Influence of Industry Environment on Firms 9 Characteristics

Transcription

1 Lutz Firnkorn Influence of Industry Environment on Firms 9 Characteristics An Empirical Review of the Determinants of Cash Holding, Leverage, Investment, and Return A Verlag Dr. Kovac Hamburg 2011

2 Influence of Industry Environment on Finns' Characteristics v Summary of Contents TABLE OF CONTENTS VII I. LIST OF ABBREVIATIONS XIII II. LIST OF TABLES III. LIST OF FIGURES IV. ACKNOWLEDGEMENT XIV XVIII XIX 1. INTRODUCTION Motivation and Goals Outline of Thesis 4 2. LITERATURE REVIEW, IDENTIFICATION OF RESEARCH GAP, AND DERIVATION OF HYPOTHESES Introduction to Literature Review Relationship Between Financing, Investment, and Risk Management Influence of Industry Environment on a Firm Management of Competitive Interaction between Firms Context and Limitations of the Literature Review Identification of Research Gap, Development of Research Hypotheses, and Research Approach SAMPLE DERIVATION AND DESCRIPTION Derivation of Sample Sample Description VARIABLE CONSTRUCTION AND DESCRIPTIVE STATISTICS Introduction 59

3 vi Influence of Industry Environment on Firms' Characteristics 4.2 Variable Definition Variable Description Adjustments of Variables for Testing of Change over Time EMPIRICAL ANALYSIS OF FUNDAMENTAL RELATIONSHIPS Introduction Initial Testing Using AN OVA Multivariate Analysis Using OLS Regression Summary of Results of Hypothesis Tests One to Four using OLS Regressions ROBUSTNESS TEST OF FINDINGS AND EMPIRICAL ANALYSIS OF ALIGNMENT OF CHANGE OVER TIME Introduction and Refinement of Research HypothesEs Robustness Check of Findings from Previous Chapter under Different Economic Conditions Investigation of Alignment of Change over Time Summary of Results of Refined Hypothesis Testing using sub-samples and Panel Regressions OVERALL DISCUSSION, SUMMARY AND CONCLUSION Introduction Summary of Hypotheses Testing and Conclusion Limitations of the Thesis and Potential Future Research Practical Implications APPENDIX Supporting analysis Bibliography 288

4 Influence of Industry Environment on Firms' Characteristics vii Table of Contents TABLE OF CONTENTS VII I. LIST OF ABBREVIATIONS XIII II. LIST OF TABLES III. LIST OF FIGURES IV. ACKNOWLEDGEMENT XIV XVIII XIX 1. INTRODUCTION Motivation and Goals Outline of Thesis 4 2. LITERATURE REVIEW, IDENTIFICATION OF RESEARCH GAP, AND DERIVATION OF HYPOTHESES Introduction to Literature Review Relationship Between Financing, Investment, and Risk Management Introduction Debt Financing and Investment Internal Financing and Risk Management Joint Determination of Investment, Financing, and Risk Management Summary Influence of Industry Environment on a Firm Introduction Role of Industry Concentration Role of Industry Dynamics Role of Similarity of a Firm to Other Firms in the Industry Summary Management of Competitive Interaction between Firms Introduction Roll of Pricing and Output Decisions 27

5 viii Influence of Industry Environment on Firms' Characteristics Pricing Decisions Output Decisions Investment in Capex, R&D, and Advertisements Summary Context and Limitations of the Literature Review Identification of Research Gap, Development of Research Hypotheses, and Research Approach Identification of Research Gaps Development of Research Hypotheses Research Approach SAMPLE DERIVATION AND DESCRIPTION Derivation of Sample Description of Data Source Economic Context of the Sample Derivation of Samples Used for Hypothesis Testing Sample Description Introduction Description of sample for testing of overall relationship Description of sample for testing of change over time Potential Sample Selection Issues VARIABLE CONSTRUCTION AND DESCRIPTIVE STATISTICS Introduction Variable Definition Core Variables to Test Hypothesis One Additional Core Variable to Test Hypothesis Two Additional Core Variables to Test Hypothesis Three Additional Core Variable to Test Hypothesis Four Control Variables Variable Description Adjustments of Variables for Testing of Change over Time Discussion of Change in Sample and Variable Definition Variable Description of Newly Defined Sample 69

6 Influence of Industry Environment on Firms' Characteristics ix 5. EMPIRICAL ANALYSIS OF FUNDAMENTAL RELATIONSHIPS Introduction Initial Testing Using ANOVA Introduction Influence of Environment on Cash Holding and Leverage Influence on Cash Holding Influence on Leverage Influence of Intra-Industry Position on Cash Holding and Leverage Influence of Environment on Investment Influence of Environment on Return Summary Multivariate Analysis Using OLS Regression Introduction Evaluation of Prerequisites for OLS Regression Influence of Industry Characteristics on Cash Holding and Leverage Introduction Role of Industry Characteristics for the Determination of CashHolding Role of Industry Characteristics for the Determination of Leverage Summary Influence of Intra-Industry Position on Cash Holding and Leverage Introduction Review of Impact of Sample Change Influence of Intra-Industry Position on Cash Holding Influence of Intra-Industry Position on Leverage Summary Relation between Investment Behavior, Industry Characteristics, and Intra-Industry Position Introduction Review of Impact of Sample Change Influence of Industry Characteristics and Intra-Industry Position on Capex Influence of Industry Characteristics and Intra-Industry Position on R&D 122

7 x Influence of Industry Environment on Firms' Characteristics Influence of Industry Characteristics and Intra-Industry Position on Advertisement Summary Relation of Return to Industry Characteristics, Intra-Industry Position, Cash holding, and Leverage Introduction Analysis of Determinants of Returns Summary Robustness Test of used OLS Methodology Summary of Results of Hypothesis Tests One to Four using OLS Regressions ROBUSTNESS TEST OF FINDINGS AND EMPIRICAL ANALYSIS OF ALIGNMENT OF CHANGE OVER TIME Introduction and Refinement of Research HypothesEs Robustness Check of Findings from Previous Chapter under Different Economic Conditions Introduction Impact of Different Economic Conditions on the role of Cash Holding Impact of Different Economic Conditions on the role of Leverage Impact of Different Economic Conditions on the role of Investment Impact of Different Economic Conditions on the role of Return Summary Investigation of Alignment of Change over Time Introduction Discussion of Methodological Choice for the Analysis of Change over time Introduction Analysis of Poolability of data Analysis of fixed vs. random effect model using the Hausman Test Al ignment of Change of Industry Characteristics with Cash Holding and Leverage Introduction Analysis of Change in Cash Holding Analysis of Change in Leverage Summary 182

8 Influence of Industry Environment on Firms' Characteristics xi Alignment of Change of Intra-Industry Position with Cash Holding and Leverage Introduction Review of Impact of Sample Change Analysis of Change in Cash Holding Analysis of Change in Leverage Summary Alignment of Change of Investment Behavior with the Industry Environment, Cash Holding, and Leverage Introduction Review of Impact of Sample Change Analysis of Change in Capex Analysis of Change in R&D Analysis of Change in Advertisement Summary Alignment of Change of Return with the Industry Environment, Cash Holding, and Leverage Introduction Analysis of Change in Return Summary Summary of Results of Refined Hypothesis Testing Using sub-samples and Panel Regressions OVERALL DISCUSSION, SUMMARY AND CONCLUSION Introduction Summary of Hypotheses Testing and Conclusion Introduction Relationship of Industry Characteristics to Cash holding and Leverage Relationship of Intra-Industry Position to Cash holding and Leverage Relationship of Industry Characteristics and Intra-Industry Position to Investment Relationship between Cash holding, Leverage, Industry Characteristics and Return Summary of Hypotheses Testing Conclusion Limitations of the Thesis and Potential Future Research 250

9 xii Influence of Industry Environment on Firms' Characteristics 7.4 Practical Implications APPENDIX Supporting analysis Robustness of Average Definition for Analysis of the Overall Relationship in Chapter Analysis of Multicollinearity - Mean Centering of Industry Characteristics and Intra-Industry Position Analysis of Investment using ANOVA - Detailed Calculations for Investment and Return Review of Prerequisites for OLS usage -Results of Analyses Alternative Calculations for Robustness Test of used OLS Methodology Bibliography 288