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on Business Economics |
| By: | Chia-Lin Chang; Hui-Kuang Hsu; Michael McAleer (University of Canterbury) |
| Abstract: | This paper investigates the stock returns and volatility size effects for firm performance in the Taiwan tourism industry, especially the impacts arising from the tourism policy reform that allowed mainland Chinese tourists to travel to Taiwan. Four conditional univariate GARCH models are used to estimate the volatility in the stock indexes for large and small firms in Taiwan. Daily data from 30 November 2001 to 27 February 2013 are used, which covers the period of Cross-Straits tension between China and Taiwan. The full sample period is divided into two subsamples, namely prior to and after the policy reform that encouraged Chinese tourists to Taiwan. The empirical findings confirm that there have been important changes in the volatility size effects for firm performance, regardless of firm size and estimation period. Furthermore, the risk premium reveals insignificant estimates in both time periods, while asymmetric effects are found to exist only for large firms after the policy reform. The empirical findings should be useful for financial managers and policy analysts as it provides insight into the magnitude of the volatility size effects for firm performance, how it can vary with firm size, the impacts arising from the industry policy reform, and how firm size is related to financial risk management strategy. |
| Keywords: | Tourism, firm size, stock returns, conditional volatility models, volatility size effects, asymmetry, tourism policy reform |
| JEL: | C22 G18 G28 G32 L83 |
| Date: | 2013–08–13 |
| URL: | http://d.repec.org/n?u=RePEc:cbt:econwp:13/27&r=bec |
| By: | Dinh Thi Thanh Binh (Faculty of International Economics, Foreign Trade University); Le Minh Ngoc (Faculty of International Economics, Foreign Trade University); Nguyen Huu Thinh (Faculty of International Economics, Foreign Trade University); Bui Cao Khai (Faculty of International Economics, Foreign Trade University); Tran Duy Hung (Faculty of International Economics, Foreign Trade University); Nguyen Viet Duong (Faculty of International Economics, Foreign Trade University); Le Thi Thu Trang (Faculty of International Economics, Foreign Trade University) |
| Abstract: | This paper applies the ordinary least square regression model to estimate the effects of the human capital on the business performance of small and medium enterprises (SMEs) in Vietnam. We exploit the cross-sectional data of SMEs for the year 2009. The estimated results show that basic and professional education of the firm owner are important factors affecting the success of the firm. Further, experience in owning a business before can help the firm owners enhance their performance. Finally, knowledge from learning is seen to have a strong effect on entrepreneurial performance. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:dpc:wpaper:0313&r=bec |
| By: | Julian Di Giovanni; Andrei A. Levchenko; Isabelle Méjean |
| Abstract: | This paper uses a database covering the universe of French firms for the period 1990- 2007 to provide a forensic account of the role of individual firms in generating aggregate fluctuations. We set up a simple multi-sector model of heterogeneous firms selling to multiple markets to motivate a theoretically-founded decomposition of firms' annual sales growth rate into different components. We find that the firm-specific component contributes substantially to aggregate sales volatility, mattering about as much as the components capturing shocks that are common across firms within a sector or country. We then decompose the firm-specific component to provide evidence on two mechanisms that generate aggregate fluctuations from microeconomic shocks highlighted in the recent literature: (i) when the firm size distribution is fat-tailed, idiosyncratic shocks to large firms directly contribute to aggregate fluctuations; and (ii) aggregate fluctuations can arise from idiosyncratic shocks due to input-output linkages across the economy. Firm linkages are approximately three times as important as the direct effect of firm shocks in driving aggregate fluctuations. |
| Keywords: | Aggregate Fluctuations, Firm-Level Shocks, Large Firms, Linkages. |
| JEL: | E32 F12 F41 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:1387&r=bec |
| By: | Emilie Dargaud (University of Lyon & CNRS & GATE); Andrea Mantovani (University of Bologna & IEB); Carlo Reggiani (University of Manchester) |
| Abstract: | The fight against cartels is a priority for antitrust authorities on both sides of the Atlantic. What differs between the EU and the US is not the basic toolkit for achieving deterrence, but to whom it is targeted. In the EU, pecuniary sanctions against the firm are the only instruments available to the Commission, while in the US criminal sanctions are also widely employed. The aim of this paper is to compare two different types of fines levied on managerial firms when they collude. We consider a profit based fine as opposed to a delegation based fine, with the latter targeting the manager in a more direct way. Under the assumption of revenue equivalence, we find that the delegation based fine, although distortive, is more effective in deterring cartels than the profit based one. When evaluating social welfare, a trade-off between deterrence and output distortion can arise. However, if the antitrust authority focuses on consumer surplus, then the delegation based fine is to be preferred. |
| Keywords: | Cartel policy, managerial firms, collusion |
| JEL: | K21 L44 K42 L21 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:ieb:wpaper:2013/6/doc2013-31&r=bec |
| By: | Elena Nikolova (EBRD); Dora Simroth (European School of Management and Technology) |
| Abstract: | This paper studies the effect of religious and linguistic diversity in a given locality on individual entrepreneurial behaviour, and finds that cultural diversity and entrepreneurship follow an inverted U-shaped pattern. We make three theoretical contributions. Unlike previous research, we are able to analyse both the attempt to establish an entrepreneurial business (‘entrepreneurial trial’) and success of entrepreneurs. Moreover, we argue that the two types of diversity matter at different stages of entrepreneurship – religious diversity is tightly linked to entrepreneurial trial, while linguistic heterogeneity affects entrepreneurial success. In addition, by identifying a non-linear relationship between diversity and entrepreneurship, we put into perspective previous research that is divided on whether cultural heterogeneity positively or negatively affects firm, regional and country performance. We use a new survey data set that covers more than 30,000 households in eastern Europe and central Asia (the Life in Transition Survey 2010). |
| Keywords: | entrepreneurship, transition region, diversity |
| JEL: | L26 P31 Z12 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:ebd:wpaper:158&r=bec |
| By: | Pablo D. Fajgelbaum |
| Abstract: | This paper develops a model to study the aggregate effects of labor market frictions in an open economy through their impact on the growth and investment decisions of firms. The model features interactions between firms' dynamic fixed investments in exporting and search frictions with job-to-job mobility. Search frictions induce slow firm growth and are a source of dispersion in firm size and export status. Job-to-job transitions are a crucial ingredient of the analysis, as in their absence search frictions do not affect outcomes per worker. The model is tractable for general-equilibrium analysis and accommodates several extensions which are useful for quantitative work. A calibration to Argentina's economy suggests that frictions in job-to-job mobility may have considerable effects on firm growth and aggregate income, and that barriers to worker mobility across firms may be relevant to measure the gains from international trade. |
| JEL: | D92 F16 J62 L11 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19492&r=bec |
| By: | Kim Huynh; Teodora Paligorova; Robert Petrunia |
| Abstract: | A large body of empirical literature investigates differences in financing structures across firms. Private firms’ financing receives little attention due to the lack of data. Using administrative confidential data on the universe of Canadian corporate firms, we compare financing relationships for private and public firms. Leverage ratios are lower for public firms and the difference is almost entirely driven by private firms’ stronger reliance on short-term debt. We also find that private and public firms’ debt financing responds differently to industry shocks. In periods of positive industry shocks, private firms rely more on long-term debt than public firms, while the former use more short-term debt when industry conditions deteriorate. |
| Keywords: | Credit and credit aggregates; Financial markets |
| JEL: | G30 L11 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:bca:bocawp:13-36&r=bec |
| By: | Verona, Fabio (Bank of Finland Research) |
| Abstract: | In this paper, I introduce lumpy micro-level capital adjustment into a sticky information general equilibrium model. Lumpy adjustment arises because of inattentiveness in capital investment decisions instead of the more common assumption of non-convex adjustment costs. The model features inattentiveness as the only source of stickiness. I find that the model with lumpy investment yields business cycle dynamics which differ substantially from those of an otherwise identical model with frictionless investment and are much more consistent with the empirical evidence. These results therefore strengthen the case in favour of the relevance of microeconomic investment lumpiness for the business cycle. |
| Keywords: | sticky information; general equilibrium; lumpy investment; business cycle |
| JEL: | D83 E10 E22 E32 |
| Date: | 2013–08–17 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:bofrdp:2013_016&r=bec |
| By: | Lei Ji (Ofce sciences-po,skema Business school) |
| Abstract: | I consider directed technical change in an economy where market structure is endogenous. Endogeneity of market structure leads to both theoretical and empirical implications that are substantially different from those in the existing literature and that in some cases are rather surprising. There are two dimensions of directed technical change: directed firm entry new firms enter the industry with higher returns and directed in-house research and development (R&D is higher in the industry with higher returns.). Directed firm entry responds to the industry market size effect and the price effect as in the existing literature. In sharp contrast to the existing literature, directed R&D depends on firm rather than industry market size. Furthermore, the firm’s market size is endogenous, and its response to economic conditions affect several results on the behavior of directed technical change. The endogeneity of firm size has generally been ignored in the previous literature. Directed technical change alters the relative demands for factors of production and leads to a change in relative factor returns. Directed firm entry changes relative factor returns through a social return to variety an externality, and directed RD changes relative factor returns through changes in relative factor productivities. Empirically, the second channel is the main force shaping relative factor productivities and hence relative factor returns. The model also includes fixed operating cost, which turns out to be important for the direction of RD and for the existence of balanced growth path BGP for the economy. The model provides a complete solution for the economy’s transition dynamics as well as its balanced growth path. |
| Keywords: | Directed technical change.Endogenous market structure,Relative factor returns |
| JEL: | E25 O30 O31 O33 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:fce:doctra:1318&r=bec |
| By: | Heitor Almeida; Murillo Campello; Igor Cunha; Michael S. Weisbach |
| Abstract: | Ensuring that a firm has sufficient liquidity to finance valuable projects that occur in the future is at the heart of the practice of financial management. Yet, while discussion of these issues goes back at least to Keynes (1936), a substantial literature on the ways in which firms manage liquidity has developed only recently. We argue that many of the key issues in liquidity management can be understood through the lens of a framework in which firms face financial constraints and wish to ensure efficient investment in the future. We present such a model and use it to survey many of the empirical findings on liquidity management. Much of the variation in the quantity of liquidity can be explained by the precautionary demand for liquidity. While there are alternatives to cash holdings such as hedging or lines of credit, cash remains “king”, in that it still is the predominate way in which firms ensure future liquidity for future investments. We discuss theories on the choice of liquidity measures and related empirical evidence. In addition, we discuss agency-based theories of liquidity, the real effects of liquidity choices, and the impact of the 2008-9 Financial Crisis on firms’ liquidity management. |
| JEL: | G31 G32 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19502&r=bec |