopener\" target=\"_blank\" data-doi=\"1\" href=\"https:\/\/dx.doi.org\/10.2308\/HORIZONS-2020-098\">DOI: 10.2308\/HORIZONS-2020-098<\/a><\/p>\n<\/div>\n<div class=\"d-inline-block text-medium mt-4\">\n<p>                                                    Provided by<br \/>\n                                                                                                            University of Texas at Austin<br \/>\n                                                                                                                <a rel=\"nofollow noopener\" target=\"_blank\" class=\"icon_open\" href=\"http:\/\/www.utexas.edu\/\"><br \/>\n                                                            <svg>\n                                                                <use href=\"https:\/\/phys.b-cdn.net\/tmpl\/v6\/img\/svg\/sprite.svg#icon_open\" x=\"0\" y=\"0\"\/>\n                                                            <\/svg><br \/>\n                                                        <\/a><\/p><\/div>\n<p>                                        <!-- print only --><\/p>\n<div class=\"d-none d-print-block\">\n<p>                                                <strong>Citation<\/strong>:<br \/>\n                                                Corporations use government grants to lighten debt load (2024, March 26)<br \/>\n                                                retrieved 26 March 2024<br \/>\n                                                from https:\/\/phys.org\/news\/2024-03-corporations-grants-debt.html<\/p>\n<p>                                             This document is subject to copyright. Apart from any fair dealing for the purpose of private study or research, no<br \/>\n                                             part may be reproduced without the written permission. The content is provided for information purposes only.<\/p><\/div>\n<\/p><\/div>\n<p><script id=\"facebook-jssdk\" async=\"\" src=\"https:\/\/connect.facebook.net\/en_US\/sdk.js\"><\/script><\/p>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMN63nwsw68G3Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more Like this articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/science\/\" target=\"_blank\" rel=\"noopener\">Science category.<\/a><\/span><\/strong>\n<\/p><\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/phys.org\/news\/2024-03-corporations-grants-debt.html\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Credit: CC0 Public Domain Local and state governments have a variety of tools at their disposal to attract businesses or entice them to stay. One is tax relief. Austin, for example, helped lure electric automaker Tesla in part with property tax rebates worth $14 million over 10 years. In a study released today from Texas&#8230;<\/p>\n","protected":false},"author":1,"featured_media":614380,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/scx2.b-cdn.net\/gfx\/news\/hires\/2019\/grant.jpg","fifu_image_alt":"","footnotes":""},"categories":[16],"tags":[],"class_list":["post-614379","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-sciencee"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/614379","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=614379"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/614379\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/614380"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=614379"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=614379"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=614379"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}