New research shows how firms can mitigate the negative impact of monetary policy changes

In his dissertation, Sinh Thoi Mai analyses the strategic responses of the firms around the world to monetary and regulatory policy changes originating from the central banks and financial market regulators, including the European Central Bank and the Federal Reserve.

According to Thoi Mai, firms can reduce their exposure to monetary policy shocks by improving their information environment.

“By issuing management earnings forecasts before the policy announcement, young firms’ stocks are less exposed to the shocks by as much as 35%”, Thoi Mai argues.

Furthermore, when firms for example proactively apply hedging techniques or diversify their investment and financing sources, their stock and investments are less affected during monetary policy tightening periods.

“My findings are not only relevant to firms but also policy makers as they provide deeper understanding about how monetary policy is transmitted, particularly in the eurozone. Specifically, they show which groups are more or less exposed to monetary policies. This understanding can support central banks to design better policies to monitor the economy”, says Thoi Mai.

In his study Thoi Mai also introduces one of first measures of corporate agility for a large set of firms, which measures corporate ability to respond quickly and effectively to business environment changes.

“This new measure of corporate agility can enhance academic research about the implications of corporate agility on corporate governance, corporate finance, and asset pricing”, Thoi Mai explains.

You can read the whole thesis here.
Essays on Monetary Policy Shocks and Firm Strategic Response: Applications of Machine Learning Methods

Sinh Thoi Mai will be defending his thesis at 16:00 on 26 June 2024 at Futurum, Hanken School of Economics, Arkadiankatu 22, Helsinki.

Opponent: Professor Zhi Da, Mendoza College of Business, University of Notre Dame Custos: Gonul Colak, Hanken School of Economics

The doctoral defence will be held as hybrid. Participants can attend on site or via video link:
https://go.hanken.fi/defence-sinhmai

For further information:

Sinh Thoi Mai
Telephone: +358466147764
Email: thoi.mai@hanken.fi