Not long after several financial crises in 1990s, another global financial crisis hit in 2008. While the whole world is riding out the perfect storm, it is desirable to find out the commonalities among historical crises and concentrate on them for solutions. At first glance, the current crisis is different from the previous ones in the sense that it started with a developed country (i.e., the US) rather than with the emerging markets as in the 1990s. In fact, virtually all crises share one feature, that is, cash is perceived to be more valuable after the crisis, confirming the old saying that “cashisking”. Additionally, it is usually not until the crises hit that management starts to realize the importance of“saving for the rainy days”.
The existing literature on the Asian crisis can be divided into four categories: cause-and-effect analysis, crisis prevention, evaluation of policy resolutions on crises, and transmission mechanism (Gong et al. 2004). However, little research to date has examined the Asian crisis from the corporate liquidity perspective. This study aims to fill this gap by examining corporate liquidity in emerging markets using the Asian crisis as the backdrop. Given the insufficient data since the outbreak of the 2008 crisis, the study examines the previous Asian financial crisis to provide insights into whether corporate liquidity (cash holdings) indeed plays a role in bad times (e.g., in a crisis period) as well as in good times. Furthermore, the study offers policy implications regarding what the firms should do to sustain their business during the current crisis period in terms of liquidity management.
This fact sheet has been developed to support the implementation of the Natural Resources Conservation Service Feed Management 592 Practice Standard. The Feed Management 592 Practice Standard was adopted by NRCS in 2003 as another tool to assist with addressing resource concerns on livestock and poultry operations. Feed management can assist with reducing the import of nutrients to the farm and reduce the excretion of nutrients in manure.
Swine and poultry production operations can emit various gas emissions, particulate matter (dust) and odors which may affect the quality of air surrounding the operation. These gas emissions and dust come from manure generated on the operation, the feeding system and spoiled feeds, and feathers from poultry or dandruff and hair from swine. Emissions of gases, odors and dust are located inbuildings, manure storage and during land application of manure. Diet ingredient sources, forms and levels can influence the availability (digestibility) and retention of nutrients in the animal and the levels and chemical forms of the nutrients excreted.
In the last two decades, the use of derivative contracts by firms has increased sharply. Surprisingly, although data on derivatives usage are more widely available, the empirical evidence on the effects of derivative use on firms’ risk and value is still mixed (despite the fact that anecdotal evidence on its detrimental effects is widespread). For example, using a sample of firms that initiate derivative use, Guay (1999) finds that the total risk, idiosyncratic risk, and risk exposures to interest rate changes of these firms decline, but he finds no significant change in the market risk of these firms. In contrast, Hentschel and Kothari (2001) find that the difference in risk for firms that use derivatives is economically small compared to firms that do not use them. Allayannis and Weston (2001) present evidence that hedging foreign currency risk is associated with large (approximately 4%) increases in market value; Graham and Rogers (2002) find that hedging can add an economically significant 1.1% to their market value by allowing firms to increase their debt capacity. However, Guay and Kothari (2003) show that the magnitude of the cash flows generated by hedge portfolios is modest and unlikely to account for such large changes in value. Consistent with this, Jin and Jorion (2006) use a sample of oil and gas producers and find insignificant effects of hedging on market value.
One factor that affects the interpretation of these results, and may generate some of the differences in these studies, is endogeneity. That is, a significant difference in the risk measures of hedging and non-hedging firms could be due to omitted control variables that determine firm risk and risk management; alternatively, omitting these variables may mask important differences among firms that arise because of differences in hedging behavior. Endogeneity also affects the interpretation of results: hedging behavior may be driven by, rather than a determinant of, differences in risk. As a result, riskier firms may hedge so that their (after-hedging) risk profile is indistinguishable from inherently less risky non-hedgers. The papers cited above use different approaches to control for endogeneity. Some authors use econometric procedures such as simultaneous equations to account for this problem (see, e.g., Graham and Rogers (2002)). Others choose samples to mitigate selection bias. Jin and Jorion (2006), for example, control for any significant difference in the hedging propensity of firms across industries by examining firms in a single industry. By examining only firms that initiate derivative use, Guay (1999) uses the same firm prior to derivative use as a control. Of course, although these choices reduce selection bias, they also impose constraints on the data, beyond the usual ones of data availability.
