Essays on corporate decisions in Asian emerging economies

Meechaiyo, Kulnicha (2022) Essays on corporate decisions in Asian emerging economies. PhD thesis, University of Glasgow.

Abstract

This thesis consists of three essays on corporate decisions in Asian Emerging economies. This thesis studies corporate decisions in different dimensions. The first chapter focuses on bond issuance decisions, the second chapter looks at corporate cash holding decisions, and the third chapter considers trade credit decisions. The thesis goal is to highlight what changes corporate decisions, transmission mechanisms, and how firms deal with them. The first empirical chapter (chapter 2) studies whether social trust can influence a decision to issue corporate bonds and how this impact changes when the country has a better governance environment by using a set of bond-firm matched data across eight emerging economies from 1997 to 2018. On the relationship impact between social trust and country governance contexts, there are two noteworthy results. One, companies that are located in areas with a high degree of social trust are more likely to issue bonds when the country's government is more effective. Two, firms locating in areas with a high degree of social trust are less likely to issue domestic currency-denominated bonds when the country's governance environment is more effective. The findings reveal that the complementary impact of social trust and country governance conditions encourages corporate bond issuance, whereas their substitution effect encourages a company to issue bonds in its own currency. The second empirical chapter (chapter 3) studies whether political uncertainty can affect corporate behaviour in eight Asian emerging economies by using national elections data and financial statement data between 1990 and 2018. This chapter divides the sample into two groups: a presidential or legislative electoral system, and an assembly-elected presidential electoral system. The group of a presidential or legislative electoral system is consist of Indonesia, Korea, Malaysia, the Philippines, Singapore, Thailand and Taiwan (China). The other group is only China. The results show the evidence that national electoral system influences cash holdings and asset growth. The cash flow sensitivity of cash during election periods is assessed by estimating panel models with fixed effects. In addition, this chapter employs the first-difference Generalized Method of Moments technique to evaluate the impact of the availability of internal finance on asset growth during election periods. The line of discussion builds upon the motivation theory of cash 3 holdings introduced by Keynes (1936) and the internal finance theory of growth. The findings show that the magnitude of cash holdings varies with the national electoral system adopted in the country and firm size. The findings also suggest that firms residing in a country with a presidential or legislative electoral system are more sensitive to political uncertainty than those residing in a country with an assembly-elected presidential electoral system. During election periods, firms residing in a country with a presidential or legislative electoral system tend to hold more cash during election periods due to being precautionary against the uncertainty that may occur. While large firms residing in a country with an assembly-elected presidential electoral system lessen a grabbing hand problem by holding a smaller amount of cash reserves, small firms in a country with a presidential or legislative electoral system tend to use internal funds to grow during election periods. The third empirical chapter (chapter 4) aims to examine the effect of customer’s market power and information asymmetry on trade credit decision. Using data from nine Asian emerging economies, this chapter finds that customers with a high market share can obtain more trade credit. If there is an information asymmetry between their vendors and themselves, they will be given less trade credit; new, young, and R&D companies are the most likely to face this problem. Small and young businesses take less trade credit in lowsocial-trust markets, which is more noticeable. Furthermore, the findings suggest that firms in high-social trust economies earn more trade credit when they spend in R&D to support a trading partnership, a practice known as a relationship-specific investment (RSI). These findings are unaffected by market share and RSI calculations. This chapter confirms that high social trust will improve the relationship between trade credit offered and a customer’s market share.

• Item Type: Thesis (PhD)
• Qualification Level: Doctoral
• Colleges/Schools: College of Social Sciences > Adam Smith Business School
• Supervisor's Name: Spaliara, Prof. Marina Eliza and Tsoukas, Prof. Serafeim
• Date of Award: 2022
• Depositing User: Theses Team
• Unique ID: glathesis:2022-82761
• Copyright: Copyright of this thesis is held by the author.
• Date Deposited: 25 Mar 2022 12:01
• Last Modified: 08 Apr 2022 16:42
• Thesis DOI: 10.5525/gla.thesis.82761
• URI: https://theses.gla.ac.uk/id/eprint/82761