Deterioration of Firm Balance Sheet and Investment Behavior: Evidence from Panel Data on Thai Firms*

Using firm‐level data, the present paper investigates whether, and to what extent, firm balance sheet problems mattered for investment over the period 1992–2002. Various categories of firms are compared, with firms grouped according to their a priori degree of liquidity constraint. Firms are also divided into pre‐crisis and post‐crisis periods to examine the impact of the financial crisis on firms’ investments. The results support the existence of the balance sheet channel and suggest that Thai firms faced greater liquidity constraints following the financial crisis. Small firms and non‐bond‐issuing firms are found to have been more adversely affected by the crisis than large firms and bond‐issuing firms.     

Working capital management during the global financial crisis: Evidence from Japan

This paper demonstrates the adjustment speed of firm working capital and the relationships between working capital and firm performance in Japan during the global financial crisis. Using quarterly firm-level data, we find that the adjustment of working capital was weaker during the crisis. Moreover, the negative relationship between excess working capital and firm performance became more significant during the crisis, especially for larger firms. However, this crisis-related working capital–firm performance effect does not appear to persist for very long, because to finance any excess working capital, firms borrow from banks and reduce their internal cash both during and outside periods of crisis.     

危机冲击与家族企业海外投资——来自中国香港上市公司的数据分析

社会情感财富理论提出后,许多学者在分析家族企业风险性决策时大多都是以社会情感财富这个单一的非经济目标作为决策依据,而忽略了经济目标在风险性决策模型中的重要性。文章针对这种单一决策目标的模型,基于企业经营的时间维度与目标类型构建了一个同时考虑到社会情感财富与经济目标的家族企业决策框架。基于2001-2016年中国香港本地制造业公司数据,文章重点考察了2003年发生的局部跨域SARS危机与2008年发生的全球金融危机对家族企业海外资产投资决策可能产生的影响,检验结果表明:与非家族企业相比,家族企业进行海外资产投资的动力往往更低。另外,不同的外部危机将对家族企业的海外资产投资产生显著的差异化影响。SARS危机冲击弱化了家族控制与海外投资的负向关系,即局部跨域危机来临时,家族企业为了持续发展将会加大其海外资产投资以获得潜在的风险性收益;全球性金融危机冲击则强化了家族控制与海外投资之间的负向关系,即全球性金融危机来临时,家族企业为了生存将会缩小其海外资产投资规模。文章的进一步研究还发现,虽然家族企业的海外投资对企业绩效具有负向影响,但局部跨域危机情境下的家族海外投资却显著改善了企业绩效,全球性金融危机冲击下的海外投资则更加恶化了企业绩效。     

政府支出、金融发展、对外开放与企业投资

本文考察政府支出、金融发展与对外开放对企业投资的影响。整体上,政府支出显著的促进了企业的投资,而金融发展和对外开放程度对于企业投资则存在"挤出"效应,但是较高的金融发展水平和对外开放程度,提升了企业投资的效率;在东部地区,影响程度较基于全国的检验结果更显著;中部地区的政府支出和金融发展促进了企业投资,但其效率较低;西部地区的对外开放与政府支出并未显著影响企业投资;非东部地区的地方国企在对外开放中投资增加更为显著,而民营企业在投资机会的把握上体现了更高的效率。     

Productivity,Exit, and Crisis in the Manufacturing and Service Sectors

Using micro data from the manufacturing and service sectors in Uruguay, we analyze the relationship between firm exit and firm productivity. We find that even during profound crisis years, when the financial sector collapsed, exit of firms is associated with lower productivity. This suggests that even in the presence of severe financial friction, cleansing effects dominate the scarring or sullying effect of recessions.     

Is downsizing a good strategy during the downturn? Evidence from Taiwanese manufacturing firms

In response to a crisis, while retrenchments are considered to be an important part of a firm’s long-term recovery, research has indicated that downsizing strategies, reducing employment and shrinking the R&D budget, may lead to an erosion of a firm’s valuable core competence. Drawing from the literature of organizational turnaround strategies, this study advances the downsizing research by explaining how downsizing strategies affect a firm’s long-term performance. Using a uniquely compiled dataset of 2559 Taiwanese manufacturing firms, our research shows that increasing labor employment during a financial crisis can significantly improve a firm’s long-term total factor productivity and sales. In other words, employment downsizing may not be the best solution when encountering an economic downturn.     

COVID-19, firm exposure,and firm value: A tale of two lockdowns

We study how a public health crisis affects the corporate sector at different phases of outbreak. Using an event study approach, we find significant valuation effects in a sample of Chinese listed firms following two symbolic events in the outbreak of COVID-19: (1) the lockdown of Hubei province; and (2) the containment of the disease in China and its spread to overseas. Market responded negatively (positively) to the first (second) event. Regression analysis further reveals that, following the first event, firms with Hubei (foreign) exposures earned significantly lower (higher) returns. Foreign exposures, however, had significantly negative effects on returns following the second event. The valuation effects of Hubei and foreign exposures also vary across firm ownership and industries. Our results indicate that, in a globalized world, firms' international status, internal networks and input-output linkages all play important roles in determining their exposures to the pandemic.     

The impact of real exchange rate movements on firm performance: A case study of Taiwanese manufacturing firms

Taiwan experienced large depreciations of its currency, the New Taiwan (NT) dollar, in the late 1990s. The largest real depreciation, 13 per cent, occurred during the East Asian Financial Crisis. Since Taiwan was subjected neither to the economic turmoil of the crisis itself nor to the subsequent reforms, its experience provides a good opportunity for studying the effects of exchange rate changes on firm performance. This paper empirically examines the exchange rate effects on firm exports, domestic sales, total sales, value-added and productivity, by using data on firms listed on the Taiwan Stock Exchange merged with customs trade data covering the period of 1992–2000. Our findings indicate that the real depreciation of the NT dollar led to an increase in exports, domestic sales, total sales, value-added, and productivity. In addition, we find that the productivity improvement induced by real currency depreciation may be a result of firm scale expansion.     

出口行为与企业生存:内部资源、政府补贴重要吗

文章利用1998-2011年新成立的中国工业企业纵向数据,采用Cox比例风险模型估计方法,实证检验了出口行为对企业生存的影响效应及内部资源、政府补贴的调节效应。研究结果表明,出口倾向负向影响企业生存,而出口强度与企业生存之间存在非线性的“S型”关系。管理冗余和创新资源显著调节出口行为与企业生存之间的关系,有效缓冲了出口企业在国外市场面临的生存风险。然而,财务冗余和政府补贴对出口行为与企业生存关系的调节效应并不显著。采用加速失效时间模型进行稳健性检验,本项研究的结论依然成立。     

Do Non‐exporting Plants Benefit from Exporting Peer Plants?*

This study examines indirect spillover effects at plant level within firms by analyzing the performance of non‐exporting plants with exporting peer plants by using Korean plant–firm matched data from 2007 to 2013. Our results show that there are no significant differences in growth between non‐exporting plants and their exporting peer plants in the same firms, whereas significant differences exist among non‐exporting plants depending on whether their peers export. This implies that exporting peer plants are important channels through which non‐exporting plants benefit within a firm.     

Some Methodological Issues on Estimating Foreign Exchange Exposure of US Multinational Firms: Evidence from the Asian Crisis

Abstract

This article asks whether sample specification of firm, period, and exchange rate matters in estimating foreign exchange exposure of US multinational firms. By sampling US firms that had Asian sales and assets from 1996 to 1998, we find that the firms’ returns are more likely to be significantly exposed to the Asian-oriented exchange rate changes for the Asian crisis, when the exchange rate changes were unexpectedly sizable. Also, by examining firms’ exposure in the share of Asian sales and assets, we find that the firms are more exposed as their operations are more involved in the Asian region.     

Offshoring, domestic outsourcing and productivity: evidence for a number of European countries

The growth in offshoring and its economic effects have been subject to extensive empirical analysis. Yet, many studies have not distinguished accurately between offshoring, domestic outsourcing, and supplier changes. The present study provides stylized facts on offshoring in Europe between 1995 and 2008 taking into account this distinction. This study shows that service activities have been systematically offshored and outsourced domestically during this period, whereas manufacturing activities have been systematically offshored or moved from domestic to foreign suppliers. Overall the share of internal production has gone down by 4.5 percentage points, which raises the question whether firms have achieved productivity gains through this specialisation effort. Combining industry-level data on offshoring and domestic outsourcing with a firm panel, this study finds that service offshoring and offshoring of non-core manufacturing activities have contributed to an increase in productivity, whereas no statistically significant link is found for offshoring of core manufacturing activities and domestic outsourcing. The estimated productivity gains are found to be driven in particular by the gains of multinational firms.     

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.     

Technology spillovers from Chinese outward direct investment: The case of Ethiopia

The present study uses firm survey data of 1033 manufacturing firms operating in Ethiopia in 2011 to examine the impact of Chinese outbound direct investment on the productivity of domestic firms. Particularly, we attempt to answer two questions. Firstly, are Chinese-owned (henceforth foreign) firms more productive than local ones? Secondly, does the presence of foreign firms generate technology spillovers on domestic firms operating in the same industry? Our empirical results show that foreign firms are more productive and that their presence has different spillover effects on the productivity of domestic firms. In particular, we find that domestic firms with higher absorptive capacity experience positive spillovers, while those with low absorptive capacity witness negative spillover. We also find that small firms and non-exporting firms benefit more from spillovers than do other types of domestic firms. In this study, instrumental variables are used to address the potential endogeneity between foreign firm presence and domestic firm productivity.     

Trade credit and financial crises in Kazakhstan

This paper studies the trade credit and delinquency behavior in Kazakhstan paying attention to the effects of two recent crises using a unique dataset of large firms and SMEs from the year 2009 to 2016. Our estimates suggest that the relationship between trade and bank credit is mainly substitutional except that it was complementary for large firms following the year 2014–5 crisis. This new piece of evidence on the non-uniform relationship between trade and bank credit during crisis might provide more insight into the mixed findings in the literature. We also discern that trade credit demand is more prevalent among capital-intensive firms. Kazakhstani firms pass along a sizeable portion of their delinquent receivable to their trade credit suppliers. The transmission of trade credit delinquency, additionally, is amplified during the year 2014–5 economic crisis but the year 2009 global financial crisis.     

Effects of Knowledge Spillovers on Knowledge Production and Productivity Growth in Korean Manufacturing Firms

Using Korean firm‐level data, this paper studies the effects of knowledge spillovers on knowledge production and productivity growth. Data from 213 Korean firms for the years 1985 to 2007 are used, and the number of patent applications is used as a proxy variable for knowledge. The results show that all the growth rates of output, patents, and productivity are higher in high‐technology firms. Regression results show that the spillover effect on knowledge production and productivity growth is very significant, and that the spillover effect is larger in small firms than in large firms. Moreover, spillover effects on productivity growth are larger after 1995, when Korean intellectual property rights were strengthened. Our findings suggest that the effects of knowledge spillover on productivity are positively correlated with strong intellectual property rights.     

Job creation or job relocation? Identifying the impact of China's special economic zones on local employment and industrial agglomeration

Since the early 1980s, special economic zones (SEZs) in China have benefited from targeted place-based policies intended to promote local employment and economic growth. What remain poorly understood is whether SEZs serve to give birth to new firms, or rather attract and support the re-establishment of firms from other places. To address this question, this paper examines the impact of SEZs on employment growth in rural counties in China. Using ASIF panel data representing the activity of manufacturing firms for the period 1999 to 2008, this paper assesses the employment effects of SEZs according to firm births, relocation, expansion, and firm closure. By matching counties with future SEZs as comparison groups, the difference-in-differences estimates show that SEZs significantly increase employment in rural counties due to the creation of new firms and the expansion of existing large firms; in contrast, SEZs fail to promote firms to move in and restrain firms from moving out. Further, data analysis reveals significant regional heterogeneity, with the employment effects of SEZs on firm entry strongest for the eastern coastal region. Finally, we confirm that SEZs tend to reduce local industrial agglomeration in the eastern and central regions.     

The impact of foreign direct investment in China on employment adjustments in Taiwan: Evidence from matched employer–employee data

Using a unique matched employer–employee dataset on Taiwanese manufacturing, we examine the impact of foreign direct investment in China on domestic employment adjustments controlling for firm and worker heterogeneity as well as for potential endogeneity of firms’ expansion in China. Our findings suggest that workers employed at firms with higher levels of investment in China are more likely to leave the firm, compared with workers at firms with zero or lower levels of investment in China. We provide evidence that foreign expansion in China decreases worker employment security at parent companies, particularly for low-skilled workers. Employment adjustments through employer-to-employer transitions are found to be highly associated with wage losses, with the strongest wage effects for low-skilled workers who shift employment between industries. Moreover, we find no evidence that FDI in China contributes to skill upgrading at parent companies.     

Reputational Penalties in Japan: Evidence from Corporate Scandals

We examine incidents in which Japanese businesses are implicated in corporate scandals. Such firms suffer statistically significant losses in their market values. Given the negligible legal and regulatory penalties for Japanese companies, we interpret the results as convincing evidence on the magnitude of reputational losses. We also compare our results to those found in US studies. The average negative abnormal stock price reaction is larger in Japan than in the USA. Moreover, they are negative and statistically significant even when it is not obvious that the firm violated an implicit or explicit contract with the damaged party.     

Property rights security and firm survival: Micro-data evidence from China

The security of property rights has been found to play important roles in various aspects of firm behaviors. However, its effects on firm survival have been largely neglected in previous research. Using annual data of Chinese manufacturing firms over the period 1998–2008, we analyze the link between property rights security and firms' survival probabilities, differentiating firms into stated-owned enterprises (SOEs) and non-SOEs, and considering whether the linkage evolves over time. Examining a wide range of specifications, we find that the protection of property rights, by limiting government intervention and promulgating laws and rules, is crucial for firm survival. Moreover, better security of property rights benefits non-SOEs more. We also find that the beneficial effects of secure property rights on firm survival are more pronounced for years after 2003 when China speeded up deregulation to comply with its WTO commitments and reform target to establish a modern system of property rights than for years before 2002.