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http://dx.doi.org/10.13106/jafeb.2021.vol8.no12.0117

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

KUANTAN, Dhaha Praviandi (IPB University)
SIREGAR, Hermanto (School of Business and Management (SB-IPB), IPB University)
RATNAWATI, Anny (School of Business and Management (SB-IPB), IPB University)
JUHRO, Solikin M. (Bank Indonesia Institute)
Publication Information
The Journal of Asian Finance, Economics and Business / v.8, no.12, 2021 , pp. 117-127 More about this Journal
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 Tobin Q. In each type of country, the interaction terms between exchange rate and commodity price are positive and statistically significant.
Keywords
Global Value Chain; Corporate Investment; Capital Expenditure;
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