Can We Learn From Lessons of the Past? A Closer Examination of the Corporate Policy Response of Asian Firms Around the Asian Financial Crisis

31 Pages Posted: 3 Feb 2020

See all articles by Jin Young Yang

Jin Young Yang

Zayed University

Reuben Segara

University of Sydney Business School; Financial Research Network (FIRN)

Date Written: January 10, 2020

Abstract

Using a sample of firms from 8 East Asian countries, we document the corporate policy (cash holding, investment, financing, and payout) response to the Asian Financial Crisis of 1997-1998. Following the crisis, we find significant evidence of a build-up of cash holdings, a fall in capital spending, decreases in sourcing funds from capital markets, and a reduction in dividend payout offset with an increase in the use of repurchases. Our results suggest that such corporate policies used by Asian firms were designed to improve their financial strength by increasing financial flexibility.

Keywords: The Asian Financial Crisis; Emerging countries; Financing constraints; Cash reserve policy; Investment decisions; Financing decisions; Payout policy

JEL Classification: G01, G30, G31, G32, G35

Suggested Citation

Yang, Jin Young and Segara, Reuben, Can We Learn From Lessons of the Past? A Closer Examination of the Corporate Policy Response of Asian Firms Around the Asian Financial Crisis (January 10, 2020). Available at SSRN: https://ssrn.com/abstract=3517205 or http://dx.doi.org/10.2139/ssrn.3517205

Jin Young Yang (Contact Author)

Zayed University ( email )

P.O. Box 4783
Abu Dhabi
United Arab Emirates

Reuben Segara

University of Sydney Business School ( email )

Sydney
Australia
+61 2 9351 8790 (Phone)
+61 2 9351 6461 (Fax)

HOME PAGE: http://www.sydney.edu.au/business/about/our-people/academic-staff/reuben-segara.html

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

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