Hiring, investments, and financial distress: evidence from a Panel VAR analysis of Japanese firms

Hirokazu Mizobata ()
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Hirokazu Mizobata: Tezukayama University

Economics Bulletin, 2015, vol. 35, issue 4, 2558-2566

Abstract: We analyse the dynamic interactions among investment, hiring, and financial distress using a panel vector auto-regression approach to identify the effect of one shock while other shocks remain constant. The results indicate that adjustments in capital and labour significantly interact with each other and that financial distress critically influences these two components. We conclude that firm's dynamic optimization problem should be understood by accounting for these three factors simultaneously.

Keywords: investment; labour demand; financial distress; panel VAR (search for similar items in EconPapers)
JEL-codes: G3 J2 (search for similar items in EconPapers)
Date: 2015-12-13
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Citations: View citations in EconPapers (3)

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