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Corporate Investment Behavior and Level of Participation in the Global Value Chain: A Dynamic Panel Data Approach

Author

Listed:
  • Kuantan, Dhaha Praviandi
  • Siregar, Hermanto
  • Ratnawati, Anny
  • Juhro, Solikin M.

Abstract

This study was conducted to comprehensively identify factors that potentially influence corporate investment behavior, including micro, macro, and sectoral variables. Furthermore, investment behavior was studied across nations based on their participation in the global value chain (GVC), which was evaluated based on commodities, limited manufacturing, advanced manufacturing, and innovative activities. The study uses the dynamic panel data analysis and Generalized Method of Moment (GMM) estimation for a sample of 800 corporations, with data spanning over 2000−2019. The study result shows that in all types of countries, the coefficient lag indicator of capital expenditure statistically has a significant effect on capital expenditure. Sales growth, exchange rate, and GDP have a significant positive effect on corporate investment growth, while DER has a negative effect. In commodity countries, corporate investment is influenced by sales growth, exchange rate, and FCI. The variables that influence corporate investment in manufacturing countries are the FCI, exchange rate, sales growth, GDP, and DER. In innovative countries, variables that significantly affect capital expenditure are DER, GDP, and TobinQ. In each type of country, the interaction terms between exchange rate and commodity price are positive and statistically significant.

Suggested Citation

  • Kuantan, Dhaha Praviandi & Siregar, Hermanto & Ratnawati, Anny & Juhro, Solikin M., 2021. "Corporate Investment Behavior and Level of Participation in the Global Value Chain: A Dynamic Panel Data Approach," MPRA Paper 115417, University Library of Munich, Germany, revised 23 Oct 2021.
    • Handle: RePEc:pra:mprapa:115417
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    References listed on IDEAS

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    1. Solikin M. Juhro & Dhaha Praviandi Kuantan & Charvin Lim, 2024. "Capital Expenditure Dynamics in ASEAN: Unveiling Determinants and The Impact of The COVID-19 Pandemic on Non-Financial Corporations," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 27(1), pages 1-24, March.

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    JEL classification:

    • F1 - International Economics - - Trade
    • F2 - International Economics - - International Factor Movements and International Business
    • F3 - International Economics - - International Finance
    • G0 - Financial Economics - - General
    • G3 - Financial Economics - - Corporate Finance and Governance

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