Affiliation:
1. Department of Business Administration College of Sciences and Humanities in Al-Sulail Prince Sattam Bin Abdulaziz University, Saudi Arabia
Abstract
This paper studies the empirical impact of Foreign Assets Management (FAM) on companies’ capital expenditure in emerging market economies with International Financial Shocks (IFS). The empirical analysis uses annual data of 2,931 publicly listed companies in 45 emerging market economies from 2000 to 2019. We analyzed a multiplicative regression of a canonical capital expenditure Q model. The findings show that FAM positively affects companies’ capital expenditure. Moreover, financially restricted companies are more sensitive to the favorable impact of FAM compared to restricted companies. Our results highlight the relevance of considering companies’ heterogeneity when examining the effect of macro-management policies. In addition, FAM has a more favorable impact on companies’ capital expenditure in economies that concurrently use capital controls and macroprudential policy. Finally, our findings suggest that successful macro-management policies insulate capital expenditure from adverse IFS. This result highlights the role of more coordinated approaches to repel adverse international shocks.
Publisher
World Scientific Pub Co Pte Ltd
Subject
Economics and Econometrics,Finance,General Business, Management and Accounting