THE TIME-VARYING CASH FLOW SENSITIVITY OF CASH
NyoNyo Aung Kyaw and Sijing Zong
By using data of US manufacturing companies, we revisit the cash flow sensitivity to cash in two sub-samples of 1993-2000 and 2000-2011 to investigate the time-varying features of the cash flow sensitivity of cash. Our results show a weakening coefficient of US manufacturing firms from 1990s to 2000s. The sensitivity in the later time period is only a half of its original scale. Financially unconstrained firms seem to converge with the constrained firms in the later period, leading to the conclusion that macroeconomic conditions impact more on the cash flow sensitivity of cash than the external financial constraint does. Further, our research identifies that the overall decreasing sensitivity is driven by firms with negative cash flows.
CULTURE AND ITS EFFECT ON MANAGEMENT MYOPIA AND FINANCIAL PERFORMANCE: A COMPARISON OF FIRMS FROM SHORT-TERM AND LONG-TERM ORIENTED CULTURES
Myopic management has been defined as making decisions based on short-term profitability as opposed to the long-term value. Myopic firms typically cut expenditures in advertising and R&D which result in the destruction of the long-term value of the firm. This paper reports the findings of a study that investigated the impact of culture on myopic management, i.e., do firms from cultures that are shortterm oriented behave more myopically than firms from cultures that are long-term oriented? The findings support the hypotheses that firms from long-term oriented cultures spend more on R&D and advertising than firms from short-term cultures which then translates to higher profitability for firms from long-term oriented cultures in comparison to firms from short-term oriented cultures.
THE EFFECT OF SCREEN QUOTAS AND SUBSIDY REGIME ON CULTURAL INDUSTRY: A CASE STUDY OF FRENCH AND KOREAN FILM INDUSTRIES
Patrick Messerlin and Jimmyn Parc
There are voices in France advocating for a Korean-type screen quota system, seen as a key ingredient in the success of the Korean film industry. At the same time, there are calls in Korea for a French-type subsidy regime to be implented as a way to achieve a further take-off. This paper shows that the Korean screen quota has little correlation with Korea’s success. For the French case, its huge subsidies have had no impact on improving the attractiveness of French movies domestically. The paper concludes by suggesting that an in-depth analysis of the policies pursued by the two countries is crucial toward avoiding a too costly trial-and-error process when designing policies related to cultural industries and culture.
GLOBAL TRENDS OF MULTI-FACTOR PRODUCTIVITY: ESTIMATION AND APPLICATION
Jeong Yeon Lee
Multi-factor productivity (MFP) compares the growth of gross domestic product with the growth of combined capital and labor inputs. The growth rate of MFP assumes theoretical significance because it represents the slope of the steady-state growth path, and hence is a major determinant of the long-term growth trend. This paper offers a balanced panel of the estimated growth rates of MFP for 24 OECD countries over 1986-2011. Based on the estimates of MFP growth, a number of notable trends in productivity growth are identified for the entire OECD area as well as for three major economies – the US, the Eurozone and Japan – within the OECD. In addition, this paper presents panel estimation results confirming that research and development (R&D) is a key determinant of MFP growth.
ACQUISITIONS, PROFITABILITY, AND GROWTH: A STUDY OF CANADIAN FIRMS
Igor Semenenko and Junwook Yoo
Large acquisitions in the United States by Canadian firms lower growth prospects and profitability of Canadian companies. Results are driven by post-acquisition performance of the largest Canadian industries, including oil & gas, mining and precious metals, which together account for almost 40 percent of Canadian firms with asset size above 100 million reported in Compustat research files. Crossborder acquisitions of firms in high tech industries do not improve performance of Canadian firms.