|
on Business Economics |
| By: | Sharon Belenzon; Tomer Berkovitz; Patrick Bolton |
| Abstract: | This paper examines the relation between ownership, corporate form, and innovation for a cross-section of private and publicly traded innovating firms in the US and 15 European countries. A striking novel observation emerges from our analysis: while most innovating firms in the US are publicly traded conglomerates, a substantial fraction of innovation is concentrated in private firms and in business groups in continental European countries. We find virtually no variation across US industries in the corporate form of innovating firms, but a substantial variation across industries in continental European countries, where business groups tend to be concentrated in industries with a slower and more fundamental innovation cycle and where intellectual protection of innovators seems to be of paramount importance. Our findings suggest that innovative companies choose the corporate form most conducive to R&D, as predicted by the Coasian view of how firms form. This is especially true in Europe, where there are fewer regulatory hurdles to the formation of business groups and hybrid corporate forms. It is less the case in the US, where conglomerates are generally favored. |
| JEL: | O16 O31 O32 |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:15304&r=bec |
| By: | Juha Kilponen (Bank of Finland, Monetary Policy and Research Department, P.O. Box 160, FI-00101 Helsinki, Finland); Juuso Vanhala (Bank of Finland, Monetary Policy and Research Department, P.O. Box 160, FI-00101 Helsinki, Finland) |
| Abstract: | This paper focuses on tenure driven productivity dynamics of a firm-worker match as a potential explanation of "unemployment volatility puzzle". We let new matches and continuing jobs differ by their productivity levels and by their sensitivity to aggregate productivity shocks. As a result, new matches have a higher destruction rate and lower, but more volatile, wages than old matches, as new hires receive technology associated with the latest vintage. Our contribution is to produce model driven stickiness of old jobs’ wages which does not rely on ad hoc assumptions on wage rigidity. In our model, an aggregate productivity shock generates a persistent productivity difference between the two types of matches, creating an incentive to open new productive vacancies and to destroy old matches that are temporarily less productive. The model produces a well behaving Beveridge curve, despite endogenous job destruction, and more volatile vacancies and unemployment, without a need to rely on differing wage setting mechanisms of new and continuing jobs. Price rigidities do not alter the basic mechanism and the transmission of monetary policy shock is very similar to the standard New Keynesian model with search frictions. JEL Classification: E24, E32, J64. |
| Keywords: | Matching, productivity shocks, job flows, Beveridge curve, vintage structure, nominal rigidities, monetary policy shock, tenure. |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20091080&r=bec |
| By: | Maximo Camacho (Universidad de Murcia); Gabriel Perez-Quiros (Banco de España); Hugo Rodríguez Mendizábal (Instituto de Análisis Económico (CSIC)) |
| Abstract: | We present evidence about the loss of the so-called "plucking effect", that is, a high-growth phase of the cycle typically observed at the end of recessions. This result matches the belief, presented informally by different authors, that recession may have now permanent effects, or recession have now an L shape versus old-time recessions that always had a V shape. We also show that the loss of the "plucking effect" can explain part of the Great Moderation. We postulate that these two phenomena may be due to changes in inventory management brought about by improvements in information and communications technologies. |
| Keywords: | Business cycle features, Great Moderation, High-growth recovery |
| JEL: | E32 F02 C22 |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:bde:wpaper:0917&r=bec |
| By: | Bo-Young Chang; Peter Christoffersen; Kris Jacobs; Gregory Vainberg |
| Abstract: | Equity risk measured by beta is of great interest to both academics and practitioners. Existing estimates of beta use historical returns. Many studies have found option-implied volatility to be a strong predictor of future realized volatility. We .nd that option-implied volatility and skewness are also good predictors of future realized beta. Motivated by this .nding, we establish a set of assumptions needed to construct a beta estimate from option-implied return moments using equity and index options. This beta can be computed using only option data on a single day. It is therefore potentially able to re.ect sudden changes in the structure of the underlying company. <P>Le risque du marché des actions mesuré selon le coefficient bêta suscite un vif intérêt de la part des universitaires et des praticiens. Les estimations existantes du coefficient bêta utilisent les rendements historiques. De nombreuses études ont démontré que la volatilité implicite du prix des options constitue un indice solide de la volatilité future réalisée. Nous constatons que la volatilité implicite des options et leur caractère asymétrique sont aussi de bons facteurs prévisionnels du bêta futur réalisé. Motivés par ce constat, nous établissons un ensemble d’hypothèses nécessaires pour effectuer une estimation du bêta, à partir des moments de rendement implicite des options, en recourant aux actions et aux options sur indices boursiers. Ce bêta peut être calculé en utilisant seulement les données obtenues sur les options au cours d’une même journée. Il peut donc refléter les changements soudains de la structure de la société sous-jacente. |
| Keywords: | market beta; CAPM; historical; capital budgeting; model-free moments, bêta du marché, MEDAF (modèle d’équilibre des actifs financiers), historique, budgétisation des investissements, moments non paramétriques. |
| JEL: | G12 |
| Date: | 2009–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:cir:cirwor:2009s-33&r=bec |
| By: | Todd Keister; James McAndrews |
| Abstract: | The quantity of reserves in the U.S. banking system has risen dramatically since September 2008. Some commentators have expressed concern that this pattern indicates that the Federal Reserve’s liquidity facilities have been ineffective in promoting the flow of credit to firms and households. Others have argued that the high level of reserves will be inflationary. We explain, through a series of examples, why banks are currently holding so many reserves. The examples show how the quantity of bank reserves is determined by the size of the Federal Reserve’s policy initiatives and in no way reflects the initiatives’ effects on bank lending. We also argue that a large increase in bank reserves need not be inflationary, because the payment of interest on reserves allows the Federal Reserve to adjust short-term interest rates independently of the level of reserves. |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednsr:380&r=bec |
| By: | Silvio Contessi (Federal Reserve Bank of St. Louis); Pierangelo De Pace (Johns Hopkins University); Johanna Francis (Fordham University, Department of Economics) |
| Abstract: | We describe the second-moment properties of the components of international capital flows and their relationship to business cycle variables for 22 industrial and emerging countries. Inward flows are procyclical. Outward and net flows are countercyclical for most industrial and emerging countries, except for the G7. Results for individual flows are ambiguous except for inward FDI flows that are procyclical in industrial countries, but countercyclical in emerging countries. Using formal statistical tests, we find mixed evidence of changes in the covariance and correlation of capital flows with a set of macroeconomic variables in the G7 countries. We detect significant increases in the variance of all flows. |
| Keywords: | Capital Flows, International Business Cycles, Second Moments |
| JEL: | E32 F21 F32 F36 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:frd:wpaper:dp2009-05&r=bec |
| By: | Shihe Fu; Liwei Shan |
| Abstract: | Two competing hypotheses, value enhancing and value discounting, state that implementing socially responsible corporate policies can have positive or negative effects on firm value. This paper tests how a specific type of social responsibility–corporate equality–affects firm value. Corporate equality is measured by the corporate equality index (CEI). This index quantifies how companies treat their gay, lesbian, bisexual, and transgender employees, consumers, and investors. Using a sample of CEI-rated, publicly traded firms in the U.S., we find that, between 2002 and 2006, firms with a higher degree of corporate equality have higher stock returns and higher market valuation (Q). We provide suggestive, causal evidence that corporate equality enhances firm value through better performance in product markets and labor markets: Firms with a higher degree of corporate equality also tend to have larger sales, higher profit margins, higher employee productivity, and attract more employees. These results are robust to the inclusion of unobserved firm-heterogeneities. Overall, our results support the value-enhancing effects of corporate social responsibility. |
| Keywords: | Corporate equality; social responsibility; socially responsible investment; stock returns; performance. |
| JEL: | G11 G12 J70 M14 |
| Date: | 2009–09–08 |
| URL: | http://d.repec.org/n?u=RePEc:eei:rpaper:eeri_rp_2009_09&r=bec |
| By: | Federico Cingano (Bank of Italy); Marco Leonardi (University of Milan); Julián Messina (University of Girona); Giovanni Pica (University of Salerno) |
| Abstract: | This paper analyzes the joint effect of EPL and financial market imperfections on investment, capital-labour substitution, labour productivity and job reallocation in a cross-country framework. In the spirit of Rajan and Zingales (1998) and Ciccone and Papaioannou (2006), we exploit variation in the need for reallocation at the sectoral and aggregate level to assess the average effect of EPL on firms’ policies. Then, exploiting firm-level information we study if the effect of EPL is stronger in firms with lower levels of internal resources. We find that, on average, EPL reduces investment per worker, capital per worker and value added per worker in high reallocation sectors relative to low reallocation sectors. The reduction in the capital-labour ratio is less pronounced in firms with higher internal resources, suggesting that financial constraints exacerbate the negative effects of EPL on capital deepening. |
| Keywords: | capital-labor substitution, labor market imperfections, financial market imperfections |
| JEL: | J21 |
| Date: | 2009–07 |
| URL: | http://d.repec.org/n?u=RePEc:bde:wpaper:0914&r=bec |
| By: | Böckerman, Petri; Riihimäki, Elisa |
| Abstract: | We examine the employment effects of international outsourcing by using firm-level data from the Finnish manufacturing sector. A major advantage of our data is that outsourcing is defined based on firms’ actual use of intermediate inputs from foreign trade statistics. The estimates show that intensive outsourcing (more than two times the 2-digit industry median) does not reduce employment nor have an effect on the share of low-skilled workers. |
| Keywords: | International outsourcing; offshoring; labour demand; propensity score matching |
| JEL: | F16 F23 |
| Date: | 2009–08–21 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:16903&r=bec |
| By: | Schiffbauer, Marc (ESRI); Siedschlag, Iulia (ESRI); Ruane, Frances (ESRI) |
| Abstract: | This paper examines the causal relationship between foreign mergers and acquisitions and firm productivity in the UK over the period 1999-2007. Our results raise questions about the existence of aggregate effects of foreign ownership on TFP in the longer-run. However, we find significant heterogeneity in the TFP effects of foreign M&A at the industry level. Overall, we uncover a systematic pattern of post-acquisition TFP effects that is consistent with the most recent theoretical models of firm heterogeneity and cross-border mergers and acquisitions as mode of foreign entry. Furthermore, we find positive aggregate effects on labor productivity due to capital deepening but not due to changes in TFP. |
| Keywords: | Cross-border mergers and acquisitions; Productivity; Firm heterogeneity |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:esr:wpaper:dynreg47&r=bec |
| By: | Douhan, Robin (Research Institute of Industrial Economics (IFN)); van Praag, Mirjam (University of Amsterdam) |
| Abstract: | We combine two empirical observations in a general equilibrium occupational choice model. The first is that entrepreneurs have more control than employees over the employment of and accruals from assets, such as human capital. The second observation is that entrepreneurs enjoy higher returns to human capital than employees. We present an intuitive model showing that more control (observation 1) may be an explanation for higher returns (observation 2); its main outcome is that returns to ability are higher in higher control environments. This provides a theoretical underpinning for the control-based explanation for higher returns to human capital for entrepreneurs. |
| Keywords: | Entrepreneurship; Ability; Occupational Choice; Human Capital; Wage Structure |
| JEL: | I20 J24 J31 L26 |
| Date: | 2009–08–20 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:0805&r=bec |
| By: | Evers, Michael; Niemann, Stefan; Schiffbauer, Marc (ESRI) |
| Abstract: | This paper demonstrates a negative relation between inflation and long-run productivity growth. Inflation generates long-run real effects due to a link from the short-run nominal and financial frictions to a firm's qualitative investment portfolio. We develop an endogenous growth model whose key ingredients are (i) a nominal short-run portfolio choice for households, (ii) an agency problem which gives rise to financial market incompleteness, (iii) a firm-level technology choice between a return-dominated but secure and a more productive but risky project. In this framework, inflation increases the costs of corporate insurance against productive but risky projects and hence a firm's choice of technology. It follows that each level of inflation is associated with a different long-run balanced growth path for the economy as long as financial markets are incomplete. Finally, we apply U.S. industry and firm level data to examine the relevance of our specific microeconomic mechanism. We find that (i) firms insure systematically against risky R&D investments by means of corporate liquidity holdings, (ii) periods of higher inflation restrain firm-level R&D investments by reducing corporate liquidity holdings. |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:esr:wpaper:dynreg48&r=bec |
| By: | Giorgio Fazio; Davide Piacentino |
| Abstract: | In this paper, we adapt multilevel analysis methods to investigate the spatial variability of SMEs productivity across the Italian territory, and account for differences in the socio-economic context. Our results suggest that to properly capture the variability of the data, it is important to allow for both spatial mean and slope effects. Social decay has the expected negative impact. However, while this effect is larger on firms with smaller capital intensity, firms with higher capital intensity seem to be less affected by geography. Greater territorial heterogeneity emerges among those firms with lower capital to labour ratios. |
| Keywords: | Firm heterogeneity, Spatial variability, Socio-economic Context, Multilevel Analysis |
| JEL: | C31 R11 R12 R30 |
| Date: | 2009–06 |
| URL: | http://d.repec.org/n?u=RePEc:gla:glaewp:2009_31&r=bec |
| By: | Salman, A. Khalik (CAFO, Växjö University); von Friedrichs, Yvonne (CAFO, Växjö University); Shukur, Ghazi (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology) |
| Abstract: | This paper employs a time series cointegration approach to evaluate the relationship between manufacturing firm failure and macroeconomic factors for the Swedish manufacturing sector in the period 1986 – 2006. It uses quarterly data for this period. We found that in long run a firms’ failure is negatively related to the level of industrial activity, money supply, GNP and economic openness rate, and positively related to the real wage. Time series Error Correction Model (ECM) estimates suggest that macroeconomic risk factors impinge on firm failures on the same direction in both the short run and the long run and that adjustment to stabilise the relationship is quite slow. |
| Keywords: | firm failure; macroeconomic factors; cointegration analysis; diagnostic tests |
| JEL: | D01 D02 |
| Date: | 2009–08–26 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cesisp:0185&r=bec |
| By: | Douhan, Robin (Research Institute of Industrial Economics (IFN)); Norbäck, Pehr-Johan (Research Institute of Industrial Economics (IFN)); Persson, Lars (Research Institute of Industrial Economics (IFN)) |
| Abstract: | What explains the world-wide trend of pro-entrepreneurial policies in the last few decades? We study entrepreneurial policy in a lobbying model taking into account the con.ict of interest between entrepreneurs and incumbents. It is shown that international market integration leads to more pro-entrepreneurial policies. It becomes more difficult to protect the profits of incumbent firms from entrepreneurial entry and pro-entrepreneurial policies make foreign entrepreneurs less aggressive. Making use of the Doing Business database, we find, consistent with our theory, evidence that international openness reduces barriers to entry for new entrepreneurs and that the effect is stronger in countries with more rent-seeking governments. |
| Keywords: | Entrepreneurship; Regulation; Innovation; Market Integration; Lobbying |
| JEL: | D73 F15 L26 L51 O31 |
| Date: | 2009–08–24 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:0807&r=bec |