Export volatility and corporate financing decisions in Australia: a dynamic panel data approach

• Main Authors: Chow, Yee Peng, Muhammad, Junaina, Amin Noordin, Bany Ariffin, Cheng, Fan Fah
• Format: Conference or Workshop Item
• Language: English
• Published: Faculty of Economics and Management, Universiti Putra Malaysia 2017
• Online Access: http://psasir.upm.edu.my/id/eprint/58700/1/6-YEE_PENG_CHOW.pdf.pdf; http://psasir.upm.edu.my/id/eprint/58700/; http://www.econ.upm.edu.my/upload/dokumen/20170816174249013-YEE_PENG_CHOW.pdf.pdf

This paper investigates the influence of export volatility on corporate financing decisions of a sample of non-financial firms listed on the Australian Securities Exchange over the period 2004-2014. The GARCH model is employed to model export volatility. Using a dynamic panel data method, namely the robust two-step system GMM estimation procedure, the results show that export volatility has a significant negative effect on the financing decisions of Australian firms. The results also reveal that while long-term debt is affected by export volatility, similar observation does not hold for short-term debt. This indicates that Australian firms are chiefly concerned about the adverse effect of export volatility in the long-run. The results also provide evidence of the importance of accounting for the effects of the Global Financial Crisis. Policy implications are derived from the findings.