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on Business Economics |
| By: | Michael Fritsch; Alexander S. Kritikos; Katharina Pijnenburg |
| Abstract: | We investigate whether people become more willingly self-employed during boom periods or in recessions and to what extent it is the business cycle or the employment status influencing entry rates into entrepreneurship. Our analysis for Germany reveals that start-up activities are positively influenced by unemployment rates and that the cyclical component of real GDP has a negative effect. This implies that new business formation is counter-cyclical. Further disentangling periods of low and high unemployment periods reveals a "low unemployment retard effect". |
| Keywords: | Self-employment, business cycle, unemployment, start-up |
| JEL: | L26 E32 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1281&r=bec |
| By: | Marc J. Melitz; Stephen J. Redding |
| Abstract: | We examine how firm heterogeneity influences aggregate welfare through endogenous firm selection. We consider a homogeneous firm model that is a special case of a heterogeneous firm model with a degenerate productivity distribution. Keeping all structural parameters besides the productivity distribution the same, we show that the two models have different aggregate welfare implications, with larger welfare gains from reductions in trade costs in the heterogenous firm model. Calibrating parameters to key U.S. aggregate and firm statistics, we find these differences in aggregate welfare to be quantitatively important (up to a few percentage points of GDP). Under the assumption of a Pareto productivity distribution, the two models can be calibrated to the same observed trade share, trade elasticity with respect to variable trade costs, and hence welfare gains from trade (as shown by Arkolakis, Costinot and Rodriguez-Clare, 2012); but this requires assuming different elasticities of substitution between varieties and different fixed and variable trade costs across the two models. |
| JEL: | F12 F15 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:18919&r=bec |
| By: | Monda, Barbara; Giorgino, Mrco |
| Abstract: | In this paper, we design a multi-dimensional index to measure the quality of Corporate Governance systems adopted by firms and use it to investigate the correlation between Corporate Governance quality and firm value. Unlike most studies that examine the relationship between only one dimension of Governance and firm value, we present a complex index (CGI) composed of 39 variables referable to four dimensions: Board, Remuneration, Shareholder Rights and Disclosure. By analysing a sample of 100 large companies listed on the main stock markets in five different countries over three years (2009-2011), we confirm the widespread hypothesis of the existence of a positive and statistically significant relationship between Corporate Governance, as measured by a subset of 12 variables, and firm value. |
| Keywords: | Corporate Governance, Corporate Governance Index, firm value |
| JEL: | G30 G32 G34 |
| Date: | 2013–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:45422&r=bec |
| By: | Alessandra Colombelli; Francesco Quatraro |
| Abstract: | This paper investigates the relationship between the creation of new firms and the properties of the local knowledge bases, like coherence, cognitive distance and variety. By combining the literature on the knowledge spillovers of entrepreneurship and that on the recombinant knowledge approach, we posit that locally available knowledge matters to the entrepreneurial process, but the type of knowledge underlying theses dynamics deserve to be analyzed. The analysis is carried out on 104 Italian NUTS 3 regions observed over the time span 1995-2011. The results confirm that local knowledge is important, and suggest that the creation of new firms in Italy is associated to the exploitation of well established technological trajectories grounded on competences accumulated over time, rather than to the commercialization of brand new knowledge. |
| Keywords: | Knowledge Coherence, Variety, Cognitive Distance, Italy, Knowledge-Spillovers Theory of Entrepreneurship, New Firms, Recombinant Knowledge |
| JEL: | L26 M13 R11 O33 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:egu:wpaper:1303&r=bec |
| By: | Andrew B. Bernard; J. Bradford Jensen; Stephen J. Redding; Peter K. Schott |
| Abstract: | This paper examines the determinants of intra-firm trade in U.S. imports using detailed country-product data. We create a new measure of product contractibility based on the degree of intermediation in international trade for the product. We find important roles for the interaction of country and product characteristics in determining intra-firm trade shares. Intra- firm trade is high for products with low levels of contractibility sourced from countries with weak governance, for skill-intensive products from skill-scarce countries, and for capital-intensive products from capital-abundant countries. |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:13-12&r=bec |
| By: | M. Martin Boyer |
| Abstract: | The Lloyd’s 2007 Survey of Underwriters states that "for the third year running, managing the cycle emerged as the most important challenge for the industry, by some margin". The contention is of course that underwriting cycles exist in property and casualty insurance and are economically significant. Using a meta-analysis of published papers in the area of insurance economics, I show that the evidence in favor of underwriting cycles is misleading or even completely absent. There is in fact no statisical or economic support for the existence of underwriting cycles. This means that firm profitability in the property and casualty insurance industry is not cyclical; we only observe profitability going up or down with no meaningful pattern. It consequently follows that pricing in the property and casualty insurance industry is not incompatible with that of a competitive market. <P> |
| Keywords: | Property and liability insurance, underwriting profits, insurance pricing, |
| JEL: | G22 |
| Date: | 2013–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:cir:cirwor:2013s-07&r=bec |
| By: | Monda, Barbara; Giorgino, Marco; Modolin, Ileana |
| Abstract: | This paper describes theoretical motivations for corporate risk management activities and empirical evidence provided by different scholars on such rationales. These theoretical considerations can be extended also to the new risk management practices such as enterprise risk management. Based on modern financial theory’s assumption that markets are perfectly efficient, organizations should not implement risk management practices since they cannot contribute to add firm value. However, in the presence of market imperfections, risk management, stabilizing firm’s earnings, can benefit companies in the following manners: reducing transaction costs especially the expected costs of bankruptcy, lowering corporate taxes, aligning financing and investment policies and reducing costs associated with agency problems and asymmetric information. |
| Keywords: | Risk Management, Hedging, Market imperfections |
| JEL: | G32 |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:45420&r=bec |
| By: | Szalay, Dezsö |
| Abstract: | I study the optimal regulation of a firm producing two goods. The firm has private information about its cost of producing either of the goods. I explore the ways in which the optimal allocation differs from its one dimensional counterpart. With binding constraints in both dimensions, the allocation involves distortions for the most efficient producers and features overproduction for some less efficient types. |
| JEL: | D82 L21 |
| Date: | 2013–03–15 |
| URL: | http://d.repec.org/n?u=RePEc:trf:wpaper:397&r=bec |
| By: | Natalia Nehrebecka; Aneta Maria Dzik (Faculty of Economic Sciences, University of Warsaw) |
| Abstract: | The paper presents a model assigning a bankruptcy probability to a company, developed on the basis of individual data from balance sheets and income statements of Polish companies, collected by Central Statistical Office of Poland in the 2001 – 2010 period. Determinants for warning signals for bankruptcies were examined together with the possibilities of early identification of such signals. The research was based on a logistic regression performed on categorized variables transformed using a weight of evidence approach. Scoring methods were used to create an indicator for grading the companies in the case of bankruptcies. In the forecasting model of a possible bankruptcy in a year's horizon the highest weight was assigned to the indicator for the ability to cover financial costs which explained the company's ability to meet the interest payments and capital costs. Indebtedness, share of cash reserves in assets and sales’ revenues were considered in forecasting bankruptcies information regarding liquidity. Taking into account the direction of sales, the specialized exporters were least probable to go bankrupt. In the more generalized model which accounts for the macroeconomic situation the most important was the indicator for the ability to pay off debt. In the model forecasting bankruptcies three-years in advance - the early warning model - no dominant indicator was found. Weights of 20% were assigned to the indicators of liquidity, current assets turnover and the return on sales. |
| Keywords: | firm survival, micro-data, Polish companies, scoring methods |
| JEL: | L11 L25 G33 M13 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:war:wpaper:2013-08&r=bec |
| By: | Antoine Gervais |
| Abstract: | I develop and implement a methodology for obtaining plant-level estimates of product quality from revenue and physical output data. Intuitively, firms that sell large quantities of output conditional on price are classified as high quality producers. I use this method to decompose cross-plant variation in price and export status into a quality and an efficiency margin. The empirical results show that prices are increasing in quality and decreasing in efficiency. However, selection into exporting is driven mainly by quality. The finding that changes in quality and efficiency have different impact on the firm's export decision is shown to be inconsistent with the traditional iceberg trade cost formulation and points to the importance of per unit transport costs. |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:13-08&r=bec |
| By: | Facundo Piguillem (EIEF); Loris Rubini (UC3M) |
| Abstract: | The international trade literature finds strong links between firm growth and export decisions. In spite of this, the literature analyzing cross-country differences in firm growth commonly abstracts from trade. We develop a tractable, dynamic model to understand the consequences of this abstraction. We find that the closed economy (i) under-estimates domestic (firm) growth barriers, potentially modifying the rankings across countries; and (ii) over-predicts the effects of counterfactuals. To asses the quantitative relevance of these findings, we calibrate the model to a set of European countries. The model successfully captures differences in value added per worker, accounting for between 54 and 87% of the differences across countries. We find that a closed economy alters the ranking of countries according to the size of these barriers and over-predicts the effects of counterfactuals on welfare by between 31 and 64% relative to the open economy. Thus, trade is essential for measuring barriers to firm growth and their counterfactuals in open economies. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:eie:wpaper:1304&r=bec |