nep-bec New Economics Papers
on Business Economics
Issue of 2013‒11‒02
twelve papers chosen by
Vasileios Bougioukos
Bangor University

  1. The Impact of China on Stock Returns and Volatility in the Taiwan Tourism Industry By Chang, C.L.; Hsu, H.K.; McAleer, M.J.
  2. Processes of firm growth and diversification: theory and evidence By Alex Coad; Christina Guenther
  3. On welfare losses due to imperfect competition By Robert Ritz
  4. Firms, Destinations, and Aggregate Fluctuations By Isabelle Mejean; Andrei Levchenko; Julian di Giovanni
  5. The Formal Sector Wage Premium and Firm Size for Self-employed Workers By Olivier Bargain; Eliane El Badaoui; Prudence Kwenda; Eric Strobl; Frank Walsh
  6. New technologies and firm organization : the case of electronic traceability systems in French agribusiness By Danielle Galliano; Luis Orozco
  7. Quality Labels and Firm Survival: Some First Empirical Evidence. By Bontemps, Christophe; Bouamra-Mechemache, Zohra; Simioni, Michel
  8. Entry and markup dynamics in an estimated business cycle model By Vivien LEWIS; Arnaud STEVENS
  9. Green Investment Strategies and Export Performance: A Firm-level Investigation By Roberto Antonietti; Alberto Marzucchi
  10. Multiple Market Imperfections, Firm Profitability and Investment. By Giorgio Calcagnini; Annalisa Ferrando; Germana Giombini
  11. New Firms and New Forms of Work By Andreas Koch; Daniel Pastuh; Jochen Späth
  12. The influence of agglomerations on firm profitability By S. DE SCHOENMAKER; P. VAN CAUWENBERGE; H. VANDER BAUWHEDE

  1. By: Chang, C.L.; Hsu, H.K.; McAleer, M.J.
    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: stock returns;firm size;asymmetry;conditional volatility models;tourism;volatility size effects;tourism policy reforms
    Date: 2013–08–01
  2. By: Alex Coad (SPRU, University of Sussex, UK); Christina Guenther (WHU - Otto Beisheim school of Management, Germany)
    Keywords: Diversification, firm growth, Penrose, Machine tools, Growth process
    JEL: L6 L11 L20 L25
  3. By: Robert Ritz
    Abstract: Corporate managers and executive compensation in many industries place significant emphasis on measures of firm size, such as sales revenue or market share. Such objectives have an important yet thus far unquantified impact on market performance. With n symmetric firms, equilibrium welfare losses are of order 1/n4, and thus vanish extremely quickly. Welfare losses are less than 5% for many empirically relevant market structures, despite significant firm asymmetry and industry concentration. They can be estimated using only basic information on market shares. These results also apply to oligopsonistic competition (e.g., for retail bank deposits) and strategic forward trading (e.g., in restructured electricity markets). Forthcoming in Journal of Industrial Economics.
    Keywords: Delegation, forward trading, managerial incentives, market structure, welfare losses.
    JEL: D43 D61 L13 L22 L41
    Date: 2013–10–07
  4. By: Isabelle Mejean (Ecole Polytechnique); Andrei Levchenko (University of Michigan); Julian di Giovanni (International Monetary Fund)
    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 ifrms in generating aggregate fluctuations. We set up a simple multi-sector model of heterogeneous firms selling to multiple markets to motivate a theoretically-founded set of estimating equations that decompose firms' annual sales growth rate into different components. We find that the firm-specic 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 rm size distribution is fat-tailed, idiosyncratic shocks to large rms contribute to aggregate fluctuations (the "granularity" hypothesis of Gabaix, 2011), and (ii) sizable aggregate volatility can arise from idiosyncratic shocks due to input-output linkages across the economy (Acemoglu et al., 2012). We find that firm linkages are approximately twice as important as granularity in driving aggregate fluctuations.
    Date: 2013
  5. By: Olivier Bargain (Aix-Marseille School of Economics); Eliane El Badaoui (Université de Cergy-Pontoise); Prudence Kwenda (University College Dublin); Eric Strobl (Ecole Polytechnique Paris); Frank Walsh (University College Dublin)
    Abstract: We develop a model where workers may enter self-employment or search for jobs as employees and where there is heterogeneity across workers’ managerial ability. Workers with higher skills will manage larger firms while workers with low managerial ability will run smaller firms and will be in self-employment only when they cannot find a salaried job. For these workers self-employment is a secondary/informal form of employment. The Burdett and Mortensen (1998) equilibrium search model is used for illustration as a special case of our more general framework. Empirical evidence from Mexico is provided and demonstrates that firm size wage effects for employees and selfemployed workers are broadly consistent with the model.
    Keywords: Self-employment, Managerial ability, Informal sector
    JEL: J31 O17
    Date: 2013–10–23
  6. By: Danielle Galliano (Economics - Institut national de la recherche agronomique (INRA)); Luis Orozco (LEREPS - Laboratoire d'Etude et de Recherche sur l'Economie, les Politiques et les Systèmes Sociaux - Université des Sciences Sociales - Toulouse I : EA4212 - École Nationale de Formation Agronomique - ENFA - Institut d'Études Politiques [IEP] - Toulouse - Université Toulouse le Mirail - Toulouse II)
    Abstract: This paper considers the relationship between the adoption of electronic traceability systems (ETSs) and the organization of firms. More precisely, it analyzes the respective roles of a firm's organizational structure, and organizational changes, in the process of ETS adoption in agribusiness. We use data from the French "Organizational Changes and Computerization" survey from 2006. We test a probit model to demonstrate the organizational structure and organizational changes underlying the firm's ETS adoption choice. Results show that ETS adoption is strongly favored by organizations with heavy hierarchical structures, standardized managerial practices and contractual mechanisms with external partners. This adoption process seems to coevolve with the organization: firms that implemented an ETS during the observed period (2003-2006) have experienced the most important organizational changes in terms of managerial practices, information systems and contractual relations, as well as the strengthening of the intermediate levels in the hierarchy.
    Keywords: traceability systems; firm organization; technological change; agribusiness
    Date: 2013
  7. By: Bontemps, Christophe; Bouamra-Mechemache, Zohra; Simioni, Michel
    JEL: L10 Q13 Q18
    Date: 2013
  8. By: Vivien LEWIS; Arnaud STEVENS
    Abstract: How do changes in market structure affect the US business cycle? We estimate a monetary DSGE model with endogenous firm/product entry and a translog expenditure function by Bayesian methods. The dynamics of net business formation allow us to identify the extent to which desired price markups and inflation decrease when entry rises. We find that a 1 percent increase in the number of competitors lowers desired markups by 0.17 percent. While markup fluctuations due to sticky prices or exogenous shocks account for a large proportion of US inflation variability, endogenous changes in desired markups also play a non-negligible role.
    Date: 2013–10
  9. By: Roberto Antonietti (Department of Economics and Management “Marco Fanno”, University of Padova, Italy); Alberto Marzucchi (Department of International Economics, Institutions and Development (DISEIS), Catholic University of Milan, Italy and INGENIO (CSIC-UPV), Spain)
    Abstract: In this paper we empirically investigate the relationship between investments in environmentally-oriented equipment and firms’ export performance. Drawing on Porter hypothesis and firm heterogeneity theory, we adopt a structural model where first we estimate the impact of green investment strategies on the level of productive efficiency (TFP), and second we assess whether induced productivity influences the extensive and intensive margin of exports. Relying on a rich firm-level dataset on Italian manufacturing, our results show that firms with higher productivity, induced among other factors by green investment involving environmental protection and reduction in the use of raw materials, have increased commitment to, and profits from, exports, especially towards countries adopting a more stringent environmental regulatory framework. Our evidence provides a ‘green investment-based’ explanation for the link between TFP-heterogeneity and trade.
    Keywords: Exports, Firm Heterogeneity, Green Investment Strategy, Total Factor Productivity
    JEL: Q55 Q56 F14 F18
    Date: 2013–09
  10. By: Giorgio Calcagnini (Department of Economics, Society & Politics, Università di Urbino "Carlo Bo"); Annalisa Ferrando (European Central Bank Frankfurt); Germana Giombini (Department of Economics, Society & Politics, Università di Urbino "Carlo Bo")
    Abstract: This paper investigates the impact of the interaction between product, labor and financial market imperfections on firms’ investment by using a panel data of European firms over the period 1994-2008. It studies the impact of product and labor market regulations on firm investment and how it changes with the degree of financial market imperfections. Findings show that product and labor market regulations negatively affect firm investment by lowering firm profitability. The presence of more efficient financial markets increases firm investment and lowers the negative effects of market regulations.
    Keywords: Investment, Regulation Impact, EPL, Financial Market Development.
    JEL: D21 D43 E22 E60
    Date: 2013
  11. By: Andreas Koch; Daniel Pastuh; Jochen Späth
    Abstract: The present contribution examines whether and how young firms and incumbents differ with regard to selected aspects of work forms and work organization in order to assess their roles for the qualitative changes of work in industrialized countries. Conceptually, we emanate from the approach of negotiated order and we empirically ground our research upon guided interviews conducted with employers and employees in about 50 firms in four distinct industries in Germany. According to our results, new forms of work are particularly widespread in new firms. Most of the young companies in our sample practice autonomous work forms like working on one’s own responsibility and team working more frequently than incumbents, they are more prone to revert to functional flexibility (e.g. changing tasks and duties) and their working time arrangements tend to be more flexible. Altogether, firm age turns out to be an important parameter of new work forms and organization, though it is not the only one. Our results show that also the general and industry-specific framework conditions, a firm’s internal characteristics (e.g. innovation intensity, hierarchies and routines), the relevant actors (management, workforce) and particularly the coaction of these elements are important drivers shaping the overall feature of a firm.
    Keywords: Young firms, Negotiated Order, Quality of Work, Working Time, Autonomy, Work Organization, Germany, Guided Interviews
    JEL: J21 L23 L26
    Date: 2013–10
    Abstract: The geographic concentration of retail firms is a remarkable phenomenon. Existing literature suggests that retail firms benefit from spatial concentration in terms of heightened demand. However, the proximity to other firms also intensifies competition and results in higher costs for land and employees. To examine the net impact of these two opposing agglomeration effects, this paper analyzes the impact of localization, urbanization and diversity on firm profitability. The sample consists of Belgian single-establishment retail firms, during the period 2005-2010. The results show that urbanization has a negative and diversity a positive influence on profitability. Furthermore, weak evidence of localization effects is found, depending on the characteristics of the co-located firms. It seems that establishments of multi-establishment firms contribute positively to the profitability of single-establishment firms, while the presence of other single-establishment firms has a negative influence.
    Keywords: profitability, localization, urbanization, diversity
    Date: 2013–10

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