Keiretsu Style Main Bank Relationships, R&D Investment, Leverage, and Firm Value: Quantile Regression Approach

Handbook of Quantitative Finance and Risk Management, Volumes I, II & III, ed. by Cheng-Few Lee, Part IV, Ch. 53, 829-841, New York: Springer Publisher. ISBN: 978-0-387-77116-8, 2010

Posted: 6 May 2020

See all articles by Hai-Chin Yu

Hai-Chin Yu

Chung Yuan Christian University

Der-Tzon Hsieh

National Taiwan University - Department of Economics

Chih-Sean Chen

Chung Yuan Christian University

Date Written: April 11, 2010

Abstract

Using quantile regression, our results provide explanations for the inconsistent findings that use conventional OLS regression in the extant literature. While the direct effects of RD while firms’ advantages with low RD whereas it is decreasing in high Q firms. Main banks add value for low to median Q firms, while the value is destroyed for high Q firms. Meanwhile, we find the interacted effect of the main bank and R&D investment which increases with firm value, only appears in medium quantiles, instead of low or high quantiles. The results of this work provide relevant implications for policymakers. Finally, we document that industry quantile effect is larger than the industry effect itself, given that most of the firms in higher quantiles gain from industry effects while lower quantile firms suffer negative effects. We also find the results of OLS are seriously influenced by outliers. In stark contrast, quantile regression results are impervious to either inclusion or exclusion outliers.

Keywords: Main Bank, R&D, Firm Value, Keiretsu

JEL Classification: G21, G34

Suggested Citation

Yu, Hai-Chin and Hsieh, Der-Tzon and Chen, Chih-Sean, Keiretsu Style Main Bank Relationships, R&D Investment, Leverage, and Firm Value: Quantile Regression Approach (April 11, 2010). Handbook of Quantitative Finance and Risk Management, Volumes I, II & III, ed. by Cheng-Few Lee, Part IV, Ch. 53, 829-841, New York: Springer Publisher. ISBN: 978-0-387-77116-8, 2010, Available at SSRN: https://ssrn.com/abstract=3573577

Hai-Chin Yu (Contact Author)

Chung Yuan Christian University ( email )

22 Pu-Jen,Pu-chung Li
Chung-Li, Taiwan 32023
Taiwan
886 3 265 5209 (Phone)
886 3 265 5299 (Fax)

Der-Tzon Hsieh

National Taiwan University - Department of Economics ( email )

21 Hsiu Chow Rd
Taipei, 10020
Taiwan
886 2 2397-4382 (Phone)
886 2 2397-4382 (Fax)

Chih-Sean Chen

Chung Yuan Christian University ( email )

22 Pu-Jen, Pu-chung Li
Chung-Li, 32023
Taiwan

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