Domestic Companies Research Articles

The dark side of globalization: Evidence from the impact of COVID-19 on multinational companies.

The COVID-19 pandemic has led to economic and health crises (“twin crises”) worldwide. Using a sample of firms from 73 countries over the period January to December 2020, we examine stock price reactions of multinational corporations (MNCs) and purely domestic companies (DCs) to the crisis. We find that, on average, MNCs suffer a significantly larger decline in firm value relative to DCs during the stock market crisis caused by the pandemic with notable heterogeneity in this underperformance across both industry and region. The evidence of MNC underperformance is robust to using abnormal returns, an alternative crisis window, a matched sample that accounts for differences in characteristics between MNCs and DCs, alternative model specifications, and alternative proxies for multinationality. Further analysis on the effect of government responses on the valuation gap suggests that stringent government responses exacerbate MNCs’ underperformance. Finally, we show that a stronger financial system mitigates negative crisis returns, especially under stringent government responses, while real factors, such as the firm’s supply chain, investments in human capital, research and development, exacerbate negative crisis returns. Our findings have important implications for managers of MNCs and government policymakers alike and contribute to studies on the international diversification–performance relation by demonstrating a dark side of globalization during a tail-risk event.

Some Transnational Aspects of Environmental Disputes in Kazakhstan and Its New Environmental Code

Environmental tort litigation is widely seen as an appropriate mechanism to redress wrongs caused by pollution, oil spills and other kinds of environmental degradation. Victims and NGOs try to find ways to sue parent companies in their country of incorporation, which is usually different from the country where the harmful event occurred. Central Asia is a region where part of the population suffers from similar situations. Kazakhstan, for instance, is very rich in minerals and foreign and domestic extractive companies often damage the soil and the air quality of towns and communities in the vicinity of their operations. The practical disappearance of the Aral Sea, partly due to the inappropriate use of water by Uzbekistan, is another example. Environmental regulation and administrative fines imposed by the countries concerned leaves the prosecution of reckless industrial practices in the hands of the Government, in countries were collusion between Governmental cliques and extractive industries is well known and where courts are often poorly trained or far from independent. Cases of transnational environmental damage are also possible due to the large border that Central Asian countries share with each other, as well as with other industrial giants like Russia and China. In such a scenario, what are the chances of using tort law and civil litigation for victims and other stakeholders, especially in view of the new Environmental Code of 2021? Central Asian countries basically belong to the civil law tradition and are greatly influenced by Russian legislation. This means that tort law and conflict of laws are usually codified in civil codes and in codes of civil procedure. Heads of jurisdiction and applicable law rules are not that different from those of other civil law countries. However, those rules often display certain “nationalist” features in that nationals or residents of the country of the forum usually have easier access to court against foreign defendants, at least on paper. Key words: Environment, Code, Litigation, Kazakhstan.

Analysis Voluntary Carbon Pricing Programs for their Further Adoption by Ukrainian Enterprises

The wide spreading of the voluntary carbon pricing practice will lead to the efficiency of governmental policies towards low-carbon an economy, since they will be able to adopt clearly anticipated price policies in Ukraine and other countries. But adopting the internal carbon pricing programs by domestic enterprises is challenging due to expose to political, energy, financial and other crises in Ukraine and should be carefully studies in prior. Thus we offer considering best experiences of European companies that have already effectively and efficiently incorporated carbon pricing schemes into their management processes and strategic decisions. For this purpose, the theoretical issues of implementing voluntary carbon pricing programs by domestic enterprises have been investigated. Theoretical and practical base of the article consists of general economic and environmental economic principles, works of international and national scientists in the field of carbon pricing. This study provides analysis of the effective tools of mitigating risk associated with climate change policy and regulations, which can be applied by domestic firms in Ukraine. Using internal carbon pricing programs as a risk management tools, we described potential benefits, costs and limitations of the program. We also introduced the business study case how to apply the internal carbon pricing tool, in particular, shadow price by a company. This example proposes a methodological approach to implementing a shadow price tool. Thus, can be applied by domestic company in order to identify the feasibility of low-carbon emission investment and make right investment decision towards decarbonisation. Further analysis reveals that internal carbon pricing programs can be implemented by domestic firms as an efficient strategy and enable a greenhouse gas emissions reduction in compliance with the future or current national target. Our study provides practical recomendations through which Ukrainian companies can address climate risk and provide guidance to governments and regulators for the forming and further implementation of national environmental policies.

The Effect of Openness to Experience and Perceived Organizational Support for Creativity on Creative Performance:

The first purpose of this study was to investigate the mediating effect of feedback seeking behavior in the process of openness to experience and perceived organizational support for creativity on creative performance. The second purpose was to examine whether self-efficacy moderates the effects of openness to experience and perceived organizational support for creativity on feedback seeking behavior. An online survey was conducted on employees from domestic companies and a total of 284 data were analyzed. The structural equation modeling and multiple regression analysis results are as follows. First, the effects of openness to experience and perceived organizational support for creativity on creative performance was statistically significant. Second, the mediating effect of feedback-seeking behavior was significant in the openness to experience and perceived organizational support for creativity on creative performance. Third, the moderating effect of self-efficacy was significant in the relationship between perceived organizational support for creativity and feedback-seeking behavior. Specifically, the positive relationship between perceived organizational support for creativity and feedback-seeking behavior was stronger when the self-efficacy was high rather than low. The implications and limitations of this study are discussed.

The cost of equity of companies subject to sovereign risk

Subject. The article considers the issue of establishing the cost of equity capital of companies, taking into account sovereign risk. Objectives. The study aims at choosing a method to estimate the cost of equity subject to country risk and a method to determine the level of sovereign risk for domestic companies. Methods. The analysis rests on two methods for determining the cost of equity given the sovereign risk, i.e. the Damodaran’s model and the hybrid CAPM model. The approaches under consideration differ in the choice of a developed market country, specifically, the United States (according to the S&P 500 Index) and Germany (according to the DAX Index), and in the choice of a method for calculating the share of country risk attributable to the company. Results. Using the Damodaran’s model and the hybrid CAPM model, I established the cost of equity, determined the degree of country risk that falls on company, for 10 domestic companies. To estimate the cost of equity for 10 companies, I used the Damodaran’s model for companies and the hybrid CAPM model (which I adjusted). Conclusions. The larger the scale of the company, the greater the degree of sovereign risk falls on it. Accordingly, the cost of equity increases, and company value decreases. The gamma index varies depending on the volatility of stock returns. This indicator better expresses company's exposure to country risk. Comparing the results with the choice of the U.S. or German base market shows that in both models, the cost of equity based on the US market will be higher, and, accordingly, the company value will be lower.

Corporate social responsibility of pharmaceutical industry in Korea.

Background: Global pharmaceutical companies in Korea argue that the development of innovative drugs should be recognized as a social contribution, yet it has been countered by various stakeholders. The need to distinguish between philanthropic activities and Corporate Social Responsibility (CSR) of pharmaceutical companies and reaching consensus in the Korean context has been raised. We sought to evaluate the CSR status of Korean pharmaceutical companies and collect the stakeholders’ opinions to define philanthropic activities and CSR related to pharmaceutical companies in Korea. Methods: We conducted a literature review on the definition of CSR of pharmaceutical companies, and the CSR activities of the domestic pharmaceutical companies were compared with those of global pharmaceutical companies operating in Korea. The opinions of stakeholder groups (patient advocate groups, consumer organizations, and domestic/global pharmaceutical companies) were collected using focus group interviews (FGI) and written surveys. Results: Literature review suggested that CSR is categorized as “must do” (economic and legal responsibilities), “ought to do” (ethical responsibilities), and “can do” (philanthropic responsibilities), whereas contributions beyond the economic, legal, or ethical responsibilities can be defined as “can do” (philanthropic responsibilities). Domestic pharmaceutical companies simply adopted systems for ethical and ESG (Environmental, Social, and Governance) management, which are at the “ought to do” level (ethical responsibility), whereas the headquarters of these global pharmaceutical companies established the CSR team and systematically reported on the CSR activity, including ESG management reports, which is at the “ought to do” level and further moving to the “can do” level, but the Korean branch rarely has CSR teams, and the CSR activities in Korea were also insufficient. At the FGI, the global pharmaceutical companies argued that CSR activities, such as innovative drug development, should be recognized as similar to philanthropic activities, yet stakeholders besides them suggested that those activities are “can do” rather than being philanthropic. Discussion: We found that the pharmaceutical companies in Korea are attempting to achieve the “ought to do” level (ethical responsibilities) while complying with the “must do” level (legal and economic responsibilities) yet not philanthropic activities. A social consensus regarding the philanthropic responsibilities of pharmaceutical companies in Korea was not reached.

Financial structure and bank relationships of Italian multinational firms

This paper examines the financial structure and bank relationships of multinational firms in Italy, a large European country strongly reliant on bank debt. We show that multinationals are, on average, more leveraged than non-internationalized companies. Moreover, multinationals have larger shares of both financial debt and bank debt as a percentage of total debt, benefit from lower interest rates, maintain more bank relationships, and are less dependent on the primary bank for the firm. Overall, these findings suggest that globally diversified firms have better access to credit markets than domestic companies. These results are robust to estimation methods that address the potential endogeneity of the choice to go international, such as matching and instrumental variable estimation.

Identifying the Configurations to Operating Efficiency in China’s Life Insurance Industry Using Fuzzy-Set Qualitative Comparative Analysis

This paper aims to measure the operating efficiency of 22 Chinese domestic and foreign-funded life insurance companies from 2013 to 2017 and outline the path to achieve high-quality development. The DEA-Malmquist was used to evaluate the total factor productivity on the sample of 22 Chinese domestic and foreign-funded life insurance companies. A fuzzy set qualitative comparative analysis (fsQCA) was also used to analyze the configuration of determinants affecting technical efficiency. The results show that the overall operating efficiency of life insurance companies in China is relatively satisfying. The changes in total factor productivity are mainly caused by changes in technical efficiency and changes in efficiency. However, changes in scale efficiency have little effect on Chinese domestic and foreign-funded life insurance companies. There is a significant difference in the operating efficiency between Chinese domestic and foreign-funded life insurance companies. In contrast, the operating efficiency is slightly higher than that of foreign-funded life insurance companies, which is mainly reflected in the difference in pure technical efficiency. The realization path of a life insurance company’s operating efficiency is primarily composed of high employee education and low overclosing ratio, high employee education and low reinsurance ratio, and all-factor positive investment. The weak employee quality and excessive overclosing are the main reasons for the low operating efficiency of some enterprises. This paper systematically analyzes the impact of the organization’s internal structure on the operating efficiency of life insurance companies. Finally, based on the configuration perspective, we explain the internal logic and path of achieving better operating efficiency. In the end, we also provide decision-making references for further improving the efficient operation of life insurance companies in China.

STRATEGIC ASPECTS OF THE DEVELOPMENT OF REGIONAL PRODUCTION SYSTEMS

In the conditions of increasing political and economic sanctions against Russia, the significance of the economy development of the country grows. Provision of the competitive all-sufficiency of the production systems is of great importance. This will contribute to the creation of conditions for overcoming the crisis and raising the country’s export potential in future. It should combine balanced development of the economic agents included in them and also territories of factories location. This will allow connecting the territorial and sectorial aspects of strategic development. Influence of social, political and regulating norms predetermines the conditions and results of production systems functioning. In their turn, economic entities are able to carry out implementation of social tasks only with the condition of the efficiency of entrepreneurial activity and financial stability. Nowadays, the necessity of import substitution in all sectors of the economy is topical for the country. Due to the introduction of logistic restrictions and ban on the cooperation with the domestic companies, Russia doesn’t have possibility to take part in the world production chain of added values creation to the full measure. Therefore, aspiration to isolate Russia from the advanced technologies should be used for the development of productions based on our own elaborations.

Big Business and Dictatorships in Latin America: A Transnational History of Profits and Repression

Big Business and Dictatorships in Latin America: A Transnational History of Profits and Repression

Technology valuation for intellectual property commercialization

This study was conducted to evaluate the technical value of 19 intellectual property rights held by the Korea Research Institute of Bioscience and Biotechnology, and the purpose of this valuation is to promote commercialization by acquiring the technology transfer or exclusive license for the intellectual property rights. This study examines the theoretical and practical aspects of the valuation methods and procedures of the income approach that are useful for valuing intellectual property. Assuming that bioscience and biotechnology firms receive license transfer of intellectual property held by a foreign company, the valuation analysis of intellectual property based on the profit approach is based on business plans and financial statements of domestic companies. After calculating the operating profit from the gross profit of the company in detail, the corporation tax and the capital cost are taken into account and the depreciation cost is increased or decreased to calculate the excess profit and multiply the present value by the present value. We propose an income approach model and a case analysis to obtain the ultimate value of intellectual property by multiplying the contribution by this factor. It is not easy to predict future cash flows and estimate various financial statements, and there is a limit to the possibility that the evaluator will be subject to the estimation of the appropriate discount rate. More detailed and partial complementary research classified by the industry size is to be left as a future study.

The Effects of the Degree of Internationalization on the Market Value of Cash

In this paper, we advance the literature on cash holdings and international business by analyzing whether the degree of internationalization influences the value investors place on cash holdings in Latin American companies. Consistent with the research hypothesis, we find strong and robust evidence that investors do not perceive the cash holdings of multinational corporations from Latin America or Multilatinas as providing greater benefits relative to the cash of their domestic peers. As a consequence, we document that investors do not place a higher value on the cash of Multilatinas than on that of Latin American domestic companies, despite the fact that the former has higher growth opportunities. This paper is an important step in understanding Latin America and the multinational corporations from this region. Furthermore, our research has implications for managers of multinational corporations that have subsidiaries in countries with valuable growth opportunities, but the risk of cash expropriation is substantial due to the poor protection of shareholders rights. Finally, our study also highlights the relevance of considering the mandatory disclosure of foreign cash, in location and amount, to improve efficiency in stakeholder decision-making and also to advance the understanding the effects of foreign cash on Multilatinas' investment decisions.

A Study on Changing Role of Foreign Institutional Investors (FIIs) in Indian Capital Market

The commencement of financial sector reform initiated in early 1990’s changed India’s policy on development strategy absolutely. The preliminary approach of financing current account deficit mainly by way of debt flows and official development assistance has altered to harnessing non-debt creating capital flows. Under this approach since September 14, 1992; Foreign Institutional Investors (FIIs) were allowed to invest in financial instruments in India and consequently Indian financial markets have changed greatly in its volume, size, depth and nature. FIIs are important to emerging economies because they bring funds and capital to businesses in developing countries. Foreign institutional investors play a very important role in any economy, since these are the big companies such as investment banks, mutual funds etc, who invest considerable amount of money in the Indian markets. These investors typically include hedge funds, mutual funds, insurance companies and investment banks among others. FIIs generally hold equity positions in foreign financial markets. Due to this, the companies invested in by FIIs generally have improved capital structures due to healthy inflow of funds. Thus, FIIs facilitate financial innovation and growth in capital markets. The entry of an FII can cause a drastic swing in domestic financial markets. It increases demand for local currency and directs inflation. Therefore, there are restrictions put by the managing authority of a country on how much stake FIIs can hold in the domestic company. This ensures that the FII’s influence on the company is limited, so as to avoid exploitation. However, not every FII will make an FDI in the country it is investing in. FIIs directly impact the stock market of the country, its exchange rate and inflation. FIIs can invest in listed, unlisted, and to-be-listed companies on the stock markets, in both the primary and secondary markets. This paper tries to analyse the changing role of FIIs in Indian capital markets because of their increasing share in the market.

Perceived Price and Quality of Food of European Union Countries of Origin by Slovaks: The Influence of Ethnocentric Tendencies

Perceived price and perceived quality are two generic factors influencing purchasing decisions. Their importance is also connected with the effect of the country of origin. The main aim of the article is to examine the perception of price and quality in the context of individual countries of origin of the European Union and influence of the consumer ethnocentrism on this perception. From the point of view of methodology, we use general philosophical-scientific methods (analysis, synthesis, scientific abstraction etc.) and, to a large extent, also methods of descriptive and inductive statistics. Specifically, we use correlation analysis to examine the direction and intensity of relationships, cluster analysis to examine the similarities of individual countries of the European Union in terms of perceived price and quality, as well as a one-way ANOVA test to verify hypotheses. Scale tools for measuring perceived quality, perceived price, and the degree of consumer ethnocentrism achieve a high degree of estimation of validity and reliability (estimated using McDonald's omega and Cronbach's alpha). The results indicate differences in the perception of price and quality of individual countries of origin of food. It can be assumed that the level of consumer ethnocentrism is below average in the conditions of Slovakia, and it has an impact on food evaluation only in the home country. The results can be used both for marketing and in the conditions of international trade, tourism, and in many other fields of theory and praxis. Implications for Central European audience: Knowledge of the perception of price and quality of individual countries is important for international trade and marketing. Knowledge of the perception of these two factors helps to create strategies for both domestic and foreign companies operating in Slovakia. In this article, we examine the perception of all countries in the European Union, which allows for comparison. Foods from certain countries perceived better quality and cheaper will be more in demand. Demonstrating the effectiveness of consumer ethnocentrism has an impact on the development of strategies by domestic companies and the government to create support for the purchase of domestic production.

IDENTIFICATION OF RISK OF DECARBONIZATION OF THE OIL AND GAS INDUSTRY

The article analyzes the global greenhouse gas emissions of the oil and gas industry in the value chain; the four scenarios for reducing carbon dioxide emissions developed by the International Energy Agency. The estimated total average annual capital expenditures on low-emissions technologies with synergies for the oil and gas industry were analyzed within the scope of the Net Zero Emission scenario. It was investigated, that the NZE brought significant challenges for oil and gas industry, but it also brought opportunities. The decarbonization measures that can be applied in the oil and gas industry were investigated. The most acceptable decarbonization measures that can be applied by domestic oil and gas companies were examined. Based on the analysis, the risks of decarbonization of the oil and gas industry were investigated and identified. The classification of risks of implementing decarbonization measures (in particular, Carbon capture, use, and storage technology (CCUS)) that can be used by oil and gas enterprises has been developed. The following groups of risks and their corresponding risk factors were highlighted: investment, socio-economic, geological, technical-technological, informational, personal risks. The developed classification can be used in developing decarbonization projects for vertically integrated oil and gas companies, particularly in forming the register of project risks.

Developing a model for the introduction of Industry 4.0 technologies into the production processes of aviation industry enterprises

Aim. The presented study aims to develop a model for the introduction of Industry 4.0 technologies into the production processes of domestic industrial companies in the aviation sector.Tasks. The authors reveal the content of the concept of Industry 4.0; propose an index for assessing the innovativeness of enterprises; present an empirical research base (company cases); propose a model for the introduction of Industry 4.0 technologies into the production processes of companies; assess the selected companies according to the developed model.Methods. This study uses the methods of in-depth interviews, analysis and synthesis of the obtained results. The results of the interviews are analyzed using the authors' model for the introduction of Industry 4.0 technologies. The theoretical basis of the study includes papers by foreign authors on the theory and practice of the introduction of Industry 4.0 technologies.Results. The concept and meaning of Industry 4.0, which creates a new industrial sector and can be considered as a new industrial era based on the use of advanced technologies in business, are revealed. The authors collect empirical data on four companies in the field of aviation engineering (cases) and use them to analyze the challenges of introducing Industry 4.0 technologies and adapting existing production processes in each case. A new model for the introduction of Industry 4.0 technologies into the production processes of domestic companies is proposed and described, making allowance for the identified shortcomings of similar existing models. The results of the assessment of the studied companies according to the developed model based on the analysis of cases are presented. The major directions for the implementation of Industry 4.0 are identified: lean management, the paperless factory concept, and workshop infrastructure.Conclusions. It is shown that each of these directions can be viewed as a basis for the successful implementation of innovations. The main conclusion of the study is that Industry 4.0 requires managers to change the way they think before any technologies can be adopted.

How does venture capital cross-border syndication spur corporate innovation? Evidence from China

In recent years, venture capital (VC) cross-border syndication has shown an obvious growth trend. Based on the existing studies, this paper explores the impact of VC cross-border syndication on corporate innovation. We also examine the mediating roles of cross-border quadratic relationship closure (CBQRC) formed by the strategic cooperation relationship between the respective portfolio companies of domestic and foreign VCs. This paper conducted an empirical analysis to test our hypotheses using a sample of first-round investments in domestic firms by domestic VC firms from 2014 to 2016. Results show that the more investment events of VC cross-border syndication or the more partners of VC cross-border syndication, the more likely it is to have a significant positive impact on the innovation of domestic portfolio companies. CBQRC plays a mediating role between VC cross-border syndication on corporate innovation. Results remain robust after removing endogeneity using the instrumental variables approach and removing sample selection bias using Heckman two-stage regression. Results deepen the understanding of the relationship between VC cross-border syndication and corporate innovation and provide essential guidance to domestic VC firms promoting corporate innovation in open partnerships.

TECHNO ECONOMIC ANALYSIS OF BASIC PRICES OF SURFACE WATER FOR MINI-HYDRO POWER PLANTS

Studies this analyze application Policy price base water surface to generator electricity minihydro (PLTM) Where the mini-hydro power plant is also alternative for Upgrade ratio electrification in area remote areas so that they can help PLN as a company electricity owned by country which have not quite enough answer Upgrade ratio electrification areas isolated which still have limitations in use energy. The mini-hydro power plant utilizes water discharge as a raw materials to flow to the penstock and then to turbine and turbine the rotate generator for awaken energy electricity and water which has pass process flowed back to the river so that the water does not run out in use at the time of PLTM electricity production. But the government give rule to para investors private nor in country for pay price base water surface. This policy makes investors power generators mini-hydro power began to decrease. This study is expected to provide solutions for investors and entrepreneurs domestic companies wishing to invest in power plants power minihydro

Agro-industrial development: Lessons from Brazil

Agribusiness is an important development option for low-income countries that expect foreign investments to have a positive effect on the modernization and strengthening of their domestic agricultural sectors. However, evidence of these expectations being met is ambivalent, notably regarding whether domestic entrepreneurs can benefit from the thriving global agribusiness by establishing themselves in agro-industrial segments that can best remunerate capital and labor. Against this backdrop, we assessed the market share of domestic vis-à-vis multinational companies in key supply chains in Brazil, the leading example of agricultural development worldwide. The results revealed that the domestic market share was 23.9% for soybean, 47.2 % for sugarcane, 57.9 % for dairy, and 76.0 % for beef supply chains. There was high heterogeneity among agribusiness segments that can be divided into three groups: 1. Segments controlled by foreign multinationals, 2. State-supported segments controlled by domestic companies, and 3. Mixed segments controlled by both domestic and multinational companies. In mixed segments, foreign and domestic investments support the streamlining of supply chains and are thereby beneficial to the country in the short and long term. These are segments in which there are no barriers preventing the entry of domestic companies such as patents. Investments made in science and technology tend to support the development of the supply chain as a whole, not only specific companies, generating win-win situations.

Does more voluntary environmental information disclosure cut down the cost of equity: heavy pollution industries in China.

Examining the coexisting policies for mandatory and voluntary disclosure of environmental information, this paper focuses on the unique background for such disclosure in the context of domestic companies in heavy pollution industries (EHPIs), a topic thus far overlooked by the literature. We aim to identify, in regard to compulsory environmental information disclosure in financial reports, whether adding further voluntary information disclosure to corporate social responsibility (CSR) results in an extra discount from investors during an equity financing. We evaluate a sample of 4390 A-share listed companies in EHPIs operating in China between 2010 and 2018. Specifically, linguistic analysis and image recognition are conducted with Python, and a regression model is applied to test our hypotheses. The positive impact of the following variables on the cost reduction in equity capital is thus demonstrated: (a) CSR disclosure, (b) higher quality CSR reports, (c) increased environmental information disclosure in CSR reports (CSR_E), (d) more accurate environmental investment information, and (e) additional graphs and text. Moreover, the degree of CSR_E disclosure's reduction in the cost of equity is 30 times that of CSR disclosure, while charts have specific positive effects that text does not. Therefore, we identify a new path for remitting information asymmetry in a financial market by extending information manipulation research, especially studies of nonfinancial information. Overall, information disclosure should be taken seriously by both firms and supervisors. Hence, this study offers guidelines for regulatory authorities to explore the coordination effect of mandatory and voluntary disclosure policies, i.e., to achieve environmental governance and the sustainable development of enterprises by improving corporate governance.