Does FDI affect carbon intensity? New evidence from dynamic panel analysis

Purpose This paper aims to clarify the relationship between foreign direct investment (FDI) and carbon intensity. This study uses the dynamic panel data model to study and provide fresh evidence for the issue. Design/methodology/approach This study first uses the dynamic panel data model to consider the endogeneity problem, and applies a system-generalized method of moments estimator to study the effect of FDI on carbon intensity using the panel data of 188 countries during 1990-2013. Findings The result shows that FDI has a significant negative impact on carbon intensity of the host country. After considering the other factors, including share of fossil fuels, industrial intensity, urbanization level and trade openness, the impact of FDI on carbon intensity is still significantly positive. In addition, FDI also has a significant negative impact on carbon intensity of high-income countries and middle- and low-income countries. Originality/value This paper offers two contributions to the literature on the effect of FDI on carbon intensity. From a methodological perspective, this paper is the first to apply a dynamic panel data model to study the effect of FDI on carbon intensity using worldwide panel data. Second, this paper is the first to analyze the effect of FDI on carbon intensity in different countries with different income levels separately.

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Cash flow and growth considering different ownership structure

Journal of Modelling in Management ◽

10.1108/jm2-04-2011-0028 ◽

2014 ◽

Vol 9 (1) ◽

pp. 5-17

Author(s):

Wen-Cheng Lu ◽

Ruo-Ling Jhuang

Keyword(s):

Panel Data ◽

Cash Flow ◽

Ownership Structure ◽

Data Model ◽

Dynamic Panel Data ◽

Panel Data Model ◽

Dynamic Panel ◽

Content Type ◽

Ownership Structures ◽

Dynamic Panel Data Model

Purpose – The purpose of this paper is to examine the effect of financial constraints on firm growth considering six types of ownership structure. According to the theory of financial management and asymmetric information theory, external funds are costly for small firms. However, some ownership structures may alleviate cash flow-growth sensitivity. The paper considers different types of ownership structure to study cash flow-growth relation and its sensitivity. Design/methodology/approach – Results are drawn from a dynamic panel data model under the two specific empirical models. Those designs can capture important empirical meanings. Findings – The sensitivity of growth to cash flow decreases significantly when managers control larger proportions of a firm's stock and when a firm belongs to a conglomerate. The findings also show that small and young firms grow faster. R&D and advertising expenditures also motivate a firm's growth, as do profitability and abundant cash flow. Originality/value – This paper uses a dynamic panel data model to investigate the effect of cash flow on firms' growth under six types of ownership structure. The sensitivity analysis of growth to cash flow provides new results for traditional literature. In fact, different ownership structures lead to distinct cash flow-growth sensitivity.

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The impact of leverage on discretionary investment: African evidence

African Journal of Economic and Management Studies ◽

10.1108/ajems-06-2017-0145 ◽

2018 ◽

Vol 9 (1) ◽

pp. 108-125 ◽

Cited By ~ 2

Author(s):

Edson Vengesai ◽

Farai Kwenda

Keyword(s):

Panel Data ◽

Data Model ◽

Cash Flows ◽

Dynamic Panel Data ◽

Investment Policy ◽

Panel Data Model ◽

Dynamic Panel ◽

Content Type ◽

Dynamic Panel Data Model ◽

The Impact

Purpose The purpose of this paper is to explore the impact of leverage on firms’ discretionary investment in Africa. Design/methodology/approach The authors employ a dynamic panel data model estimated with generalised method of moments (GMM) estimation techniques on the panel data of listed African non-financial firms. A dynamic model and the generalised methods of moments estimations are handy in controlling for unobserved heterogeneity, endogeneity, autocorrelation, heteroscedasticity, etc. Findings In spite of different settings, markets, leverage levels and methodologies, the authors found evidence that leverage constrains investment in African firms. The negative impact is more pronounced in firms with low-growth opportunities than in firms with high-growth opportunities. The results are inclined to the theory that leverage plays a disciplinary role to avoid overinvestment. Research limitations/implications African firms’ investment policy does not solely depend on the neoclassical fundamentals determinants of profitability, net worth and cash flows. Financing strategy also has a considerable bearing on the investment policy. The results provide evidence that leverage is a negative externality to the firm’s discretional investment policy for both lowly levered and highly leveraged firms. African firms’ should consider maintaining their low debt levels and rely more on internally generated funds so as not to suppress any available cash flows to interest payments and loan covenants from debt holders. Originality/value The study contributes to the literature on investment and financial leverage by the authors providing evidence from Africa, a developing continent, that has not been explored. It shows how conservative leverage levels of African firms, which have been reported to be rising, are impacting on investments. Pertaining to empirical methodology, the authors employ a dynamic panel data model, the GMM estimation technique, which is robust in controlling endogeneity, and a possible bi-directional causality between leverage and investment which have not been used in literature. The study also enables a comparison of the effect of high leverage and low leverage on firm’s discretional investment.

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