2015協(xié)作組會議英文12financial leverage and market decision foreign expansion of companies from emerging-study chinese manufacturing sector中央財經(jīng)

FinancialLeverageandMarketDecisioninForeignExpansionofCompaniesfromEmergingMarket:AStudyof DaHUOCentralUniversityofFinanceandEconomicsZhuCHENCentralUniversityofFinanceandWithfurtherinvolvementinglobaltradingactivities,companiesfromemergingmarketshaveenhancedtheircompetitioninforeignbusinessestoavarietyofdestinations.Thefinancialleveragepowerisanimportantsupporttotheforeignmarketexpansion.Itisimportanttofurtherunderstandtheeffectoffinancialleverageonthemarketdecisionsinforeignexpansionofcompaniesfromemergingmarket.This yzesthevaryingdecisionofforeignmarketsinforeignexpansionofcompaniesinmanufacturingsectorbysystematiccluster ysis,andthisresearchfurtherrevealstheeffectoffinancialleverageondecisionofforeignmarketsbasedonmultinomiallogitregression,withthefurtherestimationofprobabilitiesforforeignmarketdecisionsby manufacturingsectorfirms.Theresultofthisresearchishelpfulforglobalmarketmanagersandfinancialmakersintheirfuturedecisionsoffinancialresources.KeyWord:FinanceLeverage,MarketDecisioninForeignExpansion,CompaniesfromEmergingMarket究通過多值選擇Logit模型對財務(wù)杠桿在企業(yè)拓展海外市場的選擇中產(chǎn)生的作用進行了探討，并制造企業(yè)拓展海外市場的選擇可能性進行了估計。的DaHUO地址市海淀區(qū)學(xué)院南路39號財經(jīng)大學(xué)主教樓719(100081)ZhuCHENVernon(1979)pointedoutthatdevelopedcountriesinitiallycreatednewproductsandexportedtodevelocountries.Whilethecompetitionincreasesindevelopedcountries,productionactivitiesaregraduallyshiftedtodevelocountries.Astheproductionisshiftedtodevelocountries,thedevelocountrieschangedtoexportersanddevelopedcountriesareturnedtobeimporters.Followingtheshiftofproductionactivitiesfromdevelopedcountriestodevelocountries,theinternationalizationof companiesisgraduallyincreasedbytheexportacrossdifferentcountries.Duetothedemandoffinancialsupporttotheforeignexpansion,thefinancialleveragecanbeanimportantfactorthatinfluencesthedecisionofforeignmarketsforcompaniesfromemergingmarkets.initiatedeconomicreformin1978andhasmadetremendouseffortstotransitionfromannedeconomytoamarket-orientedeconomy.Withthederegulationofthecentral-nningeconomyandtheemergenceofmarkets,theoperationsofthe internationalcompanieshavebeendeterminedbymarketdemandandsupply.Therelaxationofcontrolofproductionincreasedthediversificationofcompanies duringthetransitioneconomy(Lietal.,hasachievedahighgrowthrateintheeconomicdevelopment. actastheregulatorsthathaveahighlevelofcontrolpowerof companies.Differentagenciesstructureregulationscouldalsobuildpoliciestoprotectthepowerintheirregulatory .The ernmentinfluenceandregulatorypoliciescouldincreasethecomplexityanduncertaintyintheoperationsofcompanies.Thecompetitiveadvantagesofthehighlevelofdiversificationinthedomesticcompaniescouldhelpthefirmstodevelopthecostleadershipandproductdifferentiationsothatthefirmscoulddiversifywithmoreintegratedoperationsandlargermarketshare.Theopenof hasincreasedthecompetitionof andforeigninvestors.Withtheopenreform,anincreasingnumberofforeigncompanieshavetakenadvantageofaninexpensivelabor andmarketdemandthroughthe1.3billionpopulationof .ThiscompetitionisincreasedafterenteredWTOin2001andthechallengesthatcomefromtheemergenceofprivatesectors,growthofforeigncontrolledbusiness,andderegulationsofthebusinessenvironment.Increasingcompetitionhasdrivendownthemarginsofcompaniesinthedomesticmarket.Alotof companiesmustlearntocompeteintheglobalmarketceastheeconomyisfurtherintegratedwiththeglobalcompetition.Thesuccessoftheexportdriveneconomy,towhichforeignenterprisesinhavebeenmajorcontributors,hasinturnfurtheredtheoutwardFDIofthecountry(Robert,2002).companieshaveincreasedtheirglobalexpansionwiththeincreasedtradeandtheserviceasthemanufacturingntoftheworldmarket.Therefore,domesticconstraintsandthepressuresofglobalcompetitionhaveprovidedthedynamicsforcompaniesinforeignmarkets(Child&Rodrigues,2005).Ascompaniesareenhancingtheinternationalizationlevel,thedecisionofforeignmarketsalsovariesacrossdifferentcountries.Thefinancialleverageisanimportantfactorintheinternalizationofcompaniesfromemergingmarkets,anditisimportanttohaveafurtherunderstandingofeffectsoffinancialleverageondecisionofmarketsinforeignexpansionbycorporatefromemergingmarkets.Decisionsofthemarketsinforeignexpansioncanbeestimatedinyzing companiesbasedontheirfinancialleveragepower.Thisresearchrevealstheeffectoffinancialleverageondecisionofforeignmarkets,andtheresultishelpfultoglobalmarketmanagersandfinancialmakersintheirdecisionsoffinancialresources.LitureSrivastava(2014)pointedoutthatthedebttotheequityratiocanrepresentthefinancialleverageofa ,anditreflectsthecapacityofthefinancialmanagerstoattractexternalfinancialresourcesforimprovementoftheequityefficiency.Thefinancialleveragecanhelpthe toincreaseitsgrowthopportunity,butitalsoincreasesthefinancialriskthe .A canattractexternalresources,especiallywhenitgoesthroughaboomperiodanditneedsadditionalfinancialresourcesinordertosupportit,butthisalsomakesitriskier.Andanincreasinglevelofriskissimilartoincreasingthecostofotherexternalresourcesleadingtothedangeroffailurearea.Itisacrucialissueforglobalmanagersthathowtochoosethecombinationofdebtandequitytoachieveoptimumcapitalstructureforminimizingthefirm'scostofcapitalandimprovingreturntoownersofthebusinessindecisionsofforeignmarketexpansion.Theoptimaldebtlevelbalancesthebenefitsofdebtagainstthecostsofdebtindecisionsofglobalexpansion.Accordingtoresource-basedview,firmsobtainsustainedcompetitiveadvantagesbyexploringinternalstrengths.Firmresourcesincludetheassets,capabilities,organizationalprocesses,firmattributes,information,andknowledgewhicharecontrolledbyafirmandenablethefirmtoimproveitsefficiencyandeffectiveness.Iffirmshavethesameresources,itishardforanyofthemtobuildcompetitiveadvantage.Toimplementstrategiesbeforeothercompetitors,afirmhastofindtheopportunitiesthathavenotbeenfoundbyotherfirmsintheindustry.Firmresourcesthatcreatecompetitiveadvantagesneedtobevaluable,imperfectlyimitable,andnotsubstitutable(Barney,1991).The companiescouldbuildtheircompetitiveadvantagesthroughexpansiontoforeignmarketsintheglobalpaniescompeteintheglobalmarketwiththecompetitiveadvantagesdevelopedinthedomesticmarket. companiesimprovedthetechnologyandmanagementskillsincooperationwithforeigncompanies.Takingadvantagesoftheprestigiousbrandequitybuiltupinthedomesticmarket,companiesmovedabroadwiththeirbargainingpowerincreasedintheglobalcompetition.Butthecostincreasedfromthediversificationcouldmakethetransactioncostintheglobalexpansiondifficultto paniescouldalsobechallengedbyresourcelimitationsandtheproblemsintransnationalmanagementandcommunications.Ontheotherhand,thediversificationthatcompanieshaveintheglobalmarketcouldhelpthecompaniestodevelopcompetitiveadvantagesandenlargethemarketshare.Therefore,diversificationandinternationalizationcouldbeatrade-offtoH1:ThefinancialleveragecanhaveapositiverelationshipwithdecisionofforeignmarketexpansionMarketexpansioncanhaveapositiveimpactonperformancebyallowingfirmstomakebetteruseoftheresourcesofacorebusiness.Theexpansionofoperationsleadstobetterall-aroundmanagementinthe ,performance,andshareholderwealthenhancement.Asaresultofthedifferenceofsales,globalfirmswithmarketpowerperformbetterthandiversifiedfirmsthatarenotmarketleaders.Themarketexpansionhasasignificantandpositiveinfluenceonthevalueofthefirm.(Ramanujam&Varadarajan,1989)H2:ThefinancialleveragecanhaveanegativerelationshipwithdecisionofforeignmarketexpansionMarkidesandWilliamson(1996)foundthatexpansionindifferentmarketscansupportsuperiorreturnsonlywhenitallowsafirmtoexploitresourcesorassetsthatareunavailabletoitsrivalsatacompetitivecost.StimpertandDuhaime(1997)pointedoutthattheexpansionofinternationalcompaniesassociatedwithadministrativecomplexitygrowsoquicklytheycansoonoverwhelmanypotentialeconomiesofscaleorscopeofferedbyproductdiversification.H3:ThefinancialleveragecanhaveaU-shaperelationshipwithdecisionofforeignmarketexpansionInternationalcompanieswillconferadvantageoverdomesticfirms.Internationalfirmshaveopportunitiestogaingreaterreturnstointangibleresources,tousemarketpower,tospreadtheirmarketrisks,andtoseeklessexpensiveinputsandlessprice-sensitivemarkets.Theinternationalcompanieshavegreateropportunitiestoleverageresourceswhileloweringmarketrisks,thusraisingitsperformance.Theinternationalizationhashelpedtoimproveoperatingperformance.However,afirmwithprofit-makingcapabilitieswillseekadditionalprofitsininternationalmarketlocations.Thisexpansionmaybelimitedbyrelatedproductscopeexpansionofglobalmarket.Experienceininternationalmarketspermitsfirmstograduallyincreasetheircommitmenttointernationalexpansion.Theabilitytomanageextensivenetworksofinternationalsubsidiariesatlowtransactionalcostsseemstobeakeycapabilityofsuccessfulmultinationalfirms(Tallman&Li,1996).H4:ThefinancialleveragecanhaveanS-shaperelationshipwithdecisionofforeignmarketexpansionAccordingtothetransactioncosttheory,theinternationalcompanieswillfinditdifficultto etheircostintheinitialstageofforeignoperations.Ahigherleveloftransactioncostwilllowerthepositivefirmperformanceintheglobalexpansionofcompanies(Bobilloetal.,2010).Thefinancialleverageofcompanieswillhaveanegativerelationshipwiththedecisionofforeignexpansionforthereasonthatthedistributionandtechnologybarrierintheforeignmarketscanincreasetransactioncostduetotheuncertaintyofdifferentenvironmentsintheglobalmarketandfurtherraisesthefinancialrestrainofthecompanies.Whenthefinancialleveragepowerfurtherincreasesinglobalexpansion,theinternationalcompaniescanarbitrageacrossfactormarketsandleveragetheirmarketpowertobothreduceinputcostsandcontroloutputmarkets(Tallman&Li,1996).Thefinancialleveragecanhavepositiveeffectondecisionofforeignexpansionasthefirmresourcesaccessedinglobalexpansioncanofferstrengthsforfirmstoimplementtheirstrategies(Porter,1981).Firmsinvolvedinafurtherhigherleveloffinancialleverageinglobalexpansionmayneedtoconfrontthedifficultiesinmanagingdifferentcultures,operationsindifferentcountries,andservicetodifferentcustomers.Thustheinternationalcompaniescanresultinincreasedmanagerialconstraintsandhighercross-borderadministrativecosts.Themanagerialcomplexityarisesfromoperationsindifferentmarketswithproblemsincommunication,coordination,controlandmotivation(Doukas&Kan,2006).AndthecostoffinancialleveragecanaffectthedecisionofforeignexpansioninglobalResearchThedestinationsofforeignexpansionby companiesinmanufacturingsectincludeAsia,Europe,NorthAmerican,SouthAmerican,Oceania,Africa,andMid-East.Thedecisionsofforeignmarketsareclusteredinthreegroupsbysystematic ysis.Themultinomiallogitregressionisperformedto yzetherelationshipbetweenfinancialleverageanddecisionofforeignexpansionbycompaniesinmanufacturingsector.ThedependentvariableisthedecisionofCluster1,Cluster2andCluster3inforeignmarketexpansion.Theindependentvariablesincludethefinancialleverage,measuredbydebttoequityratio,squarefinancialleverageandcubicfinancialleverageof companiesinmanufacturingsector.LiandWong(2003)pointedoutthatthefinancialleverage,whichequalstotheratioofdebttoequity,reflectstheinfluencesfromdebtholdersandshareholdersandtheimpactstotheperformanceofthefirms.Thecontrolvariablesincludefirmsize,wagelevelandR&Dexpense.FinancialLeverageandFirmGilletal.(2012)findthatsmallbusinesscompaniescanbepositiveinfluenceonthefinancialleverageofsmallbusinessfirmsin.Theleveragerelatedcostscanproduceanoptimalcapitalstructureasthetaxadvantageistradedagainstthelikelihoodofincurringbankruptcycosts.Thecompanieswithsmallersizemayprefernottousedebt,forthereasonthatsmallerfirmsmakelessprofitthanthelargerfirms.Alsousinglowerleverdebtisthatthepotentialofbankruptcyishighforthesmallfirmsiftheyincreasethelevelfinancialleverage.Theagencycostscanbeexpectedriseinsmallerfirmsasasmallbusinessmanagerismorelikelytoputhisownandhisventure'sinterestfirst,especiallyintheearlyyearswhensurvivalisatstake.Inaddition,smallbusinessescarrylessdebtthanthelargerfirmsduetohigherbankruptcycosts,andgreatercostsinresolvingthelargerinformationalasymmetries.Therefore,thecompanieswithasmallerfirmsizecanbemorerestrainedindecisionofforeignmarketexpansionduetothelimitationoffinancialpower,andthelargecompaniescanbemorerelaxedinglobalexpansionwithahigherleveloffinancialsupport.Firmsizeismeasuredasthelogoftotalassetsinthisstudy(Li&Wong,2003).FinancialLeverageandDevelopmentofTheabilityofinternationalcompaniestoexploittheknowledgeindeveloavarietyofforeignmarketsisimportantforthecompaniestocreatecompetitiveadvantages.Thedevelopmentofnewtechnologyinthediversificationprocessisimportantfortheinternationalcompaniesinordertodevelopnewcompetencesandachievehigherperformance.Theknowledgelearnedfromglobalexpansiontoadapttodifferentcustomersanddemandscouldhelpinternationalcompaniestoadapttheirproductstodifferentmarkets.Globalexpansionalsooffersthedynamicsfortheinternationalcompaniestoidentifyemergingtechnologicalchangesandthesynergiesandadvantagesforthecompaniestoadaptnewmarkets.Diversificationofinternationalcompaniescouldimprovethetechnologybreathanddepthofcompaniesintheglobalexpansion.Thiscouldbehelpfultothecompaniestoacquirenewtechnologyacrossdifferentcountries((Zahraetal.,2000).ThefinancialleveragepowercanfurtherenhancethedevelopmentofR&Dofcompanies.ButAhmad,Khursheedetal.(2013)foundthatthefinancialleveragehassignificantnegativeimpactoninvestmentofcompanies,andthefirm’sinvestmentdecreasesasleverageincreases.Thehighlyleveragedfirmsinvestless,whiletheleverage overinvestmentbiasandattenuateagencyproblemexist.Therefore,thecompanieswithalowerlevelR&Dexpensecanberestrainedinglobalexpansionduetolimitedfinancialresources,andthecompanieswithahigherlevelofR&Dexpensecanberelaxedinglobalexpansionwithastrongfinancialsupport.FinancialLeverageandWageHeisz,Andrew&LaRoc e-Cote,Sebastien(2004)examinedtherelationshipbetweenfirmleverageandstabilityinemploymentandinventoriesusingCanadiandataforthemanufacturingsector.Thecompaniesneedtofindnewfundstofinancebusinessactivities,andahealthybalancecanoffercompanieseasyaccesstoexternalfinance,tosmoothproductionbybuildingupinventories.Firmswithahighlyleveragecanpreferhigherdebttorespondquicklytochangesintheeconomicenvironment.Thecompanieswithdifficultyinobtainingoutsidefinancecanmakeitsemploymentmoresensitivetotheavailabilityofinternalfunds.Therefore,thefirmswithhighleveragecanbemorelikelytodownsizetheirlabor inthecaseofdecliningproductdemandthanotherfirms.Andalsothecompaniesthatarerestrainwithfinancialresourcescantakeadvantagesoflowerwage-levelinglobalexpansion.Thedataiscollectedfromannualfinancialreportof listedcompaniesinmanufacturingsectorfrom2012to2014.Thecompaniesrefertothefirmswhosebusinessspanacrossnationalborders.Thedataistransformedbythelogarithmfortheregressionysis.Thedatatransformationcouldhelpthevariablestocorrectviolationsofthestatisticalassumptionswiththemultivariatetechniques.Thedatacanbetransformedwiththelogarithmsofthevariables,anditishelpfultofindthenormalityofthevariablesinbuildingthelinearrelationshipsofthevariable.TheprobabilityofdecisionsinforeignmarketexpansionforcompaniesinmanufacturingsectorisfurtherestimatedbasedonthemultinomiallogitregressionFigure1showstheresultofsystematiccluster ysisfordecisionsofforeignmarketsinglobalexpansionof companies.ThecompaniesaregroupedintothreedifferentclustersbasedontheirdecisionsofforeignmarketsinAsia,Europe,NorthAmerica,SouthAmerica,Oceania,AfricaandMid-East.Theredrectangularhasstressedthethreegroupsofcompaniesinthesystematiccluster ysis.Figure2furthershowstheheatmapofcompaniesinthecluster ysis.Thedeepercolorinthemappresentsthehigherlevelofsimilaritiesofthedecisionsinforeignmarketexpansion.Table1showstheresultofmultinomiallogitregressionbasedonmanufacturingcompanies.Itrevealstherelationshipbetweenfinancialleverageanddecisionsofforeignmarketexpansion.Model1teststherelationshipbetweenfinancialleverageanddecisionofforeignmarketexpansionindifferentclusters,withCluster3asthestandardgroup,andthecontrolvariablesincludefirmsize,R&Dandwagelevelof companies.Model2addsthein ctionsbetweenfinancialleverageandfirmsize,R&Dandwageleveltotheregression ysis.Model1andModel2showsthatH2issupported,whileH1isnot.ThefinancialleveragehasanegativerelationshipwithdecisionsofforeignmarketexpansionforcompaniesinCluster2.Model3teststheU-shaperelationshipbetweenfinancialleverageanddecisionofforeignmarketexpansion,andModel4furtheraddsthein ctionsbetweenfinancialleverageandthefirmsize,R&Dandwageleveltotheregression ysis.Model3andModel4showsthatH3isnotsupported.Furthermore,Model5teststheS-shaperelationshipbetweenfinancialleverageanddecisionofforeignmarketexpansion,andModel6addsthein betweenfinancialleverageandthefirmsize,R&Dandwageleveltotheregressionysis.Model5andModel6showthatthereisanS-shaperelationshipbetweenfinancialleverageanddecisionofforeignmarketexpansion,andH4issupported.Itisalsofoundthatthein ctionbetweenfinancialleverageandfirmsizehasapositiverelationshipwiththedecisionofforeignmarketexpansionforcompaniesinCluster1,andthein ctionbetweenfinancialleverageandwagelevelhasanegativerelationshipwiththedecisionofforeignmarketexpansionforcompaniesinbothCluster1andClusterTheperformanceofmultinomiallogitregressionysisismeasuredbytheprobabilitiesofcorrectclassification(PCC),whichisbasedontheprobabilityofcorrectestimationsbyrandomselectedsampletests.ItisshownthatModel6hasthehigherprobabilityofcorrectclassification,andtheestimationofdecisionsinforeignmarketexpansionisbasedonModel6,andFigure3showstheprobabilityofcorrectclassificationinModel6.Figure4furthershowstheaverageprobabilitiesofdecisionsinforeignmarketexpansionformanufacturingcompaniesinCluster1,Cluster2,andCluster3,anditisfoundthatcompaniesinCluster1hasthehighestprobabilityindecisionofforeignexpansion.Figure5showsthekerneldensityofestimatedprobabilitiesindecisionsofforeignmarketexpansion.Withthedevelopmentofemergingeconomy,companiesfromemerginghaveenhancedinvolvementofglobalcompetition.Itisimporttodevelopafurtherunderstandingofrelationshipbetweenfinancialleverageanddecisionsofforeignmarketexpansionforcompaniesinemergingmarkets.Thisresearchstudiestheeffectoffinancialleverageondecisionsforforeignmarketexpansionbasedoncompaniesinmanufacturingsector.ItisfoundthatthefinancialleveragehasanS-shaperelationshipwithdecisionofforeignmarketexpansion.Thecompaniescanberestrainedbylimitationsoffinancialresourcesatinitialstageofglobalexpansion,andtheforeignexpansioncanbeencouragedbyahigherleveloffinancialleverage.Butthecostofanevenhigherleveloffinancialleveragecanoffsetthebenefitinglobalexpansion.Therefore,itisimportanttomanagethefinancialleverageinareasonablelevelsothatitsadvantagesanddisadvantagescanbebalanced.Inaddition,the ctionbetweenfinancialleverageandfirmsizehasapositiverelationshipwiththedecisionofforeignmarketexpansion,andthiscanbearesultofgreaterfirmresourcesinsupporttotheglobalexpansion.Alsothein ctionbetweenfinancialleverageandwagelevelhasanegativerelationshipwiththedecisionofforeignmarketexpansion,anditisshownthatthecompaniesfromemergingmarketsthatarerestrainedwithfinancialresourcescanalsotakeadvantageoflowerwagelevelindecisionsofforeignmarketexpansion.Ahmad,Khursheed&Alishah,SyedZulfiqar&Bilal,Hazrat&Ahmad,Habib(2013),ImpactofFinancialLeverageonFirmInvestment,AfricanJournalofBusinessManagement,7(14),1115-1125Barney,J.(1991).FirmResourcesandSustainedCompetitiveAdvantage,JournalofManagement,17(1),99~121Bobillo,AlfredoM.&Iturriaga,FelixLopez&Gaite,FernandoTejerina.(2010).FirmPerformanceandInternationalDiversification:TheInternalandExternalCompetitiveAdvantages.InternationalBusinessReview,19(6),607-618Child,John&Rodrigues,SuzanaB.(2005),TheInternationalizationof ACaseforTheoreticalExtension,ManagementandOrganizationReview,Volume1,Issue3,381-410Coucke,Kristien,&Sleuwaegen,Le