nep-bec New Economics Papers
on Business Economics
Issue of 2017‒06‒18
eleven papers chosen by
Vasileios Bougioukos
Bangor University

  1. "Internet and enterprise productivity: evidence from Latin America" By Juan Jung; Enrique López-Bazo; Matteo Grazzi
  2. Personal Bankruptcy Law and Entrepreneurship By Geraldo Cerqueiro; María Fabiana Penas; Robert Seamans
  3. Decomposing Service Exports Adjustments along the Intensive and Extensive Margin at the Firm-Level By Elisabeth Christen; Michael Pfaffermayr; Yvonne Wolfmayr
  4. South-South FDI: Is it really different? By Görg, Holger; Gold, Robert; Hanley, Aoife; Seric, Adnan
  5. Cyclical Job Ladders by Firm Size and Firm Wage By John Haltiwanger; Henry Hyatt; Lisa B. Kahn; Erika McEntarfer
  6. Mandatory adoption of business risk disclosure: evidence from Japanese firms By KIM, Hyonok; YASUDA, Yukihiro
  7. Lobbying in Europe: new firm-level evidence By Dellis, Konstantinos; Sondermann, David
  8. Relationships matter: The impact of bank-firm relationships on mergers and acquisitions in Japan By FRENCH, Joseph; YAN, Juxin; YASUDA, Yukihiro
  9. Estimating the Recession-Mortality Relationship when Migration Matters By Vellore Arthi; Brian Beach; W. Walker Hanlon
  10. Financial Frictions and the Great Productivity Slowdown By Romain A Duval; Gee Hee Hong; Yannick Timmer
  11. Dutch Disease Resistance: Evidence from Indonesian Firms By James Cust; Torfinn Harding; Pierre-Louis Vezina

  1. By: Juan Jung (AQR-IREA, Universitat de Barcelona, Av. Diagonal 690, 08034 Barcelona, Spain.); Enrique López-Bazo (AQR-IREA, Universitat de Barcelona, Av. Diagonal 690, 08034 Barcelona, Spain.); Matteo Grazzi (Competitiveness, technology and innovation division - Inter-American Development Bank, 1300 New York Avenue, NW 20577 Washington DC, USA.)
    Abstract: This paper tests three hypotheses regarding the link between internet and firm productivity: i) internet adoption and use constitute a source of productivity growth for firms in Latin America, ii) the intensity of its use also matters, and iii) the link between the new technologies and productivity levels is not uniform over the whole productivity distribution. The evidence in this paper fills the gap of scarce and fragmented literature focused on Latin America, and is aligned with previous research for more developed regions which has generally recognized that Information and Communication Technologies (ICTs) have radically changed how modern business are conducted, benefitting firm performances through several channels, such as increasing the efficiency of internal processes, expanding market reach or increasing innovation. Our findings suggest that low-medium productive firms benefit more from an expansion in internet adoption and use, in comparison with the most productive ones. If this evidence is supposed to reflect long-term effects, then public policies oriented to massify internet adoption and promote internet use intensively will surely contribute to reduce inequalities of enterprise’s productivity levels, promoting a level playing field among Latin American firms, something especially relevant for the most unequal region of the world.
    Keywords: ICT, Internet, Productivity, firms, Latin America JEL classification:D22, O31, O33, O54.
    Date: 2017–05
  2. By: Geraldo Cerqueiro; María Fabiana Penas; Robert Seamans
    Abstract: We study the effect of debtor protection on firm entry and exit dynamics. We find that more lenient personal bankruptcy laws lead to higher firm entry, especially in sectors with low entry barriers. We also find that debtor protection increases firm exit rates and that this effect is independent of firm age. Our results overall indicate that the wealth insurance provided by personal bankruptcy exemptions induce individuals to embrace entrepreneurship and that this in turn fosters competition in a Schumpeterian sense.
    Keywords: Debtor Protection, Personal Bankruptcy, Entrepreneurship.
    Date: 2017–01
  3. By: Elisabeth Christen (WIFO); Michael Pfaffermayr (WIFO); Yvonne Wolfmayr (WIFO)
    Abstract: Using a panel-data set of Austrian service exporting firms this paper examines the determinants of service exports at the firm-destination country level. We implement a random-effects Heckman sample selection firm-level gravity model as well as a fixed effects Poisson model. Expected firm-level service exports are decomposed into the intensive and extensive margins of adjustment as a response to counterfactual changes. We find market demand to be the key determinant. Results also suggest high service export potentials due to regulatory reform in partner countries within the EU. Adjustments at the extensive margin only play a marginal role. Increasing firm size as well as changes in distance related costs are most effective in developing new export relationships in services.
    Keywords: Services trade, Firm-level evidence, Firm heterogeneity, Gravity model, Sample selection, Intensive and extensive margin of trade
    Date: 2017–06–14
  4. By: Görg, Holger; Gold, Robert; Hanley, Aoife; Seric, Adnan
    Abstract: We compare the performance of Northern and Southern multinationals in Sub-Saharan Africa, and contrast it with local firms in the host country. Employing unique firm level data for 19 Sub-Saharan African countries, we show that firms receiving FDI outperform domestic ones, while the origin of the foreign investor is of minor importance. We use three different definitions of "South" to compare Northern and Southern FDI. Overall, we do not find strong differences in terms of firm productivity growth between Northern and Southern FDI, irrespective of how the latter is defined. However, we find that employment growth is generally higher for firms receiving FDI from other African investors as compared to Northern FDI, and they also receive more technology transfer from their parent company abroad.
    Keywords: South-South FDI,productivity,performance differences,Africa
    JEL: F23 O14
    Date: 2017
  5. By: John Haltiwanger; Henry Hyatt; Lisa B. Kahn; Erika McEntarfer
    Abstract: We study whether workers progress up firm wage and size job ladders, and the cyclicality of this movement. Search theory predicts that workers should flow towards larger, higher paying firms. However, we see little evidence of a firm size ladder, partly because small, young firms poach workers from all other businesses. In contrast, we find strong evidence of a firm wage ladder that is highly procyclical. During the Great Recession, this firm wage ladder collapsed, with net worker reallocation to higher wage firms falling to zero. The earnings consequences from this lack of upward progression are sizable.
    JEL: E24 E32 J63
    Date: 2017–06
  6. By: KIM, Hyonok; YASUDA, Yukihiro
    Abstract: We take advantage of institutional changes and its characteristics in Japan to empirically examine mandatory business risk disclosure. We find that there is a negative impact on total risk from the introduction of mandatory business risk disclosure. This suggests that an increase in business risk disclosure reduces a firm's cost of capital, which is contrary to the results of previous research. However, we also find that there is a positive relationship across firms and years after inception between the amount of business risk disclosure and total risk, indicating that mandatory business risk disclosure has a negative impact on investors' assessment of firms' risk. Although these two effects offset each other, the positive effects of enhanced disclosure of business risks on the cost of capital overcome the negative effects.
    Keywords: Mandatory business risk disclosure, Total risk, Cost of capital
    JEL: G14 M41
    Date: 2016–05
  7. By: Dellis, Konstantinos; Sondermann, David
    Abstract: Lobbying can provide policy makers with important sector-specific information and thereby facilitating informed decisions. If going far beyond this, in particular if successfully influencing policy makers to unnecessarily tighten regulation or not opening already excessively regulated markets, it could potentially reduce overall economic welfare. We create a unique firm-level database on EU lobby activity and firm characteristics. We tend to find that firms in more protected sector, e.g. firms from non-tradable or higher regulated sectors tend to spend more for lobby activities. Also such firms tend to have higher profit margins and lower productivity, as often the case in sheltered sectors. JEL Classification: D72, D78, O38
    Keywords: lobbying, political economy, regulation
    Date: 2017–06
  8. By: FRENCH, Joseph; YAN, Juxin; YASUDA, Yukihiro
    Abstract: We dissect the influence of bank-firm relationships on mergers and acquisitions in Japan. Using a comprehensive data set spanning fifteen years, we show that stronger bank-firm relationships generally increase the likelihood and size of M&A. Contrary to conventional wisdom of the adverse effects of bank-firm relationships in Japan, such as ‘zombie lending', our results indicate that Japanese banks facilitate restructuring in the 2000's. However, in cases where a bank plays a dual role as a lender and shareholder to a firm, the likelihood and size of M&A declines. This result stems from a bank's desire to maintain existing corporate governance mechanisms and control rights.
    Keywords: Mergers and Acquisitions, Relationship Banking, Japan
    JEL: G01 G21 G34
    Date: 2016–06–14
  9. By: Vellore Arthi; Brian Beach; W. Walker Hanlon
    Abstract: A large literature following Ruhm (2000) suggests that mortality falls during recessions and rises during booms. The panel-data approach used to generate these results assumes that either there is no substantial migration response to temporary changes in local economic conditions, or that any such response is accurately captured by intercensal population estimates. To assess the importance of these assumptions, we examine two natural experiments: the recession in cotton textile-producing districts of Britain during the U.S. Civil War, and the coal boom in Appalachian counties of the U.S. that followed the OPEC oil embargo in the 1970s. In both settings, we find evidence of a substantial migratory response. Moreover, we show that estimates of the relationship between business cycles and mortality are highly sensitive to assumptions related to migration. After adjusting for migration, we find that mortality increased during the cotton recession, but was largely unaffected by the coal boom. Overall, our results suggest that migration can meaningfully bias estimates of the impact of business-cycle fluctuations on mortality.
    JEL: I1 J60 N32 N33
    Date: 2017–06
  10. By: Romain A Duval; Gee Hee Hong; Yannick Timmer
    Abstract: We study the role of financial frictions in explaining the sharp and persistent productivity growth slowdown in advanced economies after the 2008 global financial crisis. Using a rich cross-country, firm-level data set and exploiting quasi-experimental variation in firm-level exposure to the crisis, we find that the combination of pre-existing firm-level financial fragilities and tightening credit conditions made an important contribution to the post-crisis productivity slowdown. Specifically: (i) firms that entered the crisis with weaker balance sheets experienced decline in total factor productivity growth relative to their less vulnerable counterparts after the crisis; (ii) this decline was larger for firms located in countries where credit conditions tightened more; (iii) financially fragile firms cut back on intangible capital investment compared to more resilient firms, which is one plausible way through which financial frictions undermined productivity. All of these effects are highly persistent and quantitatively large—possibly accounting on average for about a third of the post-crisis slowdown in within-firm total factor productivity growth. Furthermore, our results are not driven by more vulnerable firms being less productive or having experienced slower productivity growth before the crisis, or differing from less vulnerable firms along other dimensions.
    Date: 2017–05–31
  11. By: James Cust; Torfinn Harding; Pierre-Louis Vezina
    Abstract: Oil and gas extraction may lead to the Dutch disease, i.e. the crowding ot of the manufacturing sector due to rising wages when labor is drawn to the expanding extraction and services sectors. In this paper we exploit the fact that oil and gas discoveries contain an element of chance as well as oil price fluctuations to capture random variation in oil and gas windfalls across Indonesia and identify their effects on manufacturing firms. We find that oil and gas windfalls cause wage growth but that the firm exit rate is unaffected. Firms’ output and labor productivity increase along with wages suggesting where firms are able to respond to booming local demand, and raise productivity in response to upward wage pressures, they can overcome the crowding-out effects from resource windfalls.
    Keywords: Dutch disease, firm level, Indonesia, manufacturing firms, oil and gas
    JEL: O13 O14 Q32
    Date: 2017

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