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.     

Export Spillovers to Chinese Firms: Evidence from Provincial Data

Multinational firms are important conduits of managerial skills, foreign market linkages, and technology. Foreign export spillovers associated with multinational firms have the potential to reduce entry costs for local exporting firms. This paper examines whether exports by multinational firms increase the probability of exporting by domestic Chinese firms. The findings from the Probit estimation highlight the varying relationships between multinational exports and local foreign entry based on the type of ownership. The results from separating foreign-invested enterprises into overseas Chinese companies and OECD-based multinational firms suggest that the export activity of the former does not increase the probability of exporting by local firms, whereas the latter positively influence the export decision of local firms, particularly under processing trade.     

母国网络关系嵌入性与企业跨国动态能力——来自中国的经验证据

跨国动态能力对于中国企业进行国际化至关重要,现有研究对母国网络关系作用于企业跨国动态能力的机制尚未引起足够的重视。本文引入本土企业网络与外资企业网络的双网络效应,探索外资企业网络对企业的跨国动态能力在机会感知、资源获取以及资源重构三个维度上的影响以及两类网络之间的内生关系。在中国204家跨国企业数据的基础上,研究发现外资企业网络关系嵌入性正向影响了跨国企业动态能力的三个维度。此外,本土企业网络关系嵌入性正向调节外资网络关系嵌入性对跨国动态能力三个维度的影响。本文从网络视角给出了企业的跨国动态能力影响机制,对于新兴经济体中跨国企业的能力提升具有一定的指导意义。     

Multinational Enterprises and New Trade Theory: Evidence for the Convergence Hypothesis

According to the 'convergence hypothesis' multinational companies will tend to displace national firms and trade as total market size increases and as countries converge in relative size, factor endowments, and production costs. Using a recent model developed by Markusen and Venables (1998) as a theoretical framework, we explicitly develop, and address the properties of, empirical measures to proxy displacement of national firms by multinationals. These measures are then used to test the convergence hypothesis for a panel of data of country pairs over the years 1985–1996. Our results based on aggregate country level data provide some empirical support for the convergence hypothesis.     

Trade Openness and Vertical Structure: Evidence From Korean Firm-Level Data

Recent theories and empirics suggest that trade openness increases production fragmentation across countries. In this paper, we focus on the relationship between trade openness and firms’ choice of vertical structure. We find supportive, firm-level evidence that upon trade liberalization, firms restructure their organization by downsizing their domestic production processes (i.e. domestic vertical disintegration) and relocating their input production plants to other countries (i.e. cross-border vertical integration).     

Corporate Strategies and Performances of Korean Firms: The Unified Theory of the Firm Perspective

Abstract

A good understanding of the nature of the firm is essential in developing corporate strategies, building corporate competitiveness, and establishing sound economic policy. Several theories have emerged on the nature of the firm: the neo-classical theory of the firm, the principal agency theory, the transaction cost theory, the property rights theory, the resource-based theory and the evolutionary theory. Each of these theories identify some elements that describe the nature of the firm, but no single theory is comprehensive enough to include all elements of the nature of the firm.

Economists began to seek a theory capable of describing the nature of the firm within a single, all-encompassing, coherent framework. We propose a unified theory of the firm, which encompasses all elements of the firm. We then evaluate performances of Korean firms from the unified theory of the firm perspective. Empirical evidences are promising in support of the integrative theory of the firm.     

Business Cycles and FDI: Evidence from German Sectoral Data

Globalization has affected business cycle developments in OECD countries and has increased activities of firms across national borders. This paper analyzes whether these two developments are linked. We use a new firm-level data set on the foreign activities of German firms to test whether foreign activities are affected by business cycle developments. We aggregate the data by the sector of the reporting firm, the sector of the foreign affiliate, and the host country. Data are annual and cover the period 1989–2002. We find that German outward FDI increases in response to positive cyclical developments abroad and in response to a real depreciation of the domestic currency. JEL no. E3, F23     

Market Timing and Capital Structure: Evidence for Dutch Firms

Summary We examine market timing and its effects on capital structures for a sample of Dutch listed firms and a sub-sample of Dutch initial public offering (IPO) firms. The results yield evidence of market timing. Stock price run-ups increase the probabilities of equity and dual issues. Further, the effects of stock price run-ups on the choices between issuance of debt, equity or both are consistent with the predictions of the market timing hypothesis. However, in contrast to the existing evidence for US firms, we do not find persistent effects of market timing on capital structures of Dutch firms. This paper has benefited from useful comments from two anonymous referees, Allard Bruinshoofd, Frank de Jong, Jeroen Ligterink, seminar participants at De Nederlandsche Bank, and discussions at the 6th ONS Analysis of Enterprise Microdata Conference (Cardiff 2005).     

Union and Debt: Evidence from Chinese Private Firms

Do unions really matter in China? Using a dataset containing more than 110 thousand Chinese private manufacturing firms, this paper is the first attempt to examine how unions' bargaining power affects firms' capital structures. We find that: (1) the firms' debt levels are often positively associated with their unions' bargaining powers; (2) when a firm is in financial distress, the management is more likely to issue more debt to strengthen its bargaining power against the union and increase its residual income; (3) compared with long-term debt, short-term debt is a better option for the management to increase its bargaining power and residual income. Our research indicates that the unions of private Chinese firms are an important policy instrument for the management rather than useless decorations, which provides valuable insights for us to understand the employee–employer relations and firms' capital structures in emerging economies.     

Financing Technological Innovation: Evidence from Patent-Intensive Firms

ABSTRACT

Equityholders of firms with high debt loads have an incentive to underinvest, a distortion that can be most costly for firms with attractive growth options. Using a novel patent-based measure of a firm's growth options, we find that firms issue more equity and shy away from debt financing when they have larger investment opportunities sets. The results are more pronounced among firms in patent-intensive industries. The findings suggest the existence of conflicts of interest between debtholders and equityholders. Our results are consistent with the use of conservative debt policies by technology-intensive firms to mitigate the debt overhang associated with their future growth options.     

Rise and Fall of Multinational Enterprises in Vietnam: Survival Analysis Using Census Data during 2000–2011*

This study examined the survival of multinational enterprises (MNE) in Vietnam during 2000–2011 using Cox hazard models. The characteristics and ownership structure of firms and the nationality of foreign partners are found to be associated with the probability of firm exit, with a firm having greater capital share of foreign partners surviving longer. An efficient local government requiring less time for bureaucratic procedures and inspections is found to be associated with a lower probability of MNE exiting. Meanwhile, transparency in business regulations and predictability in implementing central government policies accelerate the survival of highly competitive MNE.     

人民币实际有效汇率变动对中国制造业企业绩效的影响:来自制造业微观层面的证据

文章采用中国工业企业数据库和海关贸易数据库匹配的数据集,在计算行业实际有效汇率基础上,从出口收益、进口成本和进口竞争三个渠道考察了汇率变动对制造业企业绩效的影响。研究发现:人民币升值通过出口收益渠道提高了本国产品以外币表示的价格,对企业绩效有负向影响;人民币升值通过进口成本渠道降低了以本币表示的进口中间品成本价格,对企业绩效有正向影响;通过进口竞争渠道,人民币升值降低了进口产品的价格,给国内产品市场施加了更大的竞争压力,对企业绩效有负向影响。同时,实际有效汇率对企业绩效的影响因企业生产率、行业集中度、要素密集度及所有制的不同而表现出差异性。     

Financial Liberalization and Corporate Investments: Evidence from Korean Firm Data*

This paper examines whether financial liberalization procedures introduced in Korea in the early 1990s succeeded in relaxing financing constraints on firms. Because external funds are more costly than internal funds in an imperfect capital market, corporate investments depend on the availability of internal funds. As financial liberalization mitigates constraints on firms, the sensitivity of investments to cash flow can be reduced. Using panel data on Korean firms, we found that cash‐flow effects on investment spending decreased drastically during the liberalization period. In particular, small, non‐chaebol and established firms that were severely constrained gained most from liberalization. Chaebol firms appeared to lose preferential access to credit after liberalization.     

Exports, FDI, and Productivity: Dynamic Evidence from Japanese Firms

This paper examines the relationship between exports, foreign direct investment, and firm productivity. Using longitudinal panel data on Japanese firms, it is found that the most productive firms engage in exports and foreign direct investment, medium productive firms engage in either exports or foreign direct investment, and the least productive firms focus only on the domestic market. Moreover, exports and foreign direct investment appear to improve firm productivity once the productivity convergence effect is controlled for. Firms that retain a presence in foreign markets, either by exports or foreign direct investment, show the highest productivity growth, which contributes to improvements in national productivity. JEL no. F10, F20, D21     

Control–ownership Disparity and Business Performance: A Study of Korean Firms

In Korea, there is a large disparity between voting and cash flow rights (control–ownership disparity). Using firm‐level data from Korea for the 2004–2009 period, the present study examines whether control–ownership disparity influenced firm performance. Specifically, the study analyzes whether the effects of control–ownership disparity on firm performance vary according to the type of firm (publicly traded vs private firms) and to the major shareholder's ownership stake (greater than 50 percent vs less than or equal to 50 percent). According to the results, the negative effect of control–ownership disparity on firm performance was weaker for publicly traded firms, and control–ownership disparity had a negative effect on firm performance when the major shareholder's ownership stake exceeded 50 percent.     

From firm-level imports to aggregate productivity: Evidence from Korean manufacturing firm data

Using Korean manufacturing firm-level data, this paper confirms that the use of imported inputs leads to increased productivity and that larger firms are more likely to use imported inputs. We find as a result that firm-level import decisions explain a non-trivial fraction of the fluctuations in manufacturing aggregate productivity in Korea over the period between 2006 and 2012. Specifically, our estimation results show that Korean manufacturing aggregate TFP declined by 8.7% during the Global Financial Crisis, about one-third of which is attributable to a contraction in firm-level import intensity. The main findings of this paper suggest a possible link between the recent global slowdown in productivity and the slowdown in global trade.