Determinants of Business Fixed Investment: Evidence from German Firm-Level Data

2016 ◽  
Vol 236 (5) ◽  
pp. 533-556
Author(s):  
Thiess Buettner ◽  
Anja Hoenig
Keyword(s):  
Empirical Analysis ◽  
Cost Of Capital ◽  
German Economy ◽  
Business Climate ◽  
Firm Level ◽  
Level Data ◽  
Firm Level Data ◽  
Business Survey ◽  
The Cost ◽  
The Empirical Analysis

Abstract This paper employs a novel firm-level dataset that combines financial accounts of German firms with data from a business survey to shed new light on the demand for capital. The empirical analysis employs firm-specific indicators in order to explore the effects of sales, the cost of capital and indicators of the business climate, which are used by the ifo Institute to provide a leading indicator for the German economy. The empirical results support a robust significant effect of a firm’s cost of capital on the stock of capital with an elasticity not significantly different from –1. Controlling for sales, a good rather than normal business situation is found to be associated with about 8 % higher investment.

scholarly journals Exceptional performance of multinational suppliers: theory and evidence

2020 ◽  
Author(s):  
Van Pham ◽  
Alan Woodland ◽  
Mauro Caselli
Keyword(s):  
Empirical Analysis ◽  
Direct Investment ◽  
Labour Productivity ◽  
Firm Level ◽  
Level Data ◽  
Firm Level Data ◽  
Ex Ante ◽  
Theoretical Predictions ◽  
Set Up ◽  
The Empirical Analysis

AbstractThis paper focuses on an unexamined area of trade—the behaviour of heterogeneous intermediate suppliers facing final producers of different ability and pursuing different strategies. To inform our empirical analysis, we develop a theoretical model to analyse the choice of an intermediate supplier between selling to domestic producers, selling to multinational producers and/or exporting to foreign producers. The model’s predictions are: (i) sufficiently productive firms self-select into supplying to multinationals or exporting, while the most productive firms pursue both strategies, and (ii) the order of preferred strategies between supplying to multinationals and exporting depends on foreign direct investment inflows and export set-up costs. The paper uses firm-level data with rare information about multinational suppliers from 29 countries in Europe and Central Asia in 2002 and 2005 to test these theoretical predictions. The empirical analysis confirms both of our model’s predictions. Moreover, it suggests that multinational suppliers are more likely to have higher required levels of ex-ante labour productivity than exporters, implying that exporting is easier and a more popular choice for firms.

Does Corporate Governance Matter to Bondholders?

2005 ◽  
Vol 40 (4) ◽  
pp. 693-719 ◽  
Author(s):  
Mark S. Klock ◽  
Sattar A. Mansi ◽  
William F. Maxwell
Keyword(s):  
Corporate Governance ◽  
Lower Cost ◽  
Bond Market ◽  
Debt Financing ◽  
Cost Of Debt ◽  
Firm Level ◽  
Shareholder Protection ◽  
Level Data ◽  
Firm Level Data ◽  
The Cost

AbstractWe examine the relation between the cost of debt financing and a governance index that contains various antitakeover and shareholder protection provisions. Using firm-level data from the Investors Research Responsibility Center for the period 1990–2000, we find that antitakeover governance provisions lower the cost of debt financing. Segmenting the data into firms with the strongest management rights (strongest antitakeover provisions) and firms with the strongest shareholder rights (weakest antitakeover provisions), we find that strong antitakeover provisions are associated with a lower cost of debt financing while weak antitakeover provisions are associated with a higher cost of debt financing, with a difference of about 34 basis points between the two groups. Overall, the results suggest that antitakeover governance provisions, although not beneficial to stockholders, are viewed favorably in the bond market.

scholarly journals The Effects of Irreversibility and Uncertainty on Business Investments: A New View of Investment

2014 ◽  
Vol 5 (3) ◽  
pp. 7-20
Author(s):  
Katarína Belanová
Keyword(s):  
Empirical Analysis ◽  
Investment Decision ◽  
Firm Level ◽  
Factors Affecting ◽  
Real Options Approach ◽  
Investment Decision Making ◽  
Level Data ◽  
The Impact ◽  
The Relationship ◽  
The Empirical Analysis

This article presents a survey of recent theoretical, as well as empirical, contributions concerning business investments, which help to explain the investment decision making of companies. These contributions emphasize the relevance of idiosyncratic factors affecting investment decisions such as the degree of irreversibility and uncertainty, interactions between these factors may generate an opportunity cost equivalent to the exercise of an option and so they add an important dimension to the neoclassical theory of investment (also called standard or orthodox theory of investment). This theory has not recognized the important qualitative and quantitative implications of this interaction, what can explain some of its failures. We investigate the irreversibility of investments and the impact this has on the nature of the relationship between investment and uncertainty in the way of empirical analysis. The empirical analysis uses firm – level data and is based on a survey of 53 automotive suppliers, which was carried out during the year 2011. We find supportive evidence for the fact that uncertainty is negatively associated with planned investments of the companies surveyed, which remains true also in the presence of irreversibility. At the end we demonstrate the core of the real options approach in a form of a practical example.

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