nep-bec New Economics Papers
on Business Economics
Issue of 2013‒09‒13
twelve papers chosen by
Vasileios Bougioukos
Bangor University

  2. Does State Antitrust Enforcement Drive Establishment Exit? By Robert M. Feinberg; Thomas A. Husted; Florian Szücs
  3. Passive partial ownership, sneaky takeover, and merger control By Jovanovic, Dragan; Wey, Christian
  4. Do not wake sleeping dogs: Pay-out policies in founding family firms By Isakov, Dusan; Weisskopf, Jean-Philippe
  5. The macro-dynamics of sorting between workers and firms By Jeremy Lise; Jean-Marc Robin
  6. R&D, IP, and firm profits in the automotive supplier industry By Stefan Lutz
  7. Coping with the Crisis: Recent Evolution in Danish Firms' International Trade Involvement, 2000-2010 By Kaleb Girma Abreha; Valérie Smeets; Frédéric Warzynski
  8. Acquisition of Mines by Resource-importing Firms and Distribution of Profits from Resource Extraction By HIGASHIDA Keisaku
  9. Industry structure dynamics and productivity growth By Lech Kalina
  10. Competition, strategic delegation and delay in technology adoption By A. Mahati; Rupayan Pal
  11. Business cycles in EU new member states: How and why are they different? By Marcin Kolasa
  12. Does the Acquisition of Mines by Firms in Resource-importing Countries Decrease Resource Prices? By HIGASHIDA Keisaku; MORITA Tamaki; MANAGI Shunsuke; TAKARADA Yasuhiro

  1. By: Geoffrey Tate; Liu Yang
    Abstract: We estimate the labor market consequences of corporate diversification using worker-firm matched data from the U.S. Census Bureau. We find evidence that workers in diversified firms have greater cross-industry mobility. Displaced workers experience significantly smaller losses when they move to a firm in a new industry in which their former firm alsooperates. We also find more active internal labor markets in diversified firms. Diversified firms exploit the option to redeploy workers internally from declining to expanding industries. Though diversified firms pay higher wages to retain workers, their labor is also more productive than focused firms of the same size, age, and industry. Overall, internal labor markets provide a bright side to corporate diversification.
    Date: 2013–08
  2. By: Robert M. Feinberg; Thomas A. Husted; Florian Szücs
    Abstract: Previous work has shown that state-level antitrust enforcement activity may have impacts on entry and relocation behavior by U.S. firms. Significant state-level antitrust activity may be an indicator of a perceived adverse business environment and it is found to deter establishment entry, particularly for larger firms in the retail and wholesale sectors. An obvious question is whether establishment exit is affected in a symmetric way, or whether sunk costs of market entry may lead to a smaller impact in terms of the exit decisions. We first combine US Census establishment exit panel data with data for 1998?2006 on US state-level antitrust activity and other measures of state-level business activities that may affect establishment exit. We also consider establishment exit across different broad industry types -- manufacturing, retail and wholesale -- and several firm size categories. Local business cycle factors seem to be the primary driver of exit, though there is some evidence of political and antitrust determinants as well. In another approach, we examine firmlevel exit decisions and the extent to which these respond to state antitrust enforcement, with some indication of antitrust enforcement effects here as well, especially in the wholesale and retail sectors.
    Keywords: antitrust enforcement, state level, firm exit
    JEL: K21 L41 L60 L81
    Date: 2013
  3. By: Jovanovic, Dragan; Wey, Christian
    Abstract: We analyze horizontal mergers when the acquirer holds a passive partial ownership stake (PPO) in the target firm prior to the merger. We show that a PPO reduces the minimal synergy level necessary to make a merger beneficial for consumers. It follows that an antitrust authority ignoring existing PPOs when evaluating merger proposals (which reflects the current EU merger control regime) invites sneaky takeovers: Acquiring firms strategically use PPOs prior to a full merger proposal to get mergers approved which are, in fact, detrimental to consumers. --
    Keywords: Horizontal Mergers,(Passive) Partial Ownership,Antitrust,Synergies,Sneaky Takeovers
    JEL: D43 K21 L13 L41
    Date: 2013
  4. By: Isakov, Dusan; Weisskopf, Jean-Philippe
    Abstract: This article examines founding family influence on pay-out policies for Swiss listed firms over the period 2003-2010. We find that founding family firms have higher dividends and total pay-outs than non-family firms. There is no significant difference between stock repurchases for the two types of firms. We show that specific firm characteristics such as active involvement of family members, the presence of only one or multiple family members or the existence of a second blockholder play an important role for pay-out policies in family firms. Firms using control enhancing mechanisms do not have significantly lower pay-outs. We propose three possible explanations for the observed pay-out policies: private benefit extraction, reputation building, and family legacy. Our findings appear to be consistent with the reputation building hypothesis.
    Keywords: founding family firms ; dual-class shares ; pay-out policy ; dividends ; share repurchases ; minority shareholders ; private benefits
    JEL: G32 G35
    Date: 2013–07–01
  5. By: Jeremy Lise (Institute for Fiscal Studies and University College London); Jean-Marc Robin (Institute for Fiscal Studies and Sciences Po)
    Abstract: We develop an equilibrium model of on-the-job search with ex-ante heterogeneous workers and firms, aggregate uncertainty and vacancy creation. The model produces rich dynamics in which the distributions of unemployed workers, vacancies and worker-firm matches evolve stochastically over time. We prove that the surplus function, which fully characterises the match value and the mobility decision of workers, does not depend on these distributions. We estimate the model on US labour market data from 1951-2007 and predict the fit for 2008-12. We use the model to measure the cyclicality of mismatch between workers and jobs.
    Keywords: On-the-job search, heterogeneity, aggregate fluctuations, mis-match
    JEL: E24 E32 J63 J64
    Date: 2013–08
  6. By: Stefan Lutz
    Date: 2013
  7. By: Kaleb Girma Abreha (Department of Economics and Business, Aarhus University); Valérie Smeets; Frédéric Warzynski (Department of Economics and Business, Aarhus University)
    Abstract: Using a highly disaggregated firm-product-destination level data from Denmark, we document salient features of Danish international production in the recent decade. These include systematic variation in export participation of firms across industries, positive correlation between the scope (number of products exported and markets served) and scale of exporting activities, considerable dominance of multi-product and multi-destination firms, existence of carry-along trade, the prevalence of core and peripheral products in exports, a small role of economy-wide entry and exit of firms and products, and a sizable role of firm-level adding and dropping of products and product-destination combinations as a margin of trade adjustment. Finally, we show that firms responded to the latest economic shock mainly by adjusting the scale of exports and imports. At the same time, changing their products and productdestination combinations helped them to mitigate the negative effects of the shock.
    Keywords: Foreign trade, Trade collapse, Margins of Trade, Denmark
    JEL: F14 L60
    Date: 2013–09–04
  8. By: HIGASHIDA Keisaku
    Abstract: This paper examines the welfare effect of the acquisition of mines by firms in resource-importing countries. In particular, we focus on the distribution of profits from resource extraction between exporting and importing countries. We consider one resource-extracting firm, which is located in a resource-exporting country, and two resource-importing firms, which are located in resource-importing countries. We demonstrate that, when a resource-importing country buys the interests of mines from the resource-extracting firm, the welfare of the resource-exporting country as well as that of resource-importing countries increases. This is because the insufficient supply of resource is mitigated. Subsidy by the government of a resource-importing country encourages the acquisition of mines by the resource-importing firm of the country. However, a part of the subsidy shifts from the resource-importing firm to the resource-exporting country through a price increase of interests. Thus, the welfare of the resource-importing country may decrease. We also consider the case in which resource-importing firms explore new mines in their own countries.
    Date: 2013–09
  9. By: Lech Kalina (Warsaw School of Economics)
    Abstract: Economic theory typically predicts that productivity should increase when a firm’s market is expanding since the benefits of reducing costs are higher when spread across a larger market. On the other hand there is a strong line of research stressing the positive impact of increasing competition and claiming that productivity should jump when a firm’s market is being squeezed by new compe titors. This paper investigates the effects of industry structure dynamics on productivity growth on panel data from industries of ten European countries. The econometric results provide empirical support for p ositive impact of less fragmented market stru ctures on productivity, however results also point out the important role which dynamics of firms turnover play in industry performance.
    JEL: D4 L1
    Date: 2013–09–04
  10. By: A. Mahati (Indira Gandhi Institute of Development Research); Rupayan Pal (Indira Gandhi Institute of Development Research)
    Abstract: This paper examines how strategic managerial delegation affects firms' timing of adoption of a new technology under different modes of product market competition. It demonstrates that delegation has differential impacts on adoption dates under Cournot and Bertrand competition. Delegation with 'own-performance' based incentive schemes always leads to early adoption in markets with Bertrand competition compared to that under no-delegation, but not necessarily so in markets with Cournot competition. It also shows that the ranking of Cournot and Bertrand equilibria in terms of delay in adoption depends on the type of managerial incentive schemes. Adoption occurs earlier (later) in markets with Cournot competition than in markets with Bertrand competition, if product differentiation is high (low), regardless of whether there is no-delegation or delegation with 'own-performance' based incentive schemes. In contrast, under strategic delegation with 'relative-performance' based incentive schemes, adoption dates do not differ across markets with different modes of competition.
    Keywords: Technology adoption, Strategic delegation, Own-performance, Relative-performance, Cournot, Bertrand
    JEL: L13 L22 O31 O32 O33
    Date: 2013–08
  11. By: Marcin Kolasa (National Bank of Poland, Warsaw School of Economics)
    Abstract: This paper uses the business cycle accounting framework to investigate the differences between economic fluctuations in Central and Eastern European (CEE) countries and the euro area. We decompose output movements into the contributions of four economic wedges, affecting the production technology, the agents’ intra- and intertemporal choices, and the aggregate resource constraint. We next analyze the observed cross-country differences in business cycles with respect to these four identified wedges. Our results indicate that business cycles in the CEE countries do differ from those observed in the euro area, even though substantial convergence has been achieved after the eastern EU enlargement. The major differences concern the importance of the intraand intertemporal wedges, which account for a larger proportion of output fluctuations in the CEE region and also exhibit relatively little comovement with their euro area counterparts.
    Keywords: business cycle accounting; business cycle synchronization
    JEL: E32 F44
    Date: 2013
  12. By: HIGASHIDA Keisaku; MORITA Tamaki; MANAGI Shunsuke; TAKARADA Yasuhiro
    Abstract: This paper examines both theoretically and empirically the effects of the acquisition of mines by firms in resource-importing countries on resource prices. In the theoretical part, we consider a simple two-period model. We demonstrate that the acquisition of mines may increase either present or future resource prices. This implies that the consumption of resources in either period may decrease. Strategic behavior of a resource-mining firm, demand for final goods, and extraction costs play key roles. In the empirical part, using a dynamic panel model and oil price data, we estimate the effect of the acquisition of mines on resource prices. We find that prices in the present period increase, while those in the future period decrease.
    Date: 2013–09

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