Vicente Cuñat
Date: 9 October 2026, Friday
Time: 13.30 – 14.30
Online
https://zoom.us/j/3370698252?pwd=OWRmQ1hNNWhRWng2QnhsTENzK1hGUT09&omn=93334435355&mynotes=on
Meeting ID: 337 069 8252
“Government Arrears and Corporate Policies: Lessons from a Natural Experiment”
by
Vicente Cuñat
London School of Economics
Abstract
We study how late payment in public procurement affects corporate policies by analyzing a public program that unexpectedly repaid local government arrears. Our identification strategy compares firms includedin the program with similar firms that were accidentally excluded. Early repayment of arrears leads to real effects and heterogeneous corporate responses. Financially unconstrained firms repay financial debt and accumulate cash, while constrained firms repay suppliers, build cash, and increase investment. This suggests that financially constrained firms can only partially offset the liquidity cost of arrears, while unconstrained firms, with better access to bank credit, fully accommodate them. The accumulation of arrears also deteriorates procurement relationships, which do not recover after repayment.
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Bio
Vicente Cuñat is Professor of Finance at the London School of Economics and Political Science. His research covers corporate governance, corporate finance and managerial economics, including shareholder voting and empowerment, mergers and acquisitions, financing constraints and labour misallocation, trade credit, information provision and incentive contracts. He has published theoretical and empirical work in the American Economic Review, the Journal of Finance, the Journal of Financial Economics, theReview of Financial Studies, Management Science and the Journal of the European Economic Association, among others. He is a graduate of the Universidad de Valencia and holds an MSc from CEMFI and a PhD in Economics from the London School of Economics. He is a Research Fellow of CEPR and a Research Associate of the European Corporate Governance Institute, and serves as an Associate Editor of theJournal of Finance and the Journal of Corporate Finance.