Global Supply Chains and Cross-Border Financing

26 Pages Posted: 30 Nov 2018 Last revised: 6 Apr 2022

See all articles by Michael G. Hertzel

Michael G. Hertzel

Arizona State University (ASU) - Finance Department

Jie Peng

The Chinese University of Hong Kong (CUHK) - CUHK Business School

Jing Wu

The Chinese University of Hong Kong (CUHK) - CUHK Business School

Yu Zhang

Peking University - Guanghua School of Management

Date Written: November 18, 2018

Abstract

This paper provides evidence that the formation of global supply chain partnerships increases access to cross-border financing. The findings are detected in all three major financing markets - equities, syndicated loans, and public debt. Difference-in-differences test allows us to draw causal inferences from our results. We propose that our findings reflect the factor of informational visibility where less visible firms can overcome informational obstacles to cross-border financing by establishing global supply chains. Specifically, we provide evidence that firms that are small, held less by institutional investors, and followed by fewer analysts have more benefits in cross-border financing from the formation of the global supply chain. Firms that established cross-border financing after global supply chains experience increased sales and profitability but at the expense of lower operational efficiencies. Our findings have important implications for firms attempting to integrate into the global supply-chain network. More broadly, our findings suggest that the information generated by operational activities can have significant effects on subsequent financing activities.

Keywords: global supply chains, cross-border financing, informational visibility

JEL Classification: L14, G15, G30, G32

Suggested Citation

Hertzel, Michael G. and Peng, Jie and Wu, Jing and Zhang, Yu, Global Supply Chains and Cross-Border Financing (November 18, 2018). Available at SSRN: https://ssrn.com/abstract=3289212 or http://dx.doi.org/10.2139/ssrn.3289212

Michael G. Hertzel

Arizona State University (ASU) - Finance Department ( email )

W. P. Carey School of Business
P.O. Box 873906
Tempe, AZ 85287-3906
United States
480-965-6869 (Phone)
602-965-8539 (Fax)

Jie Peng

The Chinese University of Hong Kong (CUHK) - CUHK Business School ( email )

Cheng Yu Tung Building, 12 Chak Cheung Street
Shatin, N.T.
Hong Kong

Jing Wu (Contact Author)

The Chinese University of Hong Kong (CUHK) - CUHK Business School ( email )

Cheng Yu Tung Building
12 Chak Cheung Street
Shatin, N.T.
Hong Kong

HOME PAGE: http://www.jingwulab.org

Yu Zhang

Peking University - Guanghua School of Management ( email )

Peking University
Beijing, Beijing 100871
China

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