Closure within multi-plant firms: evidence from Japan

In the literature there is substantial evidence that a plant is more likely to be closed down if it is owned by a firm with other plants or is owned by a multinational enterprise (MNE). But does ownership or multi-plant status matter for which plants are closed? Using Japanese data we study plant closure by multi-plant MNEs and non-MNEs. We show that both organisational forms raise the probability of plant exit and that plants that are relatively small and capital unintensive relative to the rest of the firm are significantly more likely to exit.     

The demand for foreign workers by foreign firms: evidence from Africa

Foreign workers play a crucial role in channelling resources and information flows both within the boundaries of firms and between foreign firms and the host country economy. In this study we employ a novel firm-level database (UNIDO Africa Investor Survey 2010) in order to investigate the factors that determine the employment of foreign workers by foreign firms in Sub-Saharan African countries. We shed light on important firm-level as well as host–home country characteristics which shape the demand of foreign workers in developing countries. We show that differences between investors are largely explained by the role played by economic and institutional distance between home–host countries as well as by firm-level heterogeneity in the degrees of knowledge intensity and local embeddedness.     

Does agglomeration promote internationalization of Chinese firms?

Knowledge spillover from the agglomeration of exporters can reduce the initial costs of exporting faced by other firms and thereby facilitate exports. We use a large dataset of Chinese manufacturing firms to assess whether industrial agglomeration lowers the minimum productivity level required for exporting and whether it increases a firm's probability of exporting. Semi-parametric quantile regressions reveal that the productivity advantage of exporters against non-exporters is markedly smaller in agglomerated regions. Furthermore, a parametric estimation of an export entry model indicates that the agglomeration of incumbent exporters contributes significantly to export participation, although its magnitude is limited. These spillover effects are generated not only by the agglomeration of exporting foreign invested firms (FIFs), but also, more importantly, by that of indigenous Chinese exporters. In fact, the agglomeration of exporting FIFs only contributes to the export entry of FIFs.     

Innovation and exporting: evidence from Spanish manufacturing firms

This paper investigates the relationship between innovation and the export behavior of firms using data from a representative panel of Spanish firms over 1991–2002. It presents a simple theoretical model of the firm decision to export and innovate that guides the econometric analysis. Consistent with the predictions of the theoretical model, the econometric results suggest a positive effect of firm innovation on the probability of participation in export markets. The results further reveal the heterogeneous effects of different types of innovations on the firm export participation. In particular, product upgrading appears to have a larger effect on the firm export participation than the introduction of cost-saving innovations. These findings are robust to firm unobserved heterogeneity, dynamic specifications, and to the use of instrumental variables to control for the potential endogeneity between innovation and exporting.     

The effects at home of initiating production abroad: evidence from matched French firms

Based on matching techniques in combination with a difference-in-difference estimator, this paper estimates the effects at home of initiating production abroad through the establishment of a foreign production affiliate. The analysis covers manufacturing and service firms active in France during the period 1987–1999. We show that the motivation to start producing abroad is an important determinant of its impact at home. Market-seeking foreign direct investment (FDI) in manufacturing is associated with significant scale effects, resulting in job creation. By contrast, factor-seeking FDI in manufacturing has no significant effect on employment. However, there is some evidence that this type of FDI is associated with technology effects, in the form of greater capital-intensity and efficiency, as well as larger exports. Finally, FDI in service sectors is associated with significant positive employment effects, presumably reflecting the importance of the market-seeking motive in these sectors.     

The innovation of family firms in China: New evidence from the China employer-employee survey

Drawing on China Employer-Employee Survey data collected in 2018, this study examines the effects of family ownership on firm innovation in China. Baseline regressions suggest that Chinese family firms have significantly lower R&D investment and number of patents than non-family firms, and the results are not sensitive to response quality, unobserved characteristics, and non-random assignment of family ownership. Furthermore, this gap can be effectively explained by the lower management quality of family firms. Heterogeneous analyses indicate that the low innovation of family firms appears only in more competitive environments. To improve innovation, we suggest that Chinese family firms should make increased efforts to upgrade their management.     

Multinational activity and CEO compensation: Preliminary evidence from large UK firms

Multinational Activity and CEO Compensation: Preliminary Evidence from Large UK Firms. — Since the early 1980s the rate of growth in executive remuneration has consistently outpaced that of average earnings. This phenomenon has been widely assumed to be part of an internationalization of the executive labor market. This paper starts from the premise that the multinational enterprise will be a major agent in such a market and presents some preliminary tests for the impact of multinational activity in general, and specific regional effects in particular, on CEO remuneration using a sample of large UK firms. Surprisingly, we find no evidence to support our conjecture that CEO pay will be positively related to firm involvement in the United States. However, multinational activity does generate a significant premium over purely domestic activity.     

Financial reform and financing constraints: Some evidence from listed Chinese firms

This paper examines the impact of recent financial reforms in China on the financing constraints and investment of publicly-listed Chinese firms. Two continuous indices are constructed to measure the evolution and intensity of financial reforms: a financial liberalization index and a capital control index. Dynamic panel GMM method is used to estimate firms' financing constraints in an Euler-equation investment model. Based on panel data of listed firms for 1996–2007, we find that large firms face no credit constraints and smaller firms display significant constraints. However, the sensitivity of large firms' investment to their cash holdings is heightened as more financial reforms take place. It appears that reforms that gradually eliminate preferential treatments to large firms, primarily state-owned enterprises (SOEs) in China, have subjected these firms' investment decisions to stricter market-based discipline and therefore raised their financing constraints. No significant change in the financing constraint is detected for smaller firms in China. This is interpreted as financial reform in China has not been substantial enough for its benefits to reach smaller firms.     

Monetary policy and financial investments of nonfinancial firms: New evidence from China

This paper develops a portfolio choice model by incorporating monetary policy and analyzes the determinants of financial investments of nonfinancial firms in China. Unlike the literature assuming financial investments are riskless, we allow risks in both financial and real investments in firms' portfolio choice model. Our theoretical framework suggests that monetary policy, relative risk in fixed investment, and the risk-adjusted return gap between financial and fixed investments are determinants of firms' financial investments. Using firm-level panel data over the period from 2006 to 2016, we find that the relative risk in fixed investment and quantitative expansionary monetary policy have led to rising financial investments of nonfinancial firms in China over the post-2008 financial crisis period, whereas the rate of the risk-adjusted return gap between financial and fixed investments plays no role in firms' financial investments. The impact of monetary policy on firms' financial investments is also interlinked with their ownerships, with distinct impacts emerging between state-owned and non-state-owned firms.     

The micro-economic effects of financial market structure: evidence from 20th century North American steel firms

This paper analyzes the historical relationship between domestic financial institutions, firm level financing decisions, and average capital costs in a sample of US and Canadian firms from a large and economically important manufacturing industry—primary steel production. We find that national capital market characteristics and firm specific characteristics were important determinants of 20th century US and Canadian steel firms’ financing decisions. We also show that, despite source-specific price differences, average capital costs were approximately equal in the two countries, and the firms’ financing decisions were important determinants of these average capital costs. We conclude that firms structured their balance sheets in an effort to exploit the idiosyncratic features of their domestic financial institutions, and thereby, minimize their average capital costs.     

The value impact of name changes evidence from Chinese firms during the technology boom

For a sample of US stocks in the period 1998–1999, Cooper, Dimitrov, and Rau (2001) report dramatic value increases in the 10 days around the announcement of dotcom name changes. We find much smaller value changes for a sample of Chinese listed firms with changes to internet-related dotcom names for the 1998 to 2002 period. This result is surprising given the high proportion of retail trading in China and the prohibition to short sell Chinese stocks. Also in contrast to Cooper, Dimitrov, and Rau (2001), we find that most of the value increase for our sample firms is realized gradually prior to the announcement. Further investigation reveals that our sample firms experience more frequent CEO-turnover, significant increase in return-on-assets, and involve more restructure activities around the name change event. These results suggest that the value increases for firms with name changes are the consequence of substantial and successful operational changes, and that the name change is simply part of that process, instead of the cosmetic effects of name change or investor mania suggested by previous studies.     

Information related service trade within firms: evidence from firm-level data in Germany

Review of World Economics - Multi-unit firms have productivity advantages over competitors because of their use of a non-rival asset—firm-specific knowledge—in several units. Using...     

Independent directors and firm performance in family controlled firms: evidence from Indonesia

We analyse the relationship between board structure and firm performance in family‐controlled firms using a sample of Indonesian non‐financial companies. We find that the share of independent directors on the board has an insignificant relationship with firm performance. We suspect that the result is driven by the lack of institutional reforms in relation to the appointment of independent directors. Our analysis shows strong empirical support for the proposition that family control (family ownership and family involvement on the board) is negatively related to firm performance. However, the significant effect of family ownership disappears when family involvement on the board is taken into the model. This result indicates that family ownership is more detrimental to firm performance whenever the family is highly involved in control decisions. Our results suggest that Indonesia needs to implement governance reforms that prevent majority owners from exercising excessive control over firms.     

Trading firms in the services sectors: comparable evidence from four EU countries

We establish a set of stylised facts for trade and trading firms in five market services sectors using comparable firm- and activity-level data from four EU countries. Our analysis shows that exports account for much lower shares of overall sales in the services sectors than in manufacturing. This is because fewer firms are engaged in trade in the services sectors and also because within particular sectors firms trade a lower share of their sales on average. Services producers trade mostly goods, but in terms of value, trade in services is much more important to them than to manufacturers. Larger and more productive firms are more likely to be two-way traders and to engage in both goods and services trade. Trade by services firms is somewhat less dominated by firms that both export and import than trade by manufacturing firms. Few firms export many services or to many countries. The value of services exports is increasing in the number of markets served but not necessarily in the number of services traded.     

Impact of European food safety border inspections on agri-food exports: Evidence from Chinese firms

The cost of complying with a sanitary standard is certain. However, such measure introduces uncertainty for exporters in relation to border rejections. Shipments may fail to pass inspections and may be refused entry into the importing country. This risk is shaped by variance in the quality of the exported product, and the stringency of the border controls. We examine how the risk of rejection at European borders on safety grounds is affecting Chinese agri-food exporters. We combine information from the European Rapid Alert System for Food and Feed with Chinese firm-level export data by product, destination and year for the period 2000–2011. Information externalities and reputation effects are important. Border rejections amplify the turnover among firms at the extensive margin of trade. This risk is curbing small exporters and resulting in a concentration of Chinese exports among big exporters.     

Which firms benefit from foreign direct investment? Empirical evidence from Indonesian manufacturing

Despite growing concern regarding the productivity benefits of foreign direct investment (FDI), very few studies have been conducted on the impact of FDI on firm-level technical efficiency. This study helps fill this gap by empirically examining the spillover effects of FDI on the technical efficiency of Indonesian manufacturing firms. A panel data stochastic production frontier (SPF) method is applied to 3318 firms surveyed over the period 1988–2000. The results reveal evidence of positive FDI spillovers on technical efficiency. Interesting differences emerge however when the samples are divided into two efficiency levels. High-efficiency domestic firms receive negative spillovers, in general, while low-efficiency firms gain positive spillovers. These findings justify the hypothesis of efficiency gaps, that the larger is the efficiency gap between domestic and foreign firms the easier the former extracts spillover benefits from the latter.     

Effects of presidents’ characteristics on internationalization of small and medium firms in Japan

Recent heterogeneous-firm models of international trade suggest that productivity determines whether firms engage in export activity and foreign direct investment. In practice, however, many productive firms are not internationalized, whereas many unproductive firms are, which suggests that there are factors other than productivity that influence firms’ internationalization. This study uses a unique panel data set for Japanese small and medium enterprises (SMEs) to examine whether the personal characteristics of a firm’s president are factors in firm internationalization. We find that SMEs with a risk-tolerant, forward-looking president are more likely to be internationalized. These effects are large in magnitude, as is the productivity effect, which provides a partial explanation as to why many productive firms are not internationalized. In addition, we find that productivity has an insignificant effect on firms exiting export markets, whereas presidential myopia increases the probability of exit. The evidence further suggests that a firm’s initial export costs become sunk following its entry into export markets, which explains why many unproductive firms are internationalized.     

人民币剑指国际化

人民币跨境结算只是人民币国际化的过渡，未来也会面临很多压力。但现在还没有必要太担心，因为从规模上看，试点期间处于严格的监控当中，即使有负面影响也不会很大。不过，人民币要实现真正的国际化，路还很长     

TCL的加法和减法:来自其国际化的思考

先后并购汤姆逊、阿尔卡特的彩电和手机业务,TCL成为中国家电业最为耀眼的明星之一。在轰轰烈烈并购之后,TCL成立一年多来受巨额亏损之累,TCL的国际化已无退路,不得不靠售出自己的业务以及稀释股权的“卖血”方式融资。我们应该从中思考我国企业的国家化问题。