nep-bec New Economics Papers
on Business Economics
Issue of 2016‒03‒10
seventeen papers chosen by
Vasileios Bougioukos
Bangor University

  1. Watercooler chat, organizational structure and corporate culture By Newton, Jonathan; Wait, Andrew; Angus, Simon D.
  2. Productivity effects from inter-industry offshoring and inshoring: Firm-level evidence from Belgium By Bruno Merlevede; Angelos Theodorakopoulos
  3. Competition and corporate control in partial ownership acquisitions By Stühmeier, Torben
  4. Do inflation expectations propagate the inflationary impact of real oil price shocks?: Evidence from the Michigan survey By Miles Parker
  5. Does Mental Health Matter for Firm Performance? Evidence from longitudinal Japanese firm data By KURODA Sachiko; YAMAMOTO Isamu
  6. Firm Entry and Macroeconomic Dynamics: A State-level Analysis By Gourio, Francois; Messer, Todd; Siemer, Michael
  7. The influence of CEO departure type and board characteristics on firm performance By Wided Bouaine; Lanouar Charfeddine; Mohamed Arouri; Frédéric Teulon
  8. Firm Dynamics and Employment Protection: Evidence from Sectoral Data By A. Bottasso; M. Conti; G. Sulis
  9. Audit Fees in Family Firms: Evidence From U.S. Listed Companies By Chiraz Ben Ali; Cédric Lesage
  10. Hierarchical Organization and Performance Inequality: Evidence from Professional Cycling By Bertrand Candelon; Arnaud Dupuy
  11. Replicator dynamics in value chains: Explaining some puzzles of market selection By Cantner, Uwe; Savin, Ivan; Vannuccini, Simone
  12. Capital Market Imperfections and Trade Liberalization in General Equilibrium By Michael Irlacher; Florian Unger
  13. A Rough Guide to New Zealand's Longitudinal Business Database (2nd edition) By Richard Fabling; Lynda Sanderson
  14. Swimming Upstream: Input-output Linkages and the Direction of Product Adoption By Johannes Boehm; Swati Dhingra; John Morrow
  15. CEO Monitoring and board effectiveness: Resolving CEO compensation issue By Chiraz Ben Ali; Frederic Teulon
  16. Who gains from credit granted between firms? Evidence from inter-corporate loan announcements made in China By He, Qing; Lu, Liping; Ongena, Steven
  17. Alliance Formation in a Vertically Differentiated Market By Gabszewicz, J.J.; Marini, M.; Tarola, O.

  1. By: Newton, Jonathan; Wait, Andrew; Angus, Simon D.
    Abstract: Modeling firms as networks of employees, occasional collaborative decision making around the office watercooler changes long run employee behavior (corporate culture). The culture that emerges in a given team of employees depends on team size and on how the team is connected to the wider firm. The implications of the model for organizational design are explored and related to empirical research on communication, innovation, the size and decision making of corporate boards and trends in the design of hierarchical structures.
    Keywords: Shared intentions; hierarchies; teams; delayering; networks; corporate boards
    Date: 2016–02
  2. By: Bruno Merlevede; Angelos Theodorakopoulos
    Abstract: In this paper we confirm the existence of improvements of firm productivity when domestic upstream and downstream firms become more internationalized and therefore offshore (import intermediate inputs) and inshore (export final output for intermediate input usage) intensively. China’s accession to the WTO, which in the case of Belgium reduced trade barriers to China, help us confirm that these inter-industry productivity improvements can also be generated form a quasi-trade liberalization event. Upstream linkages are the dominant source of these productivity benefits and are reaped mainly from medium-low tech, labor intensive and upstream industries. Finally, we draw upon the importance of biases in our results from misspecifications common in the literature. From ignoring the dynamic nature of productivity, results appear overestimated or with sign reversals. From estimating a value-added instead of a gross-output production function, results become spurious.
    Keywords: Offshoring, supply chain, spillovers, productivity
    JEL: F2 F14 F15
    Date: 2016–02
  3. By: Stühmeier, Torben
    Abstract: Competition authorities have a growing interest in assessing the effects of partial ownership arrangements. We show that the effects of such agreements on competition and welfare depend on the intensity of competition in the market and on the firms' governance structure. When assessing the effects of partial ownership, competition policy has to consider both the financial interest and level of control of the acquiring firm in the target firm.
    Keywords: corporate control,merger,partial acquisition
    JEL: L11 L13 L41
    Date: 2016
  4. By: Miles Parker (Reserve Bank of New Zealand)
    Abstract: This paper uses a survey of 1281 New Zealand exporters to investigate the role of firm characteristics in setting export prices. Larger, and more pro-ductive firms, are more likely to differentiate prices across markets. Primary sector firms are more likely to price to market than firms in other sectors, even taking into account other firm characteristics. This contrasts sharply with the commonly-held view that the price of these products is determined on the international market. In a further contribution to the literature, we find that service sector firms can also price to market, at similar rates to manufacturers.
    Date: 2016–02
  5. By: KURODA Sachiko; YAMAMOTO Isamu
    Abstract: This study focuses on firms' profit rate, instead of This study focuses on firms' profit rate, instead of conventional self-reported subjective indices, to objectively assess the total impact of employees' mental illness on firm performance. We found the following results from a unique data set obtained by linking Japanese firms' 2004-2014 financial data to longitudinal information on their workers' mental health. First, long work hours have a small but significant effect on employee' mental health. Second, firms with higher sick leave or turnover rate of employees with mental disorders tend to have lower annual profit rates even after controlling for unobservable firm heterogeneity. These findings imply that the percentage of employees who take sick leave or leave firms due to bad mental health is the tip of the iceberg and should be considered as a proxy variable for the mental health of a firm's employees. Third, the negative effect of workers' bad mental health on firm performance is greater for firms with high fixed employment costs. These facts indicate that keeping employees' mental health in good condition is beneficial not only for employee welfare but also from a business perspective.
    Date: 2016–03
  6. By: Gourio, Francois (Federal Reserve Bank of Chicago); Messer, Todd (Federal Reserve Bank of Chicago); Siemer, Michael (Board of the Governors of the Federal Reserve System)
    Abstract: Using an annual panel of U.S. states over the period 1982-2014, we estimate the response of macroeconomic variables to a shock to the number of new firms (startups). We find that these shocks have significant effects that persist for many years on real gross domestic product, productivity and population. This is consistent with simple models of firm dynamics where a “missing generation” of firms affects productivity persistently.
    Keywords: Business cycles; Firms entry; Firms dynamics; Gross Domestic Product; macroeconomics; productivity; population
    JEL: E31 E32 L1 L16
    Date: 2016–01–31
  7. By: Wided Bouaine; Lanouar Charfeddine; Mohamed Arouri; Frédéric Teulon
    Date: 2016–02–18
  8. By: A. Bottasso; M. Conti; G. Sulis
    Abstract: In this paper we analyse the impact of employment protection legislation (EPL) on firms’ entry and exit rates for a large sample of industries of thirteen countries selected from the most recent version of the OECD Structural and Business Statistics Database. Using a differences-in-differences identification strategy, we find that more stringent EPL is associated to lower entry and exit rates, particularly in industries characterized by higher job reallocation intensity. We also find that both collective and individual dismissal regulations reduce firms’ entry and exit rates. Interestingly, our results suggest that the negative effects of EPL is stronger in the case of firms between one and nine employees while, in the case of larger ones, results are not clear-cut. An extensive sensitivity analysis confirm the robustness of our findings.
    Keywords: entry & exit, turnover, employment protection legislation, reallocation
    JEL: J65 L11 L26
    Date: 2016
  9. By: Chiraz Ben Ali; Cédric Lesage
    Date: 2016–02–18
  10. By: Bertrand Candelon; Arnaud Dupuy
    Date: 2016–02–18
  11. By: Cantner, Uwe; Savin, Ivan; Vannuccini, Simone
    Abstract: The pure model of replicator dynamics though providing important insights in the evolution of markets has not found much of empirical support. This paper extends the model to the case of firms vertically integrated in value chains. We show that i) by taking value chains into account, the replicator dynamics may revert its effect. In these regressive developments of market selection, firms with low fitness expand because of being integrated with highly fit partners, and the other way around; ii) allowing partner's switching within a value chain illustrates that periods of instability in the early stage of industry life-cycle may be the result of an 'optimization' of partners within a value chain providing a novel and simple explanation to the evidence discussed by Mazzucato (1998); iii) there are distinct differences in the contribution to market selection between the layers of a value chain, causing strategic advantages to firms in partnering.
    Keywords: innovation,replicator dynamics,returns to scale,value chain
    JEL: C63 D24 L14 O32
    Date: 2016
  12. By: Michael Irlacher; Florian Unger
    Abstract: This paper develops a new international trade model with capital market imperfections and endogenous borrowing costs in general equilibrium. A key element of our model is that firm heterogeneity arises from the interaction of credit constraints at the firm-level with financial frictions at the country-level. Producers differ in pledgeability of sales which results in firm heterogeneity, if financial institutions are imperfect. We show that endogenous adjustments of capital costs represent a new channel that reduces common gains from globalization. Trade liberalization increases the borrowing rate, leads to a reallocation of market shares towards unconstrained producers and a larger fraction of credit-rationed firms. This increases the within-industry variance of, sales and reduces welfare gains as consumers dislike price heterogeneity. Our theory is consistent with new empirical patterns from World Bank firm-level data. We highlight that credit frictions are positively related to the degree of product market competition and to the variance of sales across firms.
    Keywords: Credit constraints, General equilibrium, Globalization, Imperfect capital markets, Welfare
    JEL: F10 F36 L11
    Date: 2016–02
  13. By: Richard Fabling (Freelance researcher); Lynda Sanderson (New Zealand Treasury)
    Abstract: New Zealand's Longitudinal Business Database is a rich resource for understanding the behaviour of New Zealand firms. This paper provides an introductory guide to the content and structure of the data aimed at new and prospective users. Where relevant, it references other publications which provide greater detail on particular aspects of the data. It also briefly describes access protocols for researchers, and processes for updating and expanding the database.
    Keywords: Firm-level data, New Zealand, Integrated Data Infrastructure (IDI), Longitudinal Business Database (LBD)
    JEL: C80 D22
    Date: 2016–02
  14. By: Johannes Boehm; Swati Dhingra; John Morrow
    Abstract: Multiproduct firms dominate production, and their product turnover contributes substantially to aggregate growth. Firms continually adapt their product mix, but what determines which products firms expand into? Theories of the firm propose that mulitproduct firms choose to make products which need the same know-how or inputs that can't be bought 'off the shelf'. We empirically examine this rationale by testing for firm-level capabilities that are shared across products and manifested through input-output (IO) linkages. We show that a firm's idiosyncratic horizontal and vertical similarity to a product's IO structure predicts product adoption. Using product-specific policy changes for a firm's inputs and outputs, we show that input linkages are the most important, suggesting that firms' product capabilities depend more on economies of scope rather than product market complementarities.
    Keywords: Multiproduct firms, product adoption, vertical linkages, horizontal linkages
    JEL: L1 L2 M2 O3
    Date: 2016–02
  15. By: Chiraz Ben Ali; Frederic Teulon
    Date: 2016–02–18
  16. By: He, Qing; Lu, Liping; Ongena, Steven
    Abstract: Who gains from inter-corporate credit? To answer this question we measure the impact of the announcements of inter-corporate loans in China on the stock prices of the firms involved. We find that the average abnormal return for the issuers of inter-corporate loans is significantly negative, whereas it is positive for the receivers. Issuing firms may be perceived by investors to have run out of worthwhile projects to finance, while receiving firms are being certified as creditworthy. Subsequent firm performance and investment confirms these valuations as overall accurate.
    Keywords: entrusted loan,inter-corporate loan,credit misallocation,certification
    JEL: G30 G14 G21
    Date: 2016
  17. By: Gabszewicz, J.J. (Université catholique de Louvain, CORE, Belgium); Marini, M. (University of Rome La Sapienza); Tarola, O. (University of Rome La Sapienza)
    Abstract: This paper studies how the possibility for firms to sign collusive agreements (as for instance being part of alliances, cartels and mergers) may affect their quality and price choice in a market with vertically differentiated goods. For this purpose we model the firm decisions as a three-stage game in which, at the first stage, firms can form an alliance via a sequential game of coalition formation and, at the second and third stage, they decide simultaneously their product qualities and prices, respectively. In such a setting we study whether there exist circumstances under which either full or partial collusion can be sustained as a subgame perfect Nash equilibrium of the coalition formation game. Also, we analyse the effects of different coalition structures on equilibrium qualities, prices and profits accruing to firms. It is shown that only intermediate coalition structures arise at the equilibrium, with the bottom quality firm always included. Moreover, all equilibrium price and quality configurations always coincide with that observed in the duopoly case, with only two quality variants on sale.
    Keywords: Vertically differentiated market, endogenous alliance formation, coalition structures, price collusion, grand coalition, coalition stability, sequential games of coalition formation
    JEL: D42 D43 L1 L12 L13 L41
    Date: 2015–04–01

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