PRODUCTIVITY OR UNEXPECTED DEMAND SHOCKS: WHAT DETERMINES FIRMS' INVESTMENT AND EXIT DECISIONS?

• 成果类型: Article
• 署名作者: Kumar, Pradeep; Zhang, Hongsong
• 署名单位: University of Exeter; University of Hong Kong
• 刊物名称: INTERNATIONAL ECONOMIC REVIEW
• ISSN/ISSBN: 0020-6598
• DOI: 10.1111/iere.12354
• 发表日期: 2019
• 页码: 303-327
• 关键词: research-and-development; inventory behavior; IMPACT; entry; uncertainty; selection; turnover; DYNAMICS; price

摘要

We investigate the roles played by unexpected demand shocks, besides productivity, on firms' capital investment and exit decisions. We propose a practical approach to recover unexpected firm-level demand shocks using inventory data. The recognition of demand shocks and inventory also improves the productivity estimation. The empirical results indicate that although productivity and demand shocks are both significant factors determining firm behavior, the former is more dominant for investment decision and the latter is more salient for firm exit. These findings confirm that unexpected demand shocks, besides persistent productivity, are important factors when analyzing capital investment and firm exit decisions.