Market reactions to export subsidies

Desai, Mihir A.; Hines, James R.

doi:10.1016/j.jinteco.2007.04.006

Cited by 62 publications

(30 citation statements)

References 38 publications

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“…This paper is also related to a strand of literature in corporate finance, studying the linkages between international activity and stock market variables. Our empirical evidence is consistent with the analysis in Denis, Denis, and Yost (2002), who find that multinational corporations trade at a discount, and with Desai and Hines (2008) and Baker, Foley, and Wurgler (2009), in linking empirically market valuations, returns, and FDI activity. Our approach departs from these contributions in explicitly acknowledging the endogeneity of the variables of interest and in using a structural model to understand the economic forces behind the correlations that we find in the data.…”

Section: Literaturesupporting

confidence: 89%

Risk, Returns, and Multinational Production *

Fillat

Garetto

2015

The Quarterly Journal of Economics

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This article starts by unveiling a strong empirical regularity: multinational corporations exhibit higher stock market returns and earning yields than nonmultinational firms. Within nonmultinationals, exporters exhibit higher earning yields and returns than firms selling only in their domestic market. To explain this pattern, we develop a real option value model where firms are heterogeneous in productivity and have to decide whether and how to sell in a foreign market where demand is risky. Selling abroad is a source of risk exposure to firms: following a negative shock, they are reluctant to exit the foreign market because they would forgo the sunk cost they paid to enter. Multinational firms are the most exposed because of the higher costs they have to pay to invest. The calibrated model is able to match both aggregate U.S. export and foreign direct investment data, and the observed cross-sectional differences in earning yields and returns.

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Section: Literaturesupporting

confidence: 89%

Risk, Returns, and Multinational Production *

Fillat

Garetto

2015

The Quarterly Journal of Economics

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“…By analyzing a sample of Chinese manufacturing firms, Lee et al [46] found that government subsidies are positively related to firm value. Desai and Hines [47] and Girma et al [48] also confirmed that subsidies can improve firm profitability. Yang [49] reported that firms benefit from government subsidies as their production costs decrease and production scales increase, thus creating larger net profits.…”

Section: Relationship Between Government Subsidies and Firm Performancementioning

confidence: 85%

The Impact of Government Subsidies on Private R&D and Firm Performance: Does Ownership Matter in China’s Manufacturing Industry?

Jin

Shang

2018

Sustainability

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Government subsidies as a policy instrument are used to alleviate market failure in research and development (R&D) activities. We aim to understand the influence of government subsidies on enterprises' R&D investment and performance. We are also interested in examining how the attributes of enterprise ownership act as a moderating variable for the relationship between government subsidies, R&D investment, and firm performance. We use firm-level data on China's manufacturing listed companies from 2011 to 2015. The results show that receiving government subsidies improves private R&D investment and firm performance, and state-owned enterprises (SOEs) can obtain more subsidies than private-owned enterprises (POEs). However, the impact of government subsidies on private R&D investment is stronger in POEs than in SOEs of China. In additional analyses, we also examine this relationship by industry, region, subsidy intensity, and R&D intensity. This study has important policy implications for regulators to improve the effectiveness of government subsidies.

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“…Finally, we controlled for financial subsidy, as prior studies [90,91] have established that it may be associated with firm performance. Firms were asked to indicate the financial subsidy that they obtain from authorities.…”

Section: Control Variablesmentioning

confidence: 99%

The Penetration of Green Innovation on Firm Performance: Effects of Absorptive Capacity and Managerial Environmental Concern

2019

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Under the background of environmental sustainability, it is of great significance to investigate how green innovation influences firm performance dimensions in emerging economies. Explicitly, the interaction effects of absorptive capacity (AC) and managerial environmental concern (MEC) on the correlation between green innovation and firm performance dimensions must be explored. Our data were obtained through a questionnaire survey from 253 companies operating in China. Using hierarchical linear modeling (HLM), we found that (1) green innovation has a robustly positive effect on firm performance dimensions (operational, financial and environmental), and (2) absorptive capacity and managerial environmental concern can positively affect the correlation between green innovation and firm performance dimensions. Our results illustrate the integrating effects of absorptive capacity, managerial environmental concern, green innovation and firm performance dimensions.

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Market reactions to export subsidies

Abstract: This paper analyzes the economic impact of export subsidies by investigating stock price reactions to a critical event in

Cited by 62 publications

References 38 publications

Risk, Returns, and Multinational Production *

Risk, Returns, and Multinational Production *

The Impact of Government Subsidies on Private R&D and Firm Performance: Does Ownership Matter in China’s Manufacturing Industry?

The Penetration of Green Innovation on Firm Performance: Effects of Absorptive Capacity and Managerial Environmental Concern

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