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Financing benefit from exporting: An indirect identification approach

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  • Yu, Ziliang
  • Tong, Jiadong

Abstract

The signaling effect, sales diversification, and diversification of investment funding sources are three mechanisms through which exporting might alleviate financial constraints on a firm. In proposing an indirect identification strategy with application to Chinese privately owned enterprises (POEs), we first examine whether and how firms obtain such financing benefits from exporting. We find that although exporting can alleviate financial constraints, it does so mainly through the mechanism of sales diversification. This finding implies that Chinese POEs can obtain a financing benefit through exporting by improving cash flow stability but not by improving financing status in either the domestic or foreign capital market.

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  • Yu, Ziliang & Tong, Jiadong, 2020. "Financing benefit from exporting: An indirect identification approach," Journal of Multinational Financial Management, Elsevier, vol. 57.
    • Handle: RePEc:eee:mulfin:v:57-58:y:2020:i::s1042444x20300463
    DOI: 10.1016/j.mulfin.2020.100657
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    More about this item

    Keywords

    Imperfect capital market; Export behavior; Financial constraint; Private-Owned enterprises; China;
    All these keywords.

    JEL classification:

    • F19 - International Economics - - Trade - - - Other
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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