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on Business Economics |
| By: | Vladimir Sokolov (National Research University Higher School of Economics); Laura Solanko (Bank of Finland) |
| Abstract: | We examine how regional-level political influence affects firm financial performance and survival. Combining representative survey data on mid-sized manufacturing firms in Russia with official registry data, we find that politically influential firms exhibit higher profitability and retain larger financial investments than non-influential firms. Most importantly, our empirical analysis suggests that the benefits of influence may be transient. Influential firms experienced significantly lower growth during our sample period than non-influential firms. Moreover, influential firms had a significantly higher probability of being liquidated than non-influential firms and the likelihood of the subsequent plant utilization by a new firm was higher for the politically influential liquidated firms. |
| Keywords: | political influence, firm performance, firm liquidation, government quality |
| JEL: | D22 D72 G33 G38 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:hig:wpaper:60/fe/2017&r=bec |
| By: | Petr Sedlacek (Bonn University); Benjamin Pugsley (Federal Reserve Bank of NY); Vincent Sterk (University College London) |
| Abstract: | There are vast differences in the growth patterns of firms: high-growth, young businesses, or “gazelles†, account for the vast majority of employment growth at incumbent firms. Using a large administrative panel data set for the United States, we provide evidence that ex-ante differences in the growth potential of firms account for most of the size heterogeneity across firms of a given age. First, we estimate a reduced-form employment process, allowing for heterogeneity in steady-state levels and deriving parameter identification from the autocovariance function of employment. Next, we estimate a general equilibrium firm dynamics model and explore the implications for firm selection and the macro effects of firm-level distortions. |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed017:196&r=bec |
| By: | ShiXue He; Marcel Ausloos |
| Abstract: | Changes in the capital structure before and after the global financial crisis for SMEs are studied, emphasizing their financing problems, distinguishing between internal financing and external financing determinants. The empirical research bears upon 158 small and medium-sized firms listed on Shenzhen and Shanghai Stock Exchanges in China over the period of 2004-2014. A regression analysis, along the lines of the Trade-Off Theory, shows that the leverage decreases with profitability, non-debt tax shields and the liquidity, and increases with firm size and tangibility. A positive relationship is found between firm growth and debt ratio, though not highly significantly. It is shown that the SMEs with high growth rates are those which will more easily obtain external financing after a financial crisis. It is recognized that the China government should reconsider SMEs taxation laws. |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1707.06635&r=bec |
| By: | Ganau, Roberto; Rodríguez-Pose, Andrés |
| Abstract: | We examine whether organized crime affects firms' performance (defined using Total Factor Productivity growth) both directly and indirectly, by downsizing the positive externalities arising from the geographic concentration of (intra- and inter-industry) market-related firms. The analysis uses a large sample of Italian small- and medium-sized manufacturing firms over the period 2010-2013. The results highlight the negative direct effects of organized crime on firms' productivity growth. Any positive effect derived from industrial clustering is thoroughly debilitated by a strong presence of organized crime, and the negative moderation effect of organized crime on productivity growth is greater for smaller than for larger firms. |
| Keywords: | Total Factor Productivity; Organized crime; Industrial clustering; Externalities; Italy |
| JEL: | D24 L25 R11 R12 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:12140&r=bec |
| By: | Hui He; Hanya Li; Jinfan Zhang |
| Abstract: | The paper analyses the effect of the stock market on firm innovation through the lens of initial public offering (IPO) using uniquely matched Chinese firm-level data. We find that IPOs lead to an increase in both the quantity and quality of firm innovation activity. In addition, IPOs expand a firm’s scope of innovation beyond its core business. The impact of IPOs on firm innovation varies across financial constraints, corporate governance, and ownership structures. Our results further illustrate that IPOs induce a firm to increase the number of inventors and enable better retention of existing inventors after the IPO. Finally, we show that the enhanced innovation activity resulting from IPOs increases a firm’s Tobin’s Q in the long run. |
| Date: | 2017–06–30 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:17/147&r=bec |
| By: | Alves, Paulo; Silva, Paulo |
| Abstract: | Using a firm-level survey database covering 50 countries we evaluate firms´ abnormal retained earnings. The results of our work indicate that firms located in emerging markets retain more earnings than firms from developed countries. On the other hand, firms located on common law based countries retain earnings above the expected and higher than firms placed on civil law based countries. A possible explanation, according to our results, can be seen in the economic growth that these countries have shown in the past 20 years. The financial crisis of 2008 and its impact in the abnormal retained earnings can help to validate this result. Finally, we would like to draw attention upon the impact of the firms´ size on abnormal retained earnings. According to our results this relationship is positive. This strongly questions the growth of smaller companies. |
| Keywords: | Abnormal retained earnings; Financing choices; Institutional environment; Small firms. |
| JEL: | G31 G34 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:80243&r=bec |
| By: | Maximiliano González; Alexander Guzmán; Diego Fernando Tellez; María Andrea Trujillo |
| Abstract: | Firms in Latin America could differentiate themselves by adopting better information disclosure practices. In this paper, we construct an Information Disclosure Index (IDI) for a sample of 454 firms in the six largest Latin America countries. We look at 3.191 company reports and show that firms with better disclosure practices have better market valuation (Tobin’s Q) and operating performance (ROE). We then measure the tone of the information disclosed using word content analysis, and find that uncertainty in tone is negatively associated with higher firm valuation (Tobin’s Q) and better financial performance (ROE). |
| Keywords: | Disclosure, Content analysis, Corporate governance, Firm value |
| JEL: | G15 G34 |
| Date: | 2016–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:col:000122:015656&r=bec |
| By: | Luigi Zingales |
| Abstract: | Neoclassical theory assumes that firms have no power of fiat any different from ordinary market contracting, thus a fortiori no power to influence the rules of the game. In the real world, firms have such power. I argue that the more firms have market power, the more they have both the ability and the need to gain political power. Thus, market concentration can easily lead to a “Medici vicious circle,” where money is used to get political power and political power is used to make money. |
| JEL: | G3 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23593&r=bec |
| By: | Burkart, Mike; Miglietta, Salvatore; Ostergaard, Charlotte |
| Abstract: | We study how owners trade off the costs and benefits of establishing a board in a historical setting, where boards are optional and authority over corporate decisions can be freely allocated across the general meeting, the board, and management. We find that informed owners and boards are substitutes, and that boards exist in firms most prone to collective action problems. Boards monitor, advise, and mediate among shareholders, and these different roles entail different allocations of authority. Boards also arise to balance the need for small shareholder protection with the need to curb managerial discretion. |
| Keywords: | authority allocation; Boards; corporate governance; private contracting |
| JEL: | D23 G3 K2 N80 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:12147&r=bec |
| By: | Roberto Ganau; AndrŽs Rodr’guez-Pose |
| Abstract: | We examine whether organized crime affects firms' performance (defined using Total Factor Productivity growth) both directly and indirectly, by downsizing the positive externalities arising from the geographic concentration of (intra- and inter-industry) market-related firms. The analysis uses a large sample of Italian small- and medium-sized manufacturing firms over the period 2010-2013. The results highlight the negative direct effects of organized crime on firms' productivity growth. Any positive effect derived from industrial clustering is thoroughly debilitated by a strong presence of organized crime, and the negative moderation effect of organized crime on productivity growth is greater for smaller than for larger firms. Length: |
| JEL: | J61 R23 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:egu:wpaper:1719&r=bec |