• International Area Studies Review
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• v.18 no.3
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• pp.175-201
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• 2014

This paper analyses the effect of R&D investment on local economies. R&D investment contributes to the regional local economy by increasing employment and production activity of the investees. The investees may end up with increased productivity, sales and employment. At the regional R&D level, the central government R&D fund and firm self R&D budget will be the source of R&D investment. Further positive effects are inter-related with local industries. This study carried out an empirical analysis on the effect of R&D investment on local economies using Korean panel data after comparing international literatures. The dynamic panel estimator is used to estimate an autoregressive model with lagged dependent variable. Using the Da Silva method, mixed variance-component moving-average error process is estimated and selected. R&D investment is very important factor to improve the productivity of a region and the size of the effect is dependent on the time periods within the Korean economic history.

• Economic Analysis
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• v.26 no.1
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• pp.1-33
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• 2020

Recent discussions about a minimum wage increase (MWI) and its influence on the economy have mainly focused on the quantitative aspects, such as labor costs and employment. However, concerning the qualitative aspects, an MWI could have positive effects by enhancing firm productivity and crowding out marginal firms from the market. These positive effects of an MWI can offset, to some extent, its potential negative effects - increasing labor costs and decreasing employment, among others. In this regard we empirically examine the impact of an MWI on firm productivity (total factor productivity). Using firm level panel data from the manufacturing industry in Korea, we calculate the influence rates of a minimum wage by sector and by firm size (number of workers), and analyze its effects on firm productivity. In particular, the production functions of the firms are estimated by taking into account endogeneity among the input factors, in order to resolve the drawbacks of existing studies - underestimating the capital factor coefficient and overestimating the labor factor coefficient. This study finds that the influences of an MWI on wages, employment, and productivity are substantially different across sectors and firm sizes. While an MWI has shown to have positive influences on productivity growth in the manufacturing industry as a whole, each sector demonstrates a different direction of effect, and the degree of productivity change also varies by sector. The impacts of an MWI on firm productivity are generally estimated to be more negative for smaller firms, but in some sectors the effects are found to be positive. In addition, the wage increases resulting from an MWI seem to cause a productivity enhancement across all sectors in the manufacturing industry. The policy implications of this study are as follows. Considering the empirical findings that an MWI causes an increase in productivity in many sectors of the manufacturing industry, it would be desirable to take into consideration not only the negative side effects but also the positive effects of an MWI when designing any future minimum wage policy. Moreover, in spite of there being a uniform minimum wage, this study finds that the diverse influence rates of a minimum wage across firms have different impacts on wages, employment, and productivity across sectors or firm size. This finding could be conducive to discussions about differentiation among minimum wage schemes by sector or firm size.

• The Journal of Asian Finance, Economics and Business
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• v.8 no.1
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• pp.45-52
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• 2021

The capital structure is one of the hot financial topics among researchers and scholars. Its importance comes from the fact that capital structure is closely related to companies' ability to meet different stakeholders' needs. A suitable capital structure will boost the business and create a competitive advantage in the context of fierce competition. Many companies choose an optimal debt level based on the trade-off between interest and debt costs. This study aimed to test the existence of trade-off theory in capital structure, the case of Vietnam's real estate companies, which are growing very fast recently. Instead of considering constant optimal leverage to test the trade-off model, we take advantage of the dynamic capital structure determined by growth opportunities, profitability, tax incentives, tangibility, liquidity, and firm size. The dynamic panel data regression was estimated by the system Generalized Method of Moment (Sys-GMM). The empirical evidence showed that real estate companies listed in the Vietnamese stock market might change their leverage toward a target capital structure determined by influential factors in a long-term perspective. In particular, the debt-to-asset ratio will change by approximately 14 percent, positively, in response to the difference between the current debt-to-asset ratio and the dynamic target debt-to-asset ratio.

• The Journal of Asian Finance, Economics and Business
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• v.8 no.3
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• pp.341-350
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• 2021

This study tested the effect of the board of directors' (BOD) characteristics on the corporate performance of the Jordanian industrial and service companies listed on the Amman Stock Exchange (ASE) during the period 2015-2019. The characteristics of the BOD were measured through the following variables: MO = managerial ownership; CEODU = CEO duality; BI = board independence; GD = gender diversity; ND = nationality diversity; AE = advanced education; BM = board meetings; BSIZ = board size; CSIZ = corporate size; CA = corporate age. The corporate performance was measured by return on assets (ROA) and return on equity (ROE). The corporate size and corporate age were used as control variables. The study sample consisted of 85 industrial and service companies with 425 observations to identify the nature of the effect of the BOD characteristics on performance. This study applied time-series data (panel data), and the multiple linear regression method was used to achieve study objectives. Results showed a positive effect of the study variables on performance, while the corporate age and the education level (BOD members) have a negative effect on performance.

• Economic Analysis
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• v.17 no.1
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• pp.103-130
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• 2011

This paper intends to provide applied economists which study the effects of research and development with valuable information on econometric model selection. It includes extensive discussion on econometric models which have been applied for the study on the relationship between research and development and productivity. In particular, it compares various stochastic production frontier models which have been developed recently. The discussion decomposes them into models with scaling property and the ones with nonscaling property as well as models with monotonic and nonmonotonic relationships between research and development and productivity. Finally, this paper applies the models to two different panel data sets (firm level data and country level data) and compare estimation results from competing econometric models.

• The Journal of Asian Finance, Economics and Business
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• v.8 no.10
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• pp.1-10
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• 2021

This paper attempts to investigate the determinants of capital structure of Vietnamese firms and also shed light on some of the factors of the modern theory of capital structure which is relevant for explaining the capital structure in advanced countries which are also relevant in the context of Vietnam. Using panel data from more than 1000 Vietnamese listed enterprises census 2017-2020, the paper finds that leverage ratio of Vietnamese firms is significantly related to probability. The firms have high level of fixed assets which they use as collateral, resulting in higher debt ratio, which is in line with the pecking order theory. The result also confirm that highly targeted debt ratio is positively correlated with the industry characteristics (using real estate firms as a benchmark), in which firm operates. Furthermore, consistent with the trade-off hypothesis, the leverage ratio is positively affected by non - debt tax shield. The result confirms that a large number of companies are state - owned, will have an insignificant impact of firm's size (as reverse proxy for bankruptcy cost) on leverage ratio. We also find that there is no distinction between state-owned enterprises and private enterprises due to strict adherence to the rules set by the Vietnamese government. Distinct from other countries, corporate income tax has slight impact on capital structure in Vietnamese firms.

• Korea Trade Review
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• v.44 no.3
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• pp.253-269
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• 2019

This study examines the utilization effect of FTA on the sales and profit of the secondary auto-part suppliers in two aspects: 1) firm-level survey on the utilization of FTA and 2) statistical inference on the FTA effects on their sales and profit. We use the GLS statistical technique, panel and survey data of 130 secondary auto-part suppliers in the Daegu and Kyungpook area in 2007-2016. The evidence shows that the secondary auto-part suppliers struggle to prepare documents for the FTA certificates of origin due to their small firm size, although they utilize the FTA at the relatively high rate of 92 percent. Statistical evidence shows that an increase in the export of the first vender significantly affects the sale of the secondary auto-part vendors, but not their profit. The low profit and high managing cost of utilizing the FTA deteriorate the utilization effect of the FTA of the secondary auto-part vendors, which is a key factor in a global supply chain and for the competitiveness of the automobile industry. Government policies are required for the secondary auto-part suppliers to utilize the FTA more effectively and share the benefits of tariff reduction with first auto-part vendors under FTA transaction.

• The Journal of Asian Finance, Economics and Business
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• v.7 no.7
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• pp.73-84
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• 2020

Existing studies disagree over the core predictors of firm-level financial choices in developing countries. The general practice only validates the traditional capital structure model, which leads to inconsistency and a lack of novelty. This study removed overfitting issues among existing factors and presented the most reliable and advanced capital structure model in Pakistani firms. The panel data include 368 Pakistani companies from 19 non-financial sectors over the period 2004 to 2017. We apply Akaike and Bayesian Information Criteria to remove overfitting issues among inconsistent proxies in the capital structure model. The fixed effects regression is used for basic results and the Generalized Method of Moments is applied to control the endogeneity. Besides the conventional proxies, we report that credit rating, distance from bankruptcy, managerial concentration, and institutional quality are the most advanced capital structure determinants in Pakistan. These predictors remain significant across firm size and growth levels. Also, the findings confirm that new predictors are reliable to define capital structure dynamics and improve the speed of adjustment in overall and sub-sample analysis. The major findings suggest that managers and policymakers should consider these advanced predictors to design their financial settings in firms.

• The Journal of Asian Finance, Economics and Business
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• v.8 no.8
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• pp.57-66
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• 2021

The outbreak of the financial crisis, the lack of corporate governance practices in Iraqi companies, the high level of earnings management (EM), and weak firm performance (FP) have all encouraged the purpose of this study. This study proposes to achieve the following objectives: (I) to investigate the influence of governance mechanisms on the earnings management practices, (II) to investigate the consequence of EM on FP. The study sample includes 65 Iraqi firms listed on the Iraqi stock exchange for six years from 2012 to 2018, with 390 firm-year observations. The hypotheses were tested using panel data regression. According to the findings, Iraqi companies prefer to use real EM rather than accruals EM to avoid reporting losses. Discretionary cash flow, production costs, and cash flow from operation are examples of actual operations employed to undertake EM. Furthermore, according to the findings of this study, board meeting frequency and female onboard have a significant and negative influence on EM. Besides, the internal audit function was found not to affect EM. On the other hand, results revealed a significant and negative relationship between EM and FP. According to the study, management prefers to minimize cash and accrual expenditure during the economic downturn.

• Journal of the Korea Academia-Industrial cooperation Society
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• v.18 no.4
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• pp.163-174
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• 2017

This study analyzed how Korean firms' recapitalization affects their capital structure decision and firm value. Recapitalization was categorized into three groups according to the influence of the debt to equity ratio: debt ratio-increasing-recapitalization(capital reduction with refund, cash dividend), debt ratio-unchanging-recapitalization (capital reduction without refund, retirement of repurchased stocks), and debt ratio-decreasing-recapitalization(exercise the rights for convertible bonds, bond with stock warrants, exchangeable bonds and stock options). This article highlights how the relationship between the firms' recapitalization and the capital structure decision driven by the change in debt to equity ratio through the recapitalization should affect the firm value. The whole recapitalization sample used for this analysis comprised 22,814 enterprises listed on the Korea Exchange that were analyzed over the 16-year period from 2000 to 2015. To summarize the results of this Panel Data Analysis, firstly, when a firm executes debt ratio-increasing-recapitalization and debt ratio-decreasing-recapitalization at the period of t-1, the debt to equity ratio, which is increased or decreased, should affect the firm's debt capacity in the same period, then, at the period of t, the firm establishes a leverage policy to readjust the debt to equity ratio the other way around. These adjustments of debt-paying-ability from the leverage policy, including the capital structure decision, finally affect the firm value. Secondly, when a firm implements the debt ratio-unchanging-recapitalization in the period of t-1, the debt to equity ratio, which is neutral, should not affect the firm's capital structure decision. But, the firm value is positively affected by the influence of that recapitalization. Conclusively, we acknowledge a firm which carries out the recapitalization balances its capital structure to the optimal level of leverage and that the capital structure decision positively affects the corporate value.