nep-bec New Economics Papers
on Business Economics
Issue of 2017‒04‒23
ten papers chosen by
Vasileios Bougioukos
Bangor University

  1. Gender Quotas in the Board Room and Firm Performance: Evidence from a Credible Threat in Sweden By Tyrefors Hinnerich, Björn; Jansson, Joakim
  2. How the corporate governance mechanisms affect bank risk taking By Mamatzakis, Emmanuel; Zhang, Xiaoxiang; Wang, Chaoke
  3. The Productivity Advantage of Serial Entrepreneurs By Kathryn L. Shaw; Anders Sørensen
  4. Firm Size Distribution, Production Efficiency, and Returns to Scale: A Stochastic Frontier Approach By Hien Thu Pham; Shino Takayama
  5. Revisiting the “Missing Middle†: Productivity Analysis By Hien Thu Pham; Shino Takayama
  6. When Harry Fired Sally: The Double Standard in Punishing Misconduct By Egan, Mark L.; Matvos, Gregor; Seru, Amit
  7. The Impact of Protection on Observed Productivity Distributions By Igor Bagayev; Ronald B. Davies
  8. Women Directors' Compensation and Firm Performance of an Emerging Economy: India By Rakesh Radav
  9. Investor State Dispute Settlement and Multinational Firm Behavior By Schjelderup, Guttorm; Stähler, Frank
  10. Does the catering theory of dividend apply to the French listed firms? By Kamal Anouar; Nicolas Aubert

  1. By: Tyrefors Hinnerich, Björn (Research Institute of Industrial Economics (IFN)); Jansson, Joakim (Research Institute of Industrial Economics (IFN))
    Abstract: Board room quotas have recently received an increasing amount of attention. This paper provides novel evidence on firm performance from an exogenous change in female board participation in Sweden. We use the credible threat, aimed at listed firms, of a quota law enacted by the Swedish deputy prime minister as an exogenous variation. The threat caused a substantial and rapid increase in the share of female board members in firms listed on the Stockholm stock exchange. This increase was accompanied by an increase in different measures of firm performance in the same years, which were related to higher sales and lower labor costs.
    Keywords: Gender quotas; Corporate boards; Firm performance
    JEL: G34 G38 J16 J48 J78 M12 M51
    Date: 2017–04–18
  2. By: Mamatzakis, Emmanuel; Zhang, Xiaoxiang; Wang, Chaoke
    Abstract: The effectiveness of the management team, ownership structure and other corporate governance systems in determining appropriate risk taking is a critical issue in a modern commercial bank. Appropriate risk management techniques and structures within financial institutions play an important role to ensure the stability of economy. After analyzing 43 Asian banks over the period from 2006 to 2014, I find that banks with strong corporate governance are associated with higher risk taking. More specifically, banks with intermediate size of board, separation of CEO and chairman of board, and audited by Big Four audit firm, are likely higher risk taking. Overall, my findings provide some new perspectives into the governance mechanisms that affect risk taking on commercial banks.
    Keywords: Banks, Risk taking, Corporate governance
    JEL: G21 G32 G39
    Date: 2017–04–04
  3. By: Kathryn L. Shaw; Anders Sørensen
    Abstract: Serial entrepreneurs, who open more than one business, are found to have higher sales and higher productivity than novice entrepreneurs, who open one business. Using panel data on entrepreneurs and their firms from Denmark for 2001-2013, the serial entrepreneur has 67% higher sales than the novice, but also opens firms that are larger in terms of the initial capital and labor, and thus is 39% more productive. There are subsets of firms that perform especially well – serial entrepreneurs that hold a portfolio of overlapping ongoing firms perform the best, as do those that open as limited liability firm rather than proprietorships. Female serial entrepreneurs do as well as male serial entrepreneurs relative to the performance of novices of their own genders. The second firms of the serial entrepreneurs also stay in business longer than the first (and only) firms of the novices.
    JEL: G24 J24 L26 M13
    Date: 2017–04
  4. By: Hien Thu Pham (School of Economics, The University of Queensland); Shino Takayama (School of Economics, The University of Queensland)
    Abstract: This paper empirically investigates the relationship between firm size, production efficiency, and returns to scale. Using a recently developed stochastic frontier approach and data from Vietnam, our analysis shows that across all of the sectors we consider, production efficiency is most variable among middle-sized firms, with these firms across all sectors tending to have the lowest production efficiency. While most firms across different sized groups show constant returns-to-scale technologies, our analysis using Spearman coefficients shows that there is a significant difference in technologies and this difference varies substantially across size groups in all sectors. Furthermore, we show that the least-efficient size also differs across sectors. Although our analysis is a snapshot of the Vietnamese manufacturing industry, the diverse production efficiencies in the middle-sized groups can be thought of as a risk that small-sized firms would face in expanding their business.
    Keywords: Firm size distribution, Missing middle, Productivity, Efficiency, Stochastic frontier.
    JEL: D21 D22 L25
    Date: 2017–04–19
  5. By: Hien Thu Pham (School of Economics, The University of Queensland); Shino Takayama (School of Economics, The University of Queensland)
    Abstract: This paper investigates empirically the relationship between firm size and production effi- ciency and inefficiency associated with the production scale. We study the possible sources of the missing middle phenomenon, which refers to the fact that most employment in developing countries is located in either small-sized or large-sized firms. Using Vietnamese data, we show that middle-sized firms’ production efficiencies tend to be lower than small-sized or large-sized firms in most of the manufacturing industries, that the least efficient firm tends to be middle-sized, and that efficiency scores are more diverse for middle-sized firms, which is arguably associated with the uncertainty that a small firm faces when increasing its size. Our work also indicates that the large-sized firms may be unable to fully utilize their inputs.
    Keywords: firm size distribution, missing middle, productivity, efficiency, data envelopment analysis, free disposal hull
    JEL: D21 D22 L25
    Date: 2017–04–17
  6. By: Egan, Mark L. (University of MN); Matvos, Gregor (University of Chicago); Seru, Amit (Stanford University)
    Abstract: We examine gender discrimination in the financial advisory industry. We study a less salient mechanism for discrimination, firm discipline following missteps. There are substantial differences in the punishment of misconduct across genders. Although both female and male advisers are disciplined for misconduct, female advisers are punished more severely. Following an incidence of misconduct, female advisers are 20% more likely to lose their jobs and 30% less likely to find new jobs relative to male advisers. Females face harsher punishment despite engaging in less costly misconduct and despite a lower propensity towards repeat offenses. Relative to women, men are three times as likely to engage in misconduct, are twice as likely to be repeat offenders, and engage in misconduct that is 20% costlier. Evidence suggests that the observed behavior is not driven by productivity differences across advisers. Rather, we find supporting evidence for taste-based discrimination. For females, a disproportionate share of misconduct complaints is initiated by the firm, instead of customers or regulators. Moreover, there is significant heterogeneity among firms. Firms with a greater percentage of male executives/owners at a given branch tend to punish female advisers more severely following misconduct and also tend to hire fewer female advisers with past record of misconduct.
    JEL: D18 G24 G28 J71
    Date: 2017–03
  7. By: Igor Bagayev; Ronald B. Davies
    Abstract: As is well established, one prediction of the heterogenous firms literature spearheaded by Melitz (2003) is that trade liberalization, by increasing import competition, drives less productive domestic firms from the market. This increases average productivity of the domestic economy via the “selection effect”. In addition, it has the potential to affect the skewness of the observed productivity distribution, i.e. the gap between the productivity of the median firm and average productivity. We examine these predictions empirically using data on 28 sectors across 99 countries. On the whole, we find that higher protection levels lower average productivity and drive a larger wedge between mean and median productivity. This latter suggests that policy decisions based on mean outcomes may arrive at different conclusions than those based on median voters.
    Keywords: Productivity distribution; Heterogeneous firms; Non-tariff measures
    JEL: F12 F13
    Date: 2017–02
  8. By: Rakesh Radav (University of Latvia, Department of Management)
    Abstract: This probably maiden study for Indian financial market on executive compensation uses novel approach by using data of women director's compensation of firm listed at Bombay stock exchange (BSE)India. The methodology adopted for this study is multivariate regression method; this method is common for the research on compensation, on the basis of the survey of literature which treats total compensation paid to the director as dependent variable and firm performance as independent variable. This study adds to the literature one more equation that is impact of firm performance (dependent variable) on compensation (independent variable). Further by using the holistic combination which is rare in the literature of executivecompensation, both measures of firm performance mainly accounting measures (EPS, ROCE and RONW) and market measures (P/E, P/BV) gives comprehensive view of firm performance in relation to compensation. The control variables mainly net sales, R and D and total assets are drawn from literature often known as instrumental variable approach in econometrics. The boundary condition for the sample is BSE-500 firms listed at Bombay stock exchange out of this BSE-500 firms sample of 407 firms are used for study.
    Keywords: Corporate governance, emerging economy, executive compensation, firm performance, India, Indian firms, women director
    JEL: G34
    Date: 2017–03
  9. By: Schjelderup, Guttorm (Dept. of Business and Management Science, Norwegian School of Economics); Stähler, Frank (School of Business and Economics, University of Tübingen)
    Abstract: Investor-state dispute settlements (ISDS) were supposed to become an integral part of multilateral trade and investment agreements although the partner countries of these deals do not suffer from substantial institutional weakness. This paper shows why multinational firms lobby for ISDS also in this environment beyond the potential compensation an ISDS provision may offer. ISDS makes them more aggressive by increasing cost-reducing investment. Therefore, potential compensations to a foreign investor do not imply a zero-sum game, and competition with a domestic firm does not necessarily help but may imply even more excessive investment.
    Keywords: Investor-State Dispute Settlement; Mulitnational Enterprises; Foreign Direct Investment; TTIP; TPP
    JEL: F21 F23 F53 F55
    Date: 2017–03–30
  10. By: Kamal Anouar (GRM - Groupe de Recherche en Management - EA 4711 - IAE Toulon - Institut d'Administration des Entreprises (IAE) - Toulon - Institut d'Administration des Entreprises (IAE) - Nice - UTLN - Université de Toulon - Université Nice Sophia Antipolis [UNS] : EA4711); Nicolas Aubert (CERGAM - Centre d'Études et de Recherche en Gestion d'Aix-Marseille - Université Paul Cézanne - Aix-Marseille 3 - AMU - Aix Marseille Université)
    Abstract: This paper tests the catering theory of dividend in the French market. It investigates how prevailing investor's demand for dividend payers proxied by the dividend premia affects the dividend policy. The dividend premia are measured at the market level and at the firm level. We find that the market demand for dividends measured by dividend premia affects the decision to start, to continue or to omit to pay dividends and the decision to increase the dividends. However, catering theory does not seem to affect the magnitude of the dividend changes since most results are not significant.
    Keywords: finance, Behavioral corporate, Catering, Dividend premium,Dividends, Payout policy
    Date: 2016–11–23

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