nep-bec New Economics Papers
on Business Economics
Issue of 2018‒01‒08
thirteen papers chosen by
Vasileios Bougioukos
Bangor University

  1. Badly hurt? Natural disasters and direct firm effects By Noth, Felix; Rehbein, Oliver
  2. Does the Stock Market Make Firms More Productive? By Benjamin Bennett; René Stulz; Zexi Wang
  3. The Productivity Puzzle and Misallocation: An Italian Perspective By Sara Calligaris; Massimo Del Gatto; Fadi Hassan; Gianmarco I. P. Ottaviano; Fabiano Schivardi
  4. State-Owned Enterprises in Emerging Europe: The Good, the Bad, and the Ugly By Uwe Böwer
  5. Friends and Foes at Work: Assigning Teams in a Social Network By Daske, Thomas
  6. Eco-strategies and firm growth in European SMEs By Elisenda Jové-Llopis; Agustí Segarra-Blasco
  7. Gender Quota and Inequalities inside the Boardroom By Antoine Rebérioux; Gwenael Roudaut
  8. Multimarket Linkages, Cartel Discipline and Trade Costs By Agnosteva, Delina; Syropoulos, Constantinos; Yotov, Yoto
  9. The Representation of Managers, Shareholders and other Stakeholders inside the Boardroom: Does it Matter for CSR Commitment? * By Gwenael Roudaut
  10. The Granular Origins of Macroeconomic Fluctuations in Europe By Christian H Ebeke; Kodjovi M. Eklou
  11. Investment climate, outward orientation and manufacturing firm productivity: New empirical evidence By Mai Nguyen; Marie-Ange Veganzones-Varoudakis
  12. Export Performance, Innovation, and Productivity in Indian Manufacturing Firms By Santosh Kumar Sahu; Sunder Ramaswamy; Abishek Choutagunta
  13. Personality Traits of Entrepreneurs: A Review of Recent Literature By Sari Pekkala Kerr; William R. Kerr; Tina Xu

  1. By: Noth, Felix; Rehbein, Oliver
    Abstract: We investigate firm outcomes after a major flood in Germany in 2013. We robustly find that firms located in the disaster regions have significantly higher turnover, lower leverage, and higher cash in the period after 2013. We provide evidence that the effects stem from firms that already experienced a similar major disaster in 2002. Overall, our results document a positive net effect on firm performance in the direct aftermath of a natural disaster.
    Keywords: natural disasters,firm outcomes
    JEL: G21 Q54
    Date: 2017
  2. By: Benjamin Bennett; René Stulz; Zexi Wang
    Abstract: We test the hypothesis that greater stock price informativeness (SPI) leads to higher firm-level productivity (TFP). Management, directly or indirectly, learns more from more informative stock prices, so that more informative stock prices should make firms more productive. We find a positive relation between SPI and TFP. The relation is stronger for smaller, younger, riskier, less capital-intensive, and financially-constrained firms. Product market competition and better governance amplify the relation, while diversification weakens it. We address endogeneity concerns with fixed effects, instrumental variables, and the use of brokerage house research department closures and S&P 500 additions as plausibly exogenous events.
    JEL: D22 G14 G31
    Date: 2017–12
  3. By: Sara Calligaris; Massimo Del Gatto; Fadi Hassan; Gianmarco I. P. Ottaviano; Fabiano Schivardi
    Abstract: Productivity has recently slowed down in many economies around the world. A crucial challenge in understanding what lies behind this \productivity puzzle" is the still short time span for which data can be analysed. An exception is Italy where productivity growth started to stagnate 25 years ago. Italy therefore offers an interesting case to investigate in search of broader lessons that may hold beyond local specific cities. We find that resource misallocation has played a sizeable role in slowing down Italian productivity growth. If misallocation had remained at its 1995 level, in 2013 Italy's aggregate productivity would have been 18% higher than its actual level. Misallocation has mainly risen within sectors than between them, increasing more in sectors where the world technological frontier has expanded faster. Relative specialization in those sectors explains the patterns of misallocation across geographical areas and firm size classes. The broader message is that an important part of the explanation of the productivity puzzle may lie in the rising difficulty of reallocating resources between firms in sectors where technology is changing faster rather than between sectors with different speeds of technological change.
    Keywords: misallocation, TFP, productivity puzzle, Italy
    JEL: D22 D24 O11 O47
    Date: 2017–12
  4. By: Uwe Böwer
    Abstract: State-owned enterprises (SOEs) play an important role in Emerging Europe’s economies, notably in the energy and transport sectors. Based on a new firm-level dataset, this paper reviews the SOE landscape, assesses SOE performance across countries and vis-à-vis private firms, and evaluates recent SOE governance reform experience in 11 Emerging European countries, as well as Sweden as a benchmark. Profitability and efficiency of resource allocation of SOEs lag those of private firms in most sectors, with substantial cross-country variation. Poor SOE performance raises three main risks: large and risky contingent liabilities could stretch public finances; sizeable state ownership of banks coupled with poor governance could threaten financial stability; and negative productivity spillovers could affect the economy at large. SOE governance frameworks are partly weak and should be strengthened along three lines: fleshing out a consistent ownership policy; giving teeth to financial oversight; and making SOE boards more professional.
    Date: 2017–10–30
  5. By: Daske, Thomas
    Abstract: In many firms, production requires the division of staff into teams. If only team performance is observable, moral hazard in teams is inevitable. This variant of moral hazard can be overcome or exacerbated by the interpersonal relationships among team members. I investigate how the division of staff into teams should account for the agents' social network of interpersonal relationships. Considering piece rate compensation for teams, I identify rules for efficient team assignment. Depending on the shape of individual effort costs, team assignment follows either a maximin or maximax rule with regard to team members' willingness to cooperate. Generally, the preferences of staff for team composition can collide with efficient production. A universal mechanism guaranteeing efficiency while delegating responsibility for team assignment to the agents does not exist. Successful staffing thus requires knowledge of the interpersonal relationships at work and, at times, control instead of delegation.
    Keywords: staffing,social preferences,social network,delegation,control
    JEL: D74 D82 D85 M54
    Date: 2017
  6. By: Elisenda Jové-Llopis (Department of Economics – CREIP, Universitat Rovira i Virgili); Agustí Segarra-Blasco (Research Group of Industry and Territory, Universitat Rovira i Virgili)
    Abstract: This study investigates the effects of eco-strategies on firm performance in terms of sales growth in an extensive sample of 11,336 small and medium-sized enterprises (SMEs) located in 28 European countries. Our empirical results suggest that not all eco-strategies are positively related to better performance, at least not in the short term. We find that European companies using renewable energies, recycling or designing products that are easier to maintain, repair or reuse perform better. Those that aim to reduce water or energy pollution, however, seem to show a negative correlation to firm growth. Our results, also, indicate that high investment in eco-strategies improves firm growth, particularly in new members that joined the EU from 2004 onwards. Finally, we observe a U-shaped relationship between eco-strategies and firm growth, which indicates that a greater breadth of eco-strategies is associated with better firm performance. However, few European SMEs are able to either invest heavily or undertake multiple eco-strategies, thus leaving room for policy interventions.
    Keywords: eco-strategy, firm growth, Europe, SMEs
    Date: 2017–12
  7. By: Antoine Rebérioux (EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique); Gwenael Roudaut (Department of Economics, Ecole Polytechnique - Polytechnique - X - CNRS - Centre National de la Recherche Scientifique)
    Abstract: – This paper examines the evolution of within-board gender inequality following the adoption of a board-level gender quota for French listed companies in 2011. We show that the quota has succeeded in opening the doors of boardrooms to new, unseasoned women, who present distinctive characteristics. However, conditional on these characteristics, we provide evidence that female new comers are less likely that their male counterparts (both seasoned and new comers) to hold key positions within boards (namely, audit, compensation and nominating committee membership and chairing). This positional segregation is the main driver of a within-firm gender fees gap that amounts to 5.5% post-quota, as against 3.3% pre-quota.
    Keywords: gender inequality,board gender quota,board committees,gender fees gap
    Date: 2017–10–18
  8. By: Agnosteva, Delina (Towson University); Syropoulos, Constantinos (Drexel University); Yotov, Yoto (Drexel University)
    Abstract: We build a model of tacit collusion between firms that operate in multiple markets to study the effects of trade costs. A key feature of the model is that cartel discipline is endogenous. Thus, markets that appear segmented are strategically linked via the incentive compatibility constraint. Importantly, trade costs affect cartel shipments and welfare not only directly but also indirectly through discipline. Using extensive data on international cartels, we find that trade costs exert a negative and significant effect on cartel discipline. In turn, cartel discipline has a negative and significant impact on trade flows, in line with the model.
    Keywords: endogenous cartel discipline; competitiveness; multimarket contact; welfare; trade costs; trade policy; gravity
    JEL: D43 F10 F12 F13 F15 F42 L12 L13 L41
    Date: 2017–12–05
  9. By: Gwenael Roudaut (Department of Economics, Ecole Polytechnique - Polytechnique - X - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Using multi-source extra-financial rating datasets (Vigéo and Asset4), this paper empirically investigates the relationships between CSR commitment (social, environment and societal) and board composition for French listed firms (SBF120) over the 2006-2011 period. This paper tests the two main hypotheses regarding CSR commitment from the corporate governance perspective: CEO's oppor-tunistic behavior and stakeholder conflict resolution, and compares both shareholder and stakeholder board perspectives. We show that CSR commitment, except environment one, is driven by good corporate governance practices from the shareholder perspective (high independence and low share of insiders). From the stakeholder perspective, social commitment is positively associated with stake-holders' representation inside the boardroom and societal one is positively related to supply-chain stakeholders' representation. These results support the stakeholder conflict resolution hypothesis (value-enhancing view). However, the results are mixed for environmental CSR dimension, suggesting that environmental commitment reduces conflicts with employees but exacerbates them with other stakeholders.
    Keywords: Agency Theory,Board of directors,Corporate Governance,Corporate Social Re- sponsibility,Stakeholder Theory
    Date: 2017–10–25
  10. By: Christian H Ebeke; Kodjovi M. Eklou
    Abstract: This paper investigates the microeconomic origins of aggregate economic fluctuations in Europe. It examines the relevance of idiosyncratic shocks at the top 100 large firms (the granular shocks) in explaining aggregate macroeconomic fluctuations. The paper also assesses the strength of spillovers from large firms onto SMEs. Using firm-level data covering over 14 million firms and eight european countries (Austria, Belgium, Finland, France, Germany, Italy, Portugal and Spain), we find that: (i) 40 percent of the variance in GDP in the sample can be explained by idiosyncratic shocks at large firms; (ii) positive granular shocks at large firms spill over to domestic SMEs’ output, especially if SMEs’ balance sheets are healthy and if SMEs belong to the services and manufacturing sectors.
    Date: 2017–11–07
  11. By: Mai Nguyen (NTU - Nanayang Technological University - Nanayang Technological University); Marie-Ange Veganzones-Varoudakis (CERDI - Centre d'Études et de Recherches sur le Développement International - UdA - Université d'Auvergne - Clermont-Ferrand I - CNRS - Centre National de la Recherche Scientifique)
    Date: 2017–10–18
  12. By: Santosh Kumar Sahu (Assistant Professor, Madras School of Economics); Sunder Ramaswamy (Visiting Distinguished Professor of Economics, Madras School of Economics); Abishek Choutagunta (Institute of Law and Economics, Universität Hamburg)
    Abstract: This study re-examines the relationship between export performance and productivity in manufacturing firms in India for the period 2003-2015, using firm level information. Departing from the earlier studies on India economy, we argue that product innovations boost export performance of the economy. The hypothesis being that, in the post-economic-reforms era competitive export market scenario, productivity alone, without product innovation and participation in R and D cannot drive export performance. We observe that the argument of highly productive firms entering the export market without reallocating resources towards innovation and R and D seems to be invalid in our sample. Nevertheless, we find in our sample, that productivity as a selection criterion coupled with advertising and marketing strategies explains participation in R and D in boosting exports.
    Keywords: Export Performance, Innovation, Productivity, Manufacturing firms, India
    JEL: D20 D24 L16 L6 L60
  13. By: Sari Pekkala Kerr; William R. Kerr; Tina Xu
    Abstract: We review the extensive literature since 2000 on the personality traits of entrepreneurs. We first consider baseline personality traits like the Big-5 model, self-efficacy and innovativeness, locus of control, and the need for achievement. We then consider risk attitudes and goals and aspirations of entrepreneurs. Within each area, we separate studies by the type of entrepreneurial behavior considered: entry into entrepreneurship, performance outcomes, and exit from entrepreneurship. This literature shows common results and many points of disagreement, reflective of the heterogeneous nature of entrepreneurship. We label studies by the type of entrepreneurial population studied (e.g., Main Street vs. those backed by venture capital) to identify interesting and irreducible parts of this heterogeneity, while also identifying places where we anticipate future large-scale research and the growing depth of the field are likely to clarify matters. There are many areas, like how firm performance connects to entrepreneurial personality, that are woefully understudied and ripe for major advances if the appropriate cross-disciplinary ingredients are assembled.
    JEL: D03 D81 D86 L26 M13 O3
    Date: 2017–12

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