nep-bec New Economics Papers
on Business Economics
Issue of 2013‒09‒06
ten papers chosen by
Vasileios Bougioukos
Bangor University

  1. Globalization and Multiproduct Firms By Nocke, Volker; Yeaple, Stephen
  2. Entrepreneurship In A Developing Country Context. By Quatraro, Francesco; Vivarelli, Marco
  3. Innovation Platforms, Complexity and the Knowledge-Intensive Firm. By Patrucco, Pier Paolo
  4. Survival of spinoffs and other startups: First evidence for the private sector in Germany, 1976 - 2008 By Fackler, Daniel; Schnabel, Claus
  5. Should I stay or should I go? Former CEOs as monitors By Andres, Christian; Fernau, Erik; Theissen, Erik
  6. Trade Liberalisation and Vertical Integration By Peter Arendorf Bache; Anders Laugesen
  7. Correlated Equilibria and Communication Equilibria in All-pay Auctions By Gregory Pavlov
  8. Canadian Labour Productivity Differences Across Firm Size Classes, 2002 to 2008 By Baldwin, John R.<br /> Leung, Danny<br /> Rispoli, Luke
  9. Understanding entrepreneurial intentions of students in agriculture and related sciences By Leonidas A. Zampetakis; Afroditi Anagnosti; Stelios Rozakis
  10. Corporate governance and abnormal returns from M&A: A structural analysis By Tarcisio da Graca; Robert Masson

  1. By: Nocke, Volker; Yeaple, Stephen
    Abstract: We present an international trade model with multiproduct firms. Firms are heterogeneously endowed with two types of capabilities that jointly determine the trade-off within firms between managing a large portfolio of products and producing at low marginal cost. The model can explain many of the documented cross- sectional correlations in firm performance measures, including why larger firms are more productive and more diversified, and yet more diversified firms trade at a discount. Globalization is shown to induce heterogeneous responses across firms in terms of scope and productivity, some of which are consistent with existing empirical work, while others are potentially testable.
    Keywords: multiproduct firms , trade liberalization , diversification discount , firm heterogeneity , productivity
    JEL: F12 F15
    Date: 2013
  2. By: Quatraro, Francesco; Vivarelli, Marco (University of Turin)
    Abstract: The aim of this paper is to provide an updated survey of the “state of the art” in entrepreneurial studies, with a particular focus on developing countries (DCs). In particular, the same concept of “entrepreneurship” will be critically discussed, then moving to the institutional, macroeconomic and microeconomic conditions affecting the entry of new firms and the post-entry performance of newborn firms.
    Date: 2013–05
  3. By: Patrucco, Pier Paolo (University of Turin)
    Date: 2013–07
  4. By: Fackler, Daniel; Schnabel, Claus
    Abstract: Using a 50 percent sample of all establishments in the German private sector, we report that spinoffs are larger and initially employ more skilled and more experienced workers than other startups. Controlling for these and other differences, we find that spinoffs are less likely to exit than other startups. We show that in West and East Germany and in all sectors investigated pulled spinoffs (where the parent company continues after they are founded) generally have the lowest exit hazards, followed by pushed spinoffs (where the parent company stops operations). The difference between both types of spinoffs is particularly pronounced in the first three years. Contrary to expectations, intra-industry spinoffs are not found to have lower exit hazards in our sample. --
    Keywords: spinoffs,startups,firm exits,Germany
    JEL: L2 D22 M13 C41
    Date: 2013
  5. By: Andres, Christian; Fernau, Erik; Theissen, Erik
    Abstract: In the German two-tiered system of corporate governance, it is not uncommon for chief executive officers (CEOs) to become the chairman of the supervisory board of the same company upon retirement. This practice has been discussed controversially because of potential conflicts of interest. As a member of the supervisory board the former CEO has to monitor his successor and former colleagues, and he is involved in setting their pay. We analyze a panel covering 150 listed firms over a 10-year period. Consistent with the existence of a leniency bias, we show that firms in which a former CEO serves on the supervisory board pay their executives significantly more. We further find weak evidence that the compensation of the members of the supervisory board is also higher. Short-run event study results indicate that the announcement of the transition of a retiring CEO to the supervisory board is considered as good news. Thus, despite the increases in executive compensation we document, CEO transitions are not a cause of concern for shareholders. --
    Keywords: Executive compensation,board structure,two-tiered board
    JEL: G30 G38
    Date: 2013
  6. By: Peter Arendorf Bache (Department of Economics and Business, Aarhus University); Anders Laugesen (Department of Economics and Business, Aarhus University)
    Abstract: We build a three-country model of international trade in final and intermediate goods and study the relation between different types of trade liberalisation and vertical integration. Firms are heterogeneous with respect to both productivity and factor intensity as observed in data. Final-good producers face decisions on exporting, vertical integration of intermediate-input production, and whether the intermediate-input production should be offshored to a low-wage country. We find that due to firm-level complementarities, the shares of final-good producers that pursue either vertical integration, offshoring, or exporting are all increasing when intermediate- or final-goods trade is liberalised and when the cost of vertical integration is reduced. At the same time, one will observe individual firms that shift away from either vertical integration, offshoring, or exporting. All these results hold for a class of productivity distributions to which the Pareto distribution belongs.
    Keywords: International Trade, Firm Heterogeneity, Incomplete Contracts, Vertical Integration, Offshoring, Exporting, Trade Liberalisation
    JEL: D23 F12 L23
    Date: 2013–09–02
  7. By: Gregory Pavlov (University of Western Ontario)
    Abstract: We study cheap-talk pre-play communication in the static all-pay auctions. For the case of two bidders, all correlated and communication equilibria are payoff equivalent to the Nash equilibrium if there is no reserve price, or if it is commonly known that one bidder has a strictly higher value. Hence, in such environments the Nash equilibrium predictions are robust to preplay communication between the bidders. If there are three or more symmetric bidders, or two symmetric bidders and a positive reserve price, then there may exist correlated and communication equilibria such that the bidders’ payoffs are higher than in the Nash equilibrium. In these cases, pre-play cheap talk may affect the outcomes of the game, since the bidders have an incentive to coordinate on such equilibria.
    Keywords: Communication; Collusion; All-pay auctions
    JEL: C72 D44 D82 D83 L41
    Date: 2013
  8. By: Baldwin, John R.<br /> Leung, Danny<br /> Rispoli, Luke
    Abstract: This paper examines differences in labour productivity across small, medium- and large-sized enterprises in Canada. In 2008, the level of labour productivity, as measured by nominal gross domestic product per hour worked, in large businesses was greater than that for medium-sized and small businesses. This gap between large businesses relative to small and medium-sized businesses narrowed slightly during the post-2000 period. The paper also examines the impact of changes in industrial structure on labour productivity.
    Keywords: Business performance and ownership, Economic accounts, Productivity accounts, Small and medium-sized businesses
    Date: 2013–08–26
  9. By: Leonidas A. Zampetakis (1 Department of Production Engineering & Management Technical University of Crete, 73100, Chania, Crete, GR); Afroditi Anagnosti (3 Innovation & Entrepreneurship Unit, Agricultural University of Athens, Iera Odos 75, 11855 Athens, GR); Stelios Rozakis (Department of Agricultural Economics & Rural Development, Agricultural University of Athens)
    Abstract: There is a growing body of literature arguing that an individual's intention to start an enterprise is a strong predictor of individual entrepreneurial action. The present research uses Ajzen’s (1991) theory of planned behavior (TPB) to investigate entrepreneurial intent of agricultural students. The TPB offers a parsimonious explanation of purposeful behavior and has been used with success in previous research studies to explain the entrepreneurial intent of business and engineering students. However, research studies that examine the application of the theory to students from agricultural universities are scarce. In the present research, we empirically examine the TPB using data from 65 students from the Agricultural University of Athens, Greece. Results, using path analysis, support previous studies that used TPB to predict entrepreneurial intentions, which suggest that students’ attitudes towards entrepreneurship are related to their intention (INT) to start a business. In addition perceived behavioral control (PBC) is a strong predictor of INT. As far the role of subjective norm (SN) is concerned, results of the present study suggest that it has a small negative, and statistically significant effect. Furthermore, in line with recent theoretical and empirical studies about the potential role of emotions in entrepreneurship, we investigated the role of anticipated emotional ambivalence in students’ entrepreneurial intent. Results suggest that anticipated emotional ambivalence from nascent entrepreneurship (that is, students’ future oriented emotions relating to the expectancy of feeling both positive and negative affect) relates negatively to perceived behavioral control.
    Keywords: Agricultural university, entrepreneurship education, entrepreneurial intentions
    JEL: A22 C39
    Date: 2013
  10. By: Tarcisio da Graca (Université du Québec (Outaouais)); Robert Masson (Cornell University)
    Abstract: We examine acquisitions to identify the effect that a measure of management entrenchment (Eindex) has on firms¹ values. Greater E-index gives more power to management and less to shareholders. We model the problem in reduced form and as a structural model. The latter suggests: (1) high E-index firms are more valuable and (2) targets with higher E-indices tend to lose negotiation power against the acquirer. These results diverge somewhat from the literature. However, with reduced form, results align with the literature. This raises concerns that interpretations/conclusions about the E-index¹s impact on firms¹ values might be driven by the analytical framework.
    Keywords: Board entrenchment; E-index; event study; structural analysis; mergers and Acquisitions.
    JEL: G34 G14
    Date: 2013–07–01

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