Fixed Effects Panel Data Model Research Articles

Capital Structure and Enterprise Market Value: An Empirical Analysis Based on S&P 500 Companies

Abstract: This study explores the impact of capital structure on enterprise market value, specifically examining the influence of the debt ratio on the market valuation of S&P 500 companies. Capital structure decisions are crucial for corporate managers and investors, as they significantly affect firm performance, risk, and market perception. The research is motivated by the need to understand how financial leverage influences market valuation, particularly in large, publicly traded companies. Utilizing two-way fixed effect panel data models spanning from 2020 to 2023, we find significant evidence that higher leverage is associated with an increase in market valuation, offering a comprehensive view of the factors that influence corporate market values. Additionally, the study reveals that the impact of leverage varies across company sizes and examines sector-specific effects and the role of long-term debt. The findings provide key insights for investors and corporate managers regarding the impact of financial structure on company valuation, emphasizing the importance of optimizing capital structure to enhance firm value and strategic decision-making.

Effects of Working Capital Management on Small-Sized Businesses in Competitive Environments with Economic Policy Uncertainty—A Case Study Applied to Chilean Companies

Working capital is a strategic resource that not only enhances financial performance but also ensures the long-term sustainability of organizations, especially SMEs. In the context of evolving economic policies and the challenges of gender equity affecting Chilean companies, this study explores how economic policy risk (EPU) and CEO characteristics influence working capital, which are essential investments for sustainable growth. The analysis covers 12,839 SMEs from 2014 to 2019. Using a fixed-effects panel data model, the findings reveal that firms tend to increase their investment in working capital in response to rising economic policy uncertainty. However, the relationship follows a non-linear inverted U-shaped pattern, which suggests the existence of an investment optimum between working capital and the EPU. Considering the level of competition, companies increase their investment in working capital when the level of competition is higher. Regarding the gender and age of CEOs, it is observed that women invest less in working capital, as do young CEOs. These results underscore the importance of EPU, along with the gender and age of CEOs, as key factors in promoting sustainable working capital management.

The macroeconomic determinants of trade openness in Latin American countries: A panel data analysis

Background Trade openness shows a positive impact on economic growth, supported by economic theory, and export diversification and economic complexity show a positive dynamic in trade openness in the world; however, a specificity is generated in South American countries. Therefore, the objective of the research is to analyse the macroeconomic determinants of trade openness in Latin American countries. Methods The research approach was quantitative and explanatory using panel data methodology from the databases of the World Bank, Harvard University and the Economic Commission for Latin America and the Caribbean for the period 2000-2020. Results The fixed effects panel data model showed that the variables that had a negative impact on trade openness were GDP, the economic complexity index and the logistic performance index, while the variables that had a positive impact were exports of high-tech products (a proxy for innovation), exports, imports, research and development expenditure and interregional trade in goods. Conclusions Therefore, during the analysis period of 2000-2020 in South America, based on the panel data analysis under fixed effects, a total of 8 countries had a negative impact on trade openness, and only the economies of Chile, French Guiana, and Brazil had a positive impact on trade openness; these economies are characterized by their better performance in the economic complexity index, their higher percentage of budget for research and development expenses, and their trade policies oriented towards the industrialization of their value-added products.

Multivariate Analysis of the Determinants of Total Mortality in the European Union with Focus on Fat Intake, Diabetes, Myocardial Infarction, Life Expectancy, and Preventable Mortality: A Panel Data Fixed-Effects Panel Data Model Approach.

Cardiovascular disease is the leading cause of death in the European Union (EU), and while the mortality rates of diabetes, myocardial infarction, and the total fat intake have been extensively studied, we believe that understanding the interaction between such closely correlated determinants is crucial to the development of effective health policies in the EU. Our paper's novelty is represented by the econometric modelling, and its ability to capture both temporal and unit variations. The research methodology consists of using a panel data model with fixed effects for the 27 EU member states over the period 2010-2021. The results of the study show that the standardized mortality rate for deaths preventable by prevention and treatment and diabetes-related mortality are significant predictors of total mortality in the EU. The standardized mortality rate for deaths preventable by prevention and treatment had a significant positive impact, suggesting that improved preventive and therapeutic interventions can significantly reduce total mortality. Diabetes-associated mortality also showed a strong positive correlation with total mortality, emphasizing the need for effective diabetes management and prevention strategies. These results are useful for the formulation of public health strategies aimed at improving life expectancy and reducing the burden of chronic diseases.

The Asymetric Relation between Money Supply and Inflation

In this study using yearly data, it is examined if the effect of money supply (broad money) on inflation is asymmetric or not. 38 countries which have 5% and above inflation rate in average during the period of 1989–2018 are investigated through the panel data analyses. The study differs from other researches, which use monetary shocks in explaining the asymmetric relation, in which that it uses broad money change intervals along with control variables to see the asymmetric impact. Using broad money change intervals, it is concluded that the relation between broad money and inflation is explained better in the asymmetric pooled and fixed effect panel data models, compared to the symmetric models. According to the results, the effects of negative and positive changes in money supply on inflation are not symmetric. Moreover, as broad money increases, inflation goes up further. In the light of this information, it is possible to mention an asymmetric relation between broad money and inflation.

Do venture capital investments contribute to the achievement of the sustainable development goals?

AbstractAchieving the goals of the 2030 agenda for sustainable development requires substantial investment and depends on the ability to attract private capital to complement public resources. Venture Capital (VC) investments have traditionally focused on sectors such as technology, healthcare, and clean energy, which align closely with the enhancement of sustainable development, and VC investors can accelerate progress toward sustainability by providing expertise and mentorship to startups working on sustainable solutions. This study aims to contribute to the literature on the intersection between finance and sustainability by investigating whether higher VC investments are associated with a higher level of achievement of the Sustainable Development Goals (SDGs). Using a panel data fixed effect model on a sample covering more than 100 countries, we find that a higher level of VC activity is associated with stronger SDGs' performances, with this effect being primarily driven by economic factors. We document heterogeneous effects related to the round of investments as well as the organizational form of VC investors and the industry and country of the VC‐backed companies.

The macroeconomic determinants of trade openness in Latin American countries: A panel data analysis

Background Trade openness shows a positive impact on economic growth, supported by economic theory, and export diversification and economic complexity show a positive dynamic in trade openness in the world; however, a specificity is generated in South American countries. Therefore, the objective of the research is to analyse the macroeconomic determinants of trade openness in Latin American countries. Methods The research approach was quantitative and explanatory using panel data methodology from the databases of the World Bank, Harvard University and the Economic Commission for Latin America and the Caribbean for the period 2000-2020. Results The fixed effects panel data model showed that the variables that had a negative impact on trade openness were GDP, the economic complexity index and the logistic performance index, while the variables that had a positive impact were exports of high-tech products (a proxy for innovation), exports, imports, research and development expenditure and interregional trade in goods. Conclusions Therefore, during the analysis period of 2000-2020 in South America, based on the panel data analysis under fixed effects, a total of 8 countries had a negative impact on trade openness, and only the economies of Chile, French Guiana, and Brazil had a positive impact on trade openness; these economies are characterized by their better performance in the economic complexity index, their higher percentage of budget for research and development expenses, and their trade policies oriented towards the industrialization of their value-added products.

Institutional distance and subsidiary performance of multilatinas: moderating effects of ownership strategy and government support

Purpose: In this article we investigated the effects of regulatory and normative institutional distances on Emerging Market Multinational Enterprises (EMNEs) subsidiaries performance, and the moderating roles of the ownership strategy and the government support. Design/methodology/approach: We applied fixed-effects regression models for panel data to analyze a sample of 296 subsidiaries of 32 Brazilian EMNEs, from 2006 to 2015. Findings: We found that institutional distance positively affects subsidiary performance. Although, full ownership, and government support positively affects subsidiary performance, subsidiaries with partial ownership located in more developed and institutionally distant host countries presents superior performance. We also found a positive relationship between government support, regulatory distance, and subsidiary performance. However, the same relationship with normative distance was not statistically relevant. Originality/value: By analyzing different ways in which the institutional context affects subsidiary performance and different approaches to increasing or mitigating those effects, this study contributes to furthering the understanding of how institutional issues affect EMNEs, and the role of the home country government. Conclusions: The findings of this study could help policymakers make informed decisions about investments in EMNEs. This is achieved by analyzing the impact of government financial aid on the performance of subsidiaries.

Limiting heterogeneity in cross-border data flow: Impact on domestic value chains stability and the role of innovation.

Amidst growing skepticism towards globalization and rising digital trade, this study investigates the impact of Restrictions on Cross-Border Data Flows (RCDF) on Domestic Value Chains (DVCs) stability. As global value chains participation declines, the stability of DVCs-integral to internal economic dynamics-becomes crucial. This study situates within a framework exploring the role of innovation and RCDF in the increasingly interconnected global trade. Using a panel data fixed effect model, our analysis provides insights into the varying effects of RCDF on DVCs stability across countries with diverse economic structures and technological advancement levels. This approach allows for a nuanced understanding of the interplay between digital trade policies, value chain stability, and innovation. RCDF tend to disrupt DVCs by negatively impacting innovation, which necessitates proactive policy measures to mitigate these effects. In contrast, low-income countries experience a less detrimental impact; RCDF may even aid in integrating their DVCs into Global Value Chains, enhancing economic stability. It underscores the need for dynamic, adaptable policies and global collaboration to harmonize digital trade standards, thus offering guidance for policy-making in the context of an interconnected global economy.

Panel Data Regression Analysis of the Determinants of Educated Unemployment in East Java

The primary goal of this research is to determine the relationship between the educated unemployment rate in East Java Province and several variables, including the minimum wage from 2018 to 2022, the labor force, and the human development index. This study included 190 secondary data samples in total, all of which came from the Central Bureau of Statistics' official website. For this investigation, the fixed effects panel data model (FEM) works well. This research demonstrates that: (1) the labor force and the educated unemployment rate do not correlate, or only partially correlate; (2) the educated unemployment rate is negatively impacted by the human development index; (3) there is a significant correlation between the educated unemployment rate and the minimum wage; and (4) in East Java, the minimum wage, the human development index, the labor force, and educated unemployment have a substantial correlation.

Understanding the socioeconomic determinants of cooking fuel expenditure in Uttar Pradesh, India

Poor people in a developing country like India face energy poverty and are deprived of clean cooking fuel. Clean cooking fuels are costlier and require more willingness to pay (WTP) from the consumer. Therefore, this is a descriptive study aims to analyze factors associated with differences in cooking fuel expenses at the household level in Uttar Pradesh, India. For this purpose, panel data from the Consumer Pyramids Household Survey of CMIE from 2014 to 2019 has been considered. The study uses fixed-effect panel data model to control individual-specific effects. Cooking fuel expenses show positive elasticity concerning per capita income. However, this elasticity is lower for the higher-income group than the bottom-income group. Less educational attainments of households are associated with lower spending on cooking fuel. Moreover, households with better access to electricity are willing to spend more on cooking fuel expenditure. Hence, improved access to electricity nudges households towards more WTP for cooking fuel. It is further confirmed by finding a positive association between electricity-using household appliances and cooking fuel expenses. Therefore, improved access to electricity may increase the WTP for cooking fuel and adopt clean cooking fuel in different ways. This suggests positive spillover effects of modern energy services on clean cooking fuel.

Investment efficiency, ESG performance and corporate performance: evidence from Chinese listed enterprises

Purpose This study aims to propose a moderated mediation model to investigate the moderating effects of environmental, social and governance (ESG) performance on the relationship between inefficient investment and firm performance and the mediating effect of firms that participate in institutional research on the relationship between investment efficiency and performance. This study also analyses the heterogeneity of the corporate nature, intensity of industrial research and development (R&D), industrial competition and regional marketization. Design/methodology/approach This study uses a panel data fixed-effects model to conduct a regression analysis of 1,918 Chinese listed firms from 2016 to 2020. A Fisher’s permutation test is used to examine the differences between state-owned and nonstate-owned firms. Findings Inefficient investment negatively impacts corporate performance and higher ESG performance exacerbates this effect by attracting more institutional research which reveals more problems. State-owned enterprises perform significantly better than nonstate-owned enterprises in terms of ESG transformation. Industrial R&D intensity, competition and regional marketization also mitigate the negative effects of inefficient investment on corporate performance. Practical implications This study suggests that companies should consider inefficient investments that arise from agency issues in corporate ESG transformation. In addition, state-owned enterprises in ESG transformation should take the lead to achieve sustainable development more efficiently. China should balance regional marketization, encourage enterprises to increase R&D intensity, reduce industry concentration, encourage healthy competition and prevent market monopolies. Originality/value This study combines the agency and stakeholder theories to reveal how inefficient investments that arise from agency issues inhibit value creation in ESG initiatives.

EMPIRICAL EVALUATION OF SUSTAINABLE AGRICULTURAL MANAGEMENT IN SOUTHEAST EUROPEAN COUNTRIES USING PANEL DATA ANALYSIS

The purpose of this article is to assess the agricultural development of ten Southeast European (SEE) countries from the aspect of key environmental, economic and social indicators of agricultural sustainability management from 2011 to 2020. The article uses a Cross-section panel data Fixed Effects Model to identify relations between agricultural development in SEE countries and mentioned indicators of sustainable agricultural development management. The common sample of all SEE countries shows the economic sustainability, but also the environmental and social unsustainability of their agricultural systems. At a disaggregated level, the subsample of European Union (EU) membership candidate countries also yields the same findings. In contrast, the subsample of EU member states indicates all three dimensions of sustainability, with the exception of the aspect of using renewables. Therefore, both groups of countries should use renewables more intensively in order to contribute to the promotion of their efficient, sovereign and sustainable agricultural growth.

Cloud computing in the Polish public administration: current state and development prospects

The EU's goal of digital transformation of the economy and society requires increased participation of businesses and citizens. This cannot be achieved without a high level of digitalization in public administration. The paper aims to examine the scale and determinants of cloud computing (CC) adoption in Polish public administration units from 2018 to 2021. A comparison was conducted between the level of adoption of cloud services in the public administration sector and in the enterprise sector in Poland. Next, a synthetic taxonomic measure of technology development was determined so as to assess the differentiation of cloud computing usage in the country's voivodeships. Finally, a two-way fixed effects panel data model was estimated to identify the determinants of the level of CC implementation in public administration. The results showed a wide variation in the adoption of cloud solutions between voivodeships (Polish provinces). The study found a significant correlation between the CC use in public administration and the level of economic development of individual voivodeships, as well as IT training for employees, but no correlation with the level of CC use in enterprises.

Can digital empowerment enhance the brand value of China's enterprises?

ABSTRACT The Fourth Sci-tech Revolution, characterised by digital empowerment, has reshaped the global value chain's developmental trajectory, introducing novel opportunities and driving forces to augment brand value, particularly in developing nations. Utilising panel data encompassing China's top 500 companies from 2011 to 2020, this study employs a fixed-effect panel data model alongside the chain mediation model. It systematically examines how digital empowerment impacts enterprises across three dimensions: upgrading consumption objects, consumption concepts, and consumption patterns. The findings indicate a significant correlation between digital empowerment and an enterprise's brand value. Notably, digital empowerment substantially influences the enhancement of brand value through consumption upgrading, particularly regarding consumption patterns and objects. Conversely, it hinders brand value enhancement through consumption concept upgrading. The intricate multi-chain intermediary effect involving consumption patterns, concepts, and objects renders the impact of digital empowerment on brand value somewhat uncertain. Hence, caution is warranted concerning the potential outflow and contraction of consumption resulting from consumption upgrading.

Competitiveness of citrus export and its determinants: a two-way fixed effect panel data model approach.

Pakistan has a conducive condition for the development of a wide range of scrumptious fruits. As a result, the country grows a diverse assortment of tropical and subtropical fruits; the most prized and top-ranked fruit among all fruits grown in Pakistan is citrus. Citrus is the principal fruit that contributes significantly to Pakistan's export earnings and national income. In this study, the cross-border determinants influencing Pakistan's citrus exports to its topmost 22 trading partners are examined using a gravity model technique. This is the first large study from Pakistan by using gravity model to check the impact of various cross-border factors on citrus fruit export. The analysis is based on a panel dataset covering the years 2003 to 2021. To estimate the results, the study used fixed effect regression with time and country fixed effects. The results signify that per capita income, population, and some regional dummies are positively associated with citrus exports from Pakistan. Citrus price, distance, exchange rate, and other regional dummies are observed to have an adverse effect on citrus exports. Trade agreements between Pakistan and trade partners such as free trade agreements, preferential trade agreements, and SAFTA, have been observed as important determinants of citrus exports. Citrus exporters in Pakistan can also benefit from understanding the factors that influence export markets. By addressing the challenges identified in this study, Pakistan can enhance its citrus exports and boost its agricultural sector.

Decadal analysis of measles epidemiological data in India (2011–2020)

BackgroundDespite India being one of the largest contributors to the measles burden, crucial epidemiological information is significantly lacking. We have analyzed the national-level representative data between 2011 and 2020 to estimate the national- and state-level incidence, first dose vaccine coverage, and mortality; and developed a prediction model to examine the trend of the disease.MethodsWe extracted the Health Management Information System (HMIS) for monthly aggregated measles cases, deaths, and child immunization (9–11 months) for first dose measles vaccine coverage across all states & Union Territories (UT). Population information & projections were extracted based on Census 2011. A multilevel fixed effect panel data model was used to predict measles incidence rate, assuming measles vaccination coverage as a predictor while accounting for time fixed effects.ResultsTotal 558,536 measles cases and 4209 measles deaths were reported in India between 2010 and 2020. The incidence rate was highest in 2013 (628.8/million population), followed by a significant decline to reach 52.0/million in 2020. Measles vaccination coverage for the first dose was 84.1% in 2011 to 91.3% in 2019. Higher vaccination coverage was significantly correlated (r = 0.7, p = 0.02) with decline of measles incidence rate. The case fatality rate (CFR) was least in 2014 (0.13%) but upsurged consistently reaching to 3.3% in 2020. The predictive model indicates that with a first-dose vaccine coverage of 93.5%, and keeping other factors constant, the national measles incidence is projected to reach zero by 2025.ConclusionMeasles incidence is declining in India due to higher vaccination coverage, yet the rise in death rates emphasizes the need for continued collaborative efforts to achieve a measles-free nation.

Environmental, social, and governance performance as an influencing factor of financial sustainability: Evidence from the global high‐tech sector

AbstractThe corporate sector strives to improve its environmental, social, and governance (ESG) performance to transition from short‐term to sustainable long‐term profit maximisation. This study thus explores the impact of ESG performance on the financial sustainability (FS) of a sample of the top 100 global high‐tech firms. Specifically, we employ the two‐step generalised method of moments to control for endogeneity bias and a panel data fixed effects model to control for unobserved heterogeneity. Empirical findings reveal that overall ESG performance has a statistically negative association with the FS of global high‐tech firms. Individual pillar‐wise analysis reveals that the environmental and social (governance) pillar has a negative (positive) association with the FS of the sampled firms. This result proves that each ESG pillar exerts varying effects on corporate performance indicators. Overall, the results provide empirical evidence that could help policymakers devise policies for investing optimally in ESG indicators to spur corporate FS.

Cash holding, economic uncertainty and investment: Evidence from ASEAN countries

This research observes the effect of uncertainty on corporate cash holding. Uncertainty drives up asymmetric information problems, increasing companies' external capital costs. As a result, companies prefer to accumulate cash to protect their investment capabilities in the future. The study uses a sample of non-financial public companies in six ASEAN countries, such as Malaysia, the Philippines, Thailand, Singapore, Indonesia, and Vietnam, from 2008 to 2021. The study uses a total of 34,359 firm-year observations. The research method employs a fixed-effect panel data model with Driscoll-Kraay standard errors. The findings of this study indicate that economic uncertainty can cause companies to accumulate their cash holdings. Furthermore, cash holding can reduce the impact of economic uncertainty on decreasing corporate investment decisions. This research contributes to the literature by showing the relationship between economic uncertainty, cash holdings, and corporate investment in the context of ASEAN countries.

Efficiency of public investment in education in Peru, 2016-2022: A comparative analysis by region

The study analyzes the level of technical efficiency of public investment in Education at the primary and secondary level in Peru, 2016 to 2022. Data envelopment analysis – DEA was used and for the association between the provision of resources and educational quality. the panel data fixed effects model. The results indicate that there are relative differences in efficiency between the regions, registering an average score of 49% for the primary level and 38% for the secondary level, with the most efficient being Moquegua, Tacna, Arequipa and Ica, and the least efficient being Loreto, Huánuco, Ucayali, and San Martín. From the input-output association, classroom size, infrastructure in good condition and public investment have a direct relationship, while students per teacher and per computer, the relationship is inverse with respect to educational achievement in communication and mathematics at the primary and secondary level. This suggests that inefficient regions should increase educational attainment at the primary and secondary levels by an average of 51% and 62%, respectively, while maintaining the same level of spending. Therefore, to improve their efficiency within the framework of public policies, they can adopt the management implemented by regions such as Moquegua and Tacna.