The Thai Currency Crisis: Financing Constraints, High Fixed Costs, and Corporate Governance

2005 ◽  
Author(s):  
Robert Dekle ◽  
Chatsurang Cathy Karnchanasai ◽  
Pongsak Hoontrakul
Keyword(s):  
Corporate Governance ◽  
Currency Crisis ◽  
Financing Constraints ◽  
Fixed Costs

The Thai Currency Crisis: Financing Constraints, High Fixed Costs, and Corporate Governance

2005 ◽  
Vol 4 (2) ◽  
pp. 60-87 ◽  
Author(s):  
Robert Dekle ◽  
Cathy Karnchanasai ◽  
Pongsak Hoontrakul
Keyword(s):  
Scale Economies ◽  
Asian Financial Crisis ◽  
Financing Constraints ◽  
Fixed Costs ◽  
High Scale ◽  
Firm Level ◽  
Unit Costs ◽  
Level Data ◽  
Financing Costs

We examine the role of financing constraints in depressing output during the Asian financial crisis, using Thai firm-level data. From an output decline of 3.7 percent in our sample in 1998, we find that tightening financing constraints contributed to lowering output by 1.7 percent. We also find evidence of high scale economies or high fixed costs in Thai industries. With high fixed costs, small changes in unit costs or financing costs can lead to large changes in output. We interpret the high fixed costs as evidence of overinvestment prior to the crisis.

scholarly journals Economic Policy Uncertainty and Corporate Mergers and Acquisitions

2020 ◽  
Vol 3 (4) ◽  
Author(s):  
Xun Han ◽  
Kexin Chen ◽  
Xianjing Huang
Keyword(s):  
Corporate Governance ◽  
Economic Policy ◽  
Mergers And Acquisitions ◽  
Stock Price ◽  
Price Volatility ◽  
Financing Constraints ◽  
Policy Uncertainty ◽  
Economic Policies ◽  
Economic Policy Uncertainty ◽  
The Relationship

In recent years, the frequent adjustment of the government’s economic policies and the uncertainty of foreign economic situations have made the degree of uncertainty of China’s economic policies rise continuously. The increasing degree of policy uncertainty will inevitably affect the investment and financing decisions of micro enterprises. Then, how does economic policy uncertainty (EPU) affect mergers and acquisitions (M&A) behavior? What’s the mechanism? Based on the above questions, this paper uses the data of non-financial listed companies in the Shanghai and Shenzhen stock exchanges from 2008 to 2018 as a sample to explore the relationship between EPU and M&A. The study shows that rising EPU will promote corporate M&A behavior, and this effect is more significant in slow-growth companies. The relationship between EPU and M&A is affected by corporate governance, stock price volatility and financing constraints. Specifically, the company’s M&A size is more sensitive to EPU with higher level of corporate governance, higher level of stock price volatility, and lesser financing constraints. Further research shows that the rise of EPU will significantly promote the improvement of M&A performance in the short-term, but this effect does not exist in the long-term. Various robustness checks do not change the empirical results of this paper. 

Sign in / Sign up

Export Citation Format

Share Document