Essays on Investment and Exports of Multinational Firms in South Korea

dc.contributor.advisorSul, Donggyu
dc.creatorKim, Kwang Soo
dc.date.accessioned2018-11-19T11:46:22Z
dc.date.available2018-11-19T11:46:22Z
dc.date.created2018-08
dc.date.issued2018-08
dc.date.submittedAugust 2018
dc.date.updated2018-11-19T11:46:22Z
dc.description.abstractThis dissertation consists of three essays on investment and exports of multinational firms in South Korea. The first chapter examines firm-level evidence that banking crises in source countries affect investment decisions of foreign multinationals. Using firm-level data on annual financial statements with information on banking crises and foreign-owned companies in South Korea from 1994 to 2013, I find that an increase in foreign shareholding decreases the investment rate of foreign multinationals during banking crises in source countries. Firm characteristics and financial vulnerabilities alter the impact of the banking crisis on investment decision of foreign multinationals. In the case of non-chaebol, non-exporter firms, or less financially sensitive industries, there exists an inverse relationship between foreign share-holding and the investment rate of foreign-owned firms during banking crises, but the rest of the firms suffer no effects from banking crises in source countries, concerning the investment behavior of foreign multinationals. The second chapter shows the effect of foreign direct investment (FDI) on exports of foreign multinationals during banking crises in source countries. Using a firm-level dataset on firms’ annual amount of exports with the banking crises database in South Korea during the 1994-2013 period, I present that banking crises in source countries hinder FDI from increasing exports of foreign affiliates in more financially vulnerable industries. More than 50 percent of foreign shareholding promotes the amount of foreign affiliates’ exports in more financially vulnerable industries, but during banking crises in source countries, it is hard for foreign multinationals with even more than 50 percent of foreign shareholding to increase exports in more financially dependent industries. I also find that firm characteristics affect foreign multinationals’ exports during banking crises in source countries. FDI increases the amount of chaebol exporters’ exports relatively more than non-chaebol foreign multinationals in more financially vulnerable industries. Chaebol exporters with more than 10 percent of foreign shareholding export more than non-chaebol exporters in more financially dependent industries. During banking crises in source countries, chaebol exporters with more than 10 percent of foreign shareholding export less than non-chaebol exporters in more financially dependent industries. By contrast, publicly listed foreign multinational exporters export more than non-public foreign multinational exporters in less financially dependent industries, but during banking crises in source countries, publicly-listed foreign multinational exporters export more than non-public foreign multinational exporters in more financially dependent industries. The last chapter with Dr. Aslı Leblebicio˘glu analyzes the effects of foreign multinationals’ presence on domestic firms’ investment. For this analysis, we combine a South Korean firm-level dataset for the 2006−2014 period with the input-output tables provided by the Bank of Korea to construct industry level measures of multinational presence in sectors that are horizontally and vertically linked, and estimate dynamic investment equations that are aug-mented with these foreign presence measures. We find a positive and significant effect of foreign presence in both horizontally and vertically linked industries on the domestic firm’s investment rate, with larger effects arising from multinational presence in the supplying sec-tors. Quantitatively, a 2 percentage point increase in the presence of multinational suppliers increases the domestic firm’s investment rate by 3.24 percentage points. We also find that this effect is larger for small and medium firms, private firms, non-exporters, firms that are not part of a chaebol, and for firms in external finance dependent industries. A similar 2 per-centage point increase in the foreign presence in downstream sectors increases the investment rate of domestic suppliers by 0.55 percentage points. This effect is larger if the domestic firm is part of a chaebol, or is in a less external finance dependent industry. Investment increases by 0.53 percentage points following a 2 percentage point increase in horizontal linkages.
dc.format.mimetypeapplication/pdf
dc.identifier.urihttp://hdl.handle.net/10735.1/6309
dc.language.isoen
dc.rights©2018 The Author. Digital access to this material is made possible by the Eugene McDermott Library. Further transmission, reproduction or presentation (such as public display or performance) of protected items is prohibited except with permission of the author.
dc.subjectInvestments—Korea (South)
dc.subjectFinancial crises—Korea (South)
dc.subjectExports—Finance
dc.subjectInternational business enterprises—Korea (South)
dc.titleEssays on Investment and Exports of Multinational Firms in South Korea
dc.typeDissertation
dc.type.materialtext
thesis.degree.departmentEconomics
thesis.degree.grantorThe University of Texas at Dallas
thesis.degree.levelDoctoral
thesis.degree.namePHD

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