Global Supply Chains and Cross-Border Financing

Production and Operations Management

34 Pages Posted: 30 Nov 2018 Last revised: 10 Apr 2023

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 leads to an increased usage of cross-border financing. The findings are detected in all three major financing markets - equities, syndicated loans, and public debt. Difference-in-differences tests allow us to draw a causal interpretation of our main findings, which also hold in several robustness tests. Our findings suggest that increased cross-border financing reflects greater ability to access global financial markets, due to enhanced firm visibility and investor attention, as well as operational forces that arise when establishing new global supply chain partnerships. 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. 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

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). Production and Operations Management, 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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