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on Business Economics |
| By: | UEDA Kenichi; ISHIDE Akira; GOTO Yasuo |
| Abstract: | We confirm, with a twist, that listing on a stock exchange can mitigate the financial constraints of firms, using Japanese firm-level data over the period 1995-2014, controlling for main bank relationships and majority owner influence. Compared to a similar unlisted firm, a listed firm has a lower marginal product of capital and more new borrowings during recessions. Theoretically, we argue that these are the most important variables to uncover differential financial frictions between listed and unlisted firms. However, on average, listed firms do not borrow more over time, but rather maintain lower leverage to mitigate the borrowing constraints. |
| Date: | 2017–06 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:17090&r=bec |
| By: | Caterina Giannetti |
| Abstract: | This paper investigates the level of debt specialization across European firms relying on a cross-country comparable sample of manufacturing firms. We find a non-linear relationship between firm debt specialization (i.e. composition of the various types of debt) and firm size and age. In line with previous evidence for US firms, we observe that small and young firms have a more concentrated debt structure (i.e. they rely on few types of debt). Relying on quasi-experimental setting, we also find that firms having a diversified debt structure are less likely to experience a severe reduction in turnover.Creation-Date: 2016-01-01 |
| Keywords: | Debt concentration, European firm financing, Generalized propensity score. |
| JEL: | C24 G31 |
| URL: | http://d.repec.org/n?u=RePEc:pie:dsedps:2016/211&r=bec |
| By: | Kamata, Isao; Sato, Hitoshi; Tanaka, Kiyoyasu |
| Abstract: | This study examines the role of management practices in the internationalisation of domestic firms through directly exporting and/or supplying to local affiliates of multinationals. An original survey of manufacturing firms in Viet Nam was conducted, investigating their management practices such as human resource management and internationalisation status. The survey results shed light on similarities and dissimilarities among firms in several dimensions of management practices. We found that internationalised firms tended to be more enthusiastic about the formal training of production workers, the modernisation of production and operation, and product and process innovation. Differences in skills and experience requirements for newly employed managers were less recognisable, but internationalised firms tended to have managers who studied overseas. Furthermore, the use of public support to employee training, teamwork in production, and unionisation of employees did not show a significant difference between internationalised and non-internationalised firms. |
| Keywords: | Industrial management,Business enterprises,Globalization,Management Practices,Firm Heterogeneity,Global Value Chains |
| JEL: | F23 F61 M11 M50 |
| Date: | 2017–03 |
| URL: | http://d.repec.org/n?u=RePEc:jet:dpaper:dpaper658&r=bec |
| By: | Kim, Seung-Leul; Lee, Sang-Ho; Matsumura, Toshihiro |
| Abstract: | This article formulates a mixed oligopoly in which a public firm competes with two private firms that may adopt corporate social responsibility (CSR). We investigate the optimal privatization policy and find that, depending on the magnitude of CSR, the optimality of either nationalization or full privatization can hold. In particular, we show that the optimal degree of privatization is decreasing in the magnitude of CSR and thus nationalization can be optimal if they have homogeneous objectives. Under significant heterogeneity of the objectives among firms, however, the optimal degree of privatization is non-monotone with the magnitude of CSR, but full privatization can be optimal. This result suggests that the optimal privatization policy depends on both the magnitude of CSR and the heterogeneity of the objectives among private firms. |
| Keywords: | Corporate social responsibility; partial privatization; mixed oligopoly |
| JEL: | D43 L13 L22 L32 |
| Date: | 2017–06–12 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:79780&r=bec |
| By: | Sonali Das; Volodymyr Tulin |
| Abstract: | This paper studies private investment in India against the backdrop of a significant investment decline over the past decade. We analyze the potential causes of weaker investment at the firm level, using both firm-level financial statements and a novel dataset on firms’ investment project decisions, and find that financial frictions have played a role in the slowdown. Firms with higher financial leverage invest less, as do firms with lower earnings relative to their interest expenses. Consistent with the notion of credit constraints leading to pro-cyclical investment, we also find that firms with higher leverage are (i) less likely to undertake new investment projects, (ii) less likely to complete investment projects once begun, and (iii) undertake shorter-term investment projects. |
| Date: | 2017–06–08 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:17/134&r=bec |
| By: | Tsuyoshi Toshimitsu (School of Economics, Kwansei Gakuin University) |
| Abstract: | Based on a horizontally differentiated duopoly model with network externalities, in which we focus on the role of compatibility between the products, we consider the effect of collusion on social welfare. We demonstrate that collusion improves social welfare, compared to the case of noncooperative Cournot competition, if the level of compatibility between the products under collusion is sufficiently large, given that a network externality is strong. In this case, the collusion is sustainable. |
| Keywords: | collusion, network externality, compatibility, horizontally differentiated duopoly, welfare |
| JEL: | D43 D62 L13 L14 L15 L41 |
| Date: | 2017–06 |
| URL: | http://d.repec.org/n?u=RePEc:kgu:wpaper:163&r=bec |
| By: | Luciano Fanti; Domenico Buccella |
| Abstract: | This paper revisits the strategic trade policy issue by considering a bargaining process over managerial contracts and different firms' organizational structures, that is, either family ownership keeping also the firm's control or atomistic shareholders whose board of directors delegate output choice to managers. We show that, in contrast to the traditional results, a plethora of Nash equilibria emerges and the implementation of trade policies in both countries may be efficient (i.e. national social welfares are higher than under free trade) in the presence of a bargaining process in a sales delegation game, depending on the manager's bargaining power as well as the degree of product competition. |
| Keywords: | Export subsidy/tax; Prisonerâs dilemma; Managerial Delegation; Owner-Manager Bargaining; Cournot duopoly. |
| JEL: | F16 J51 L13 |
| Date: | 2017–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:pie:dsedps:2017/215&r=bec |
| By: | Zhanyun Zhao; Frank Potter; Yuhong Zheng |
| Keywords: | Nonresponse Establishment Surveys Respondent Characteristics Web-Based Survey, CATI |
| JEL: | I |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:171e9c7b261a4c9ab49d438bae03ee6a&r=bec |
| By: | Alghalith, Moawia; Niu, Cuizhen; Wong, Wing-Keung |
| Abstract: | In this paper, we analyze the impacts of joint energy and output prices uncertainties on the inputs demands in a mean-variance framework. We find that the concepts of elasticities and variance vulnerability play important roles in the comparative statics analysis. If the firms' preferences exhibit variance vulnerability, increasing the variance of energy price will necessarily cause the risk averse firm to decrease the demands for the non-risky inputs. Further, we investigate two special cases with only uncertain energy price and only uncertain output price. In the case with only uncertain energy price, we find that the uncertain energy price has no impact on the demands for the non-risky inputs. Besides, if the firms' preferences exhibit variance vulnerability, increasing the variance of energy price will surely cause the risk averse firm to decrease the demand for energy. |
| Keywords: | Price Uncertainty, Mean-Variance, Energy price, Risk |
| JEL: | D81 |
| Date: | 2017–06–17 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:79739&r=bec |
| By: | Kesavayuth, Dusanee; Lee, Sang-Ho; Zikos, Vasileios |
| Abstract: | In this paper, we consider a duopoly with product differentiation and examine the interaction between merger and innovation incentives. The analysis reveals that a merger tends to discourage innovation, unless the investment cost is sufficiently low. This result holds whether or not side payments between firms are allowed. When side payments are permitted, a bilateral merger-to-monopoly is always profitable, a standard result in the literature. When side payments are not permitted, however, we show that a merger is not profitable when the efficiency of the new technology is relatively high and the investment cost is below a particular level. |
| Keywords: | Merger, R&D, innovation, differentiated products |
| JEL: | D21 L13 L41 O31 |
| Date: | 2017–06–21 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:79821&r=bec |
| By: | Corbae, Dean (University of Wisconsin - Madison); D'Erasmo, Pablo (Federal Reserve Bank of Philadelphia) |
| Abstract: | In this paper, we ask how bankruptcy law affects the financial decisions of corporations and its implications for firm dynamics. According to current U.S. law, firms have two bankruptcy options: Chapter 7 liquidation and Chapter 11 reorganization. Using Compustat data, we first document capital structure and investment decisions of non-bankrupt, Chapter 11, and Chapter 7 firms. Using those data moments, we then estimate parameters of a firm dynamics model with endogenous entry and exit to include both bankruptcy options in a general equilibrium environment. Finally, we evaluate a bankruptcy policy change recommended by the American Bankruptcy Institute that amounts to a \fresh start" for bankrupt _rms. We find that changes to the law can have sizable consequences for borrowing costs and capital structure, which via selection affects productivity (allocative effciency rises by 2:58%) and welfare (rises by 0:54%). |
| Keywords: | bankruptcy law; corporations; United States |
| Date: | 2017–06–13 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedpwp:17-14&r=bec |
| By: | Kohn, David (Universidad Cat´olica de Chile); Leibovici, Fernando (Federal Reserve Bank of St. Louis); Szkup, Michal (University of British Columbia) |
| Abstract: | We study the role of financial frictions and balance-sheet effects in accounting for the dynamics of aggregate exports in large devaluations. We investigate a small open economy with heterogeneous firms, where firms face financing constraints and debt can be denominated in foreign units. We find that these channels can explain only a small fraction of the dynamics of exports observed in the data. While these frictions distort production and investment decisions, they affect exports significantly less since firms reallocate sales across markets in response to real exchange rate changes. We document the importance of this mechanism using plant-level data. |
| Keywords: | Financial frictions; large devaluations; export dynamics; balance-sheet effects. |
| JEL: | F1 F4 G32 |
| Date: | 2017–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedlwp:2017-013&r=bec |
| By: | Seven Ağır (Department of Economics, Middle East Technical University, Ankara, Turkey); Cihan Artunç (Department of Economics, University of Arizona, Tucson, Arizona, USA) |
| Abstract: | In 1942, the Republic of Turkey promulgated a controversial tax on personal wealth to finance mobilization of the army and curb inflation. The extraordinary tax was arbitrarily assessed and the burden fell disproportionately on non-Muslim minorities. The precise transformative effect of the tax on Turkey’s commercial life is not well understood. This article assembles a new dataset of firms operating in Istanbul to show the tax led to a dramatic rise on the liquidation of enterprises with non-Muslim ownership but no effect on Muslims. At the same time, the tax caused a sharp decline in the formation of new non-Muslim firms and a commensurate increase in the number of Muslim firms. The results show that the Wealth Tax forced the dissolution of otherwise productive, older firms and contributed to the further nationalization of the economy. |
| Keywords: | Turkish economic history, wealth tax, firm survival |
| JEL: | N84 N85 O1 |
| Date: | 2017–06 |
| URL: | http://d.repec.org/n?u=RePEc:met:wpaper:1707&r=bec |
| By: | Dean Corbae; Pablo D'Erasmo |
| Abstract: | In this paper, we ask how bankruptcy law affects the financial decisions of corporations and its implications for firm dynamics. According to current U.S. law, firms have two bankruptcy options: Chapter 7 liquidation and Chapter 11 reorganization. Using Compustat data, we first document capital structure and investment decisions of non-bankrupt, Chapter 11, and Chapter 7 firms. Using those data moments, we then estimate parameters of a firm dynamics model with endogenous entry and exit to include both bankruptcy options in a general equilibrium environment. Finally, we evaluate a bankruptcy policy change recommended by the American Bankruptcy Institute that amounts to a “fresh start” for bankrupt firms. We find that changes to the law can have sizable consequences for borrowing costs and capital structure which via selection affects productivity (allocative efficiency rises by 2.58%) and welfare (rises by 0.54%). |
| JEL: | E22 G32 G33 |
| Date: | 2017–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23515&r=bec |