Globalization, Transparency and Economic Growth: The Vulnerability of Chinese Firms to Macroeconomic Shocks

31 Pages Posted: 27 Sep 2008 Last revised: 1 Feb 2011

See all articles by Lars Oxelheim

Lars Oxelheim

Research Institute of Industrial Economics (IFN); University of Agder; Knut Wicksell Center for Financial Studies, Lund University

Date Written: September 23, 2008

Abstract

The process of globalization encompasses economic and financial integration. Abolition of capital controls and dismantling of barriers of different kinds are important ingredients of the process that will entirely change the exposure of previously sheltered companies to shocks on the global economic arena. Lessons learned by policy-makers in already globalized countries are that market participants should be prepared to meet the new exposure to fluctuating exchange rates, interest rates and inflation rates. China has recently adopted International Financial Reporting Standards (IFRS) in her efforts to improve the quality of information available for risk management and for pricing of risk. This paper claims that further improvements are needed and presents a new framework for how to understand and measure the impact of different scenarios on corporate performance. It also elaborates on how to communicate the macroeconomic effects to external stakeholders of the firm in a way that fosters further economic growth in China.

Keywords: FDI, OLI, cross-border acquisitions, cost of capital, financial strategy, financial variables

JEL Classification: E22, E32, E44, F15, F23, F37, G18, G32, L25, M21, M48

Suggested Citation

Oxelheim, Lars, Globalization, Transparency and Economic Growth: The Vulnerability of Chinese Firms to Macroeconomic Shocks (September 23, 2008). Journal of Asian Economics, Vol. 21, No. 1, 2010, IFN Working Paper No. 768, Available at SSRN: https://ssrn.com/abstract=1274224

Lars Oxelheim (Contact Author)

Research Institute of Industrial Economics (IFN) ( email )

P.O. Box 55665
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University of Agder ( email )

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Norway

Knut Wicksell Center for Financial Studies, Lund University ( email )

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S-220 07 Lund
Sweden
+46462228744 (Phone)

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