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Global value chain and firms’ leverage: The mediator role of foreign ownership

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  • Gao, Jingyi

Abstract

This paper investigates the effect of participation in the global value chain on leverage dynamics by using novel matched Chinese firm data and the moderating role of foreign ownership. This paper shows firms with higher upstream may reduce leverage degree, and foreign firms’ leverage reduces more. In addition, the effects show heterogeneity among areas and industries. We test the mechanism by adopting foreign ownership entry shock and the value-added ratio. The policy implication is straightforward the climbing of the global value chain and foreign ownership attraction can maintain the leverage risk for developing countries.

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  • Gao, Jingyi, 2022. "Global value chain and firms’ leverage: The mediator role of foreign ownership," Finance Research Letters, Elsevier, vol. 48(C).
    • Handle: RePEc:eee:finlet:v:48:y:2022:i:c:s1544612322001234
    DOI: 10.1016/j.frl.2022.102821
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    References listed on IDEAS

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    Cited by:

    1. Yang, Jinxuan & Hui, Ning, 2024. "How digital finance affects the sustainability of corporate green innovation," Finance Research Letters, Elsevier, vol. 63(C).

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    More about this item

    Keywords

    Upstream; Leverage; Foreign ownership; Heterogeneity; Value-added ratio;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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