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on Business Economics |
| By: | Antoine Habersetzer, Rikard Eriksson, Heike Mayer |
| Abstract: | The aim of this paper is to assess the importance of industry experience and home advantage of entrepreneurs for the competitiveness of new firms in the periphery. We assume that spinoffs founded by local entrepreneurs are generally the most competitive form of entry, and show the highest comparative advantage in peripheral regions. We use matched employer-employee data for Sweden to test the effect of industry experience and home advantage on firm survival (logistic regressions), and job growth of surviving firms (OLS regression) during the period 2004-2012. Our results suggest that industry experience is more important than home advantage for firm survival, but that firms in core areas do benefit from home advantage. Regarding job growth, home advantage seems to be more important than industry experience but with varying significance over the regional hierarchy. After controlling for survival, the positive effect on job growth of being locally embedded seems to be confined to peripheral entrepreneurs. |
| Keywords: | Entrepreneurship, spinoffs, home advantage, periphery |
| Date: | 2017–05 |
| URL: | http://d.repec.org/n?u=RePEc:rdv:wpaper:credresearchpaper14&r=bec |
| By: | Andrea Garnero; François Rycx; Isabelle Terraz |
| Abstract: | How do firm-level collective agreements affect firm performance in a multi-level bargaining system? Using detailed Belgian linked employer-employee panel data, our findings show that firm agreements increase both wage costs and productivity (with respect to sector-level agreements). Relying on a recent approach developed by Bartolucci (2014), they also indicate that firm agreements exert a stronger impact on wages than on productivity, so that profitability is hampered. However, this rent-sharing effect only holds in manufacturing. In private sector services, the raw wage premium associated to firm agreements is entirely driven by compositional effects. Furthermore, estimates show that firm agreements lead to significantly more rent-sharing among firms operating in less competitive environments. Firm agreements are thus mainly found to raise wages beyond productivity when the rents to be shared between workers and firms are relatively big. Overall, this suggests that firm-level agreements benefit to both employers and employees – through higher productivity and wages – without being very detrimental to firms’ performance. |
| Keywords: | Collective bargaining; productivity; labour costs; linked panel data |
| JEL: | C33 J24 J31 |
| Date: | 2018–06–04 |
| URL: | http://d.repec.org/n?u=RePEc:sol:wpaper:2013/271425&r=bec |
| By: | Grinza, Elena (University of Milan); Rycx, Francois (Free University of Brussels) |
| Abstract: | We investigate the impact of sickness absenteeism on productivity by using rich longitudinal matched employer-employee data on Belgian private firms. We deal with endogeneity, which arises from unobserved firm heterogeneity and reverse causality, by applying a modified version of the Ackerberg et al's (2015) control function method, which explicitly removes firm fixed effects. Our main finding is that, in general, sickness absenteeism substantially dampens firm productivity. An increase of 1 percentage point in the rate of sickness absenteeism entails a productivity loss of 0.24%. Yet, we find that the impact is much diversified depending on the categories of workers who are absent and across different types of firms. Our results show that sickness absenteeism is detrimental mainly when absent workers are high-tenure or blue-collar workers. Moreover, they show that sickness absenteeism is harmful mostly to industrial firms, high capital-intensive companies, and small- and medium-sized enterprises. This overall picture is coherent with the idea that sickness absenteeism is problematic when absent workers embed high levels of firm/task-specific (tacit) knowledge, when the work of absent employees is highly interconnected with the work of other employees (e.g., along the assembly line), and when firms face more limitations in substituting temporarily absent workers. |
| Keywords: | sickness absenteeism, firm productivity, semiparametric methods for estimating production functions, longitudinal matched employer-employee data |
| JEL: | D24 M59 I15 |
| Date: | 2018–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11543&r=bec |
| By: | Entrop, Oliver; Merkel, Matthias F. |
| Abstract: | In contrast to the U.S., many executive managers of continental European firms have a PhD. In this paper we analyze if a research-oriented background in the form of a PhD is linked to the corporate decision-making of CFOs in the use of foreign exchange (FX) derivatives in Germany. After controlling for fundamental firm characteristics, compensation schemes and personal characteristics of managers, we find some evidence that CFOs with a PhD in a business-related area tend to use FX derivatives less, while CFOs with a general business education do so more. Analyzing their behavior with regard to speculation, we find strong evidence that CFOs with a PhD speculate less on the FX market compared to CFOs with another (business) education. A possible reason may be that a research-oriented education is more associated with critical awareness and long-term orientation in corporate decision-making. |
| Keywords: | FX Derivatives,Risk Management,Speculation,Behavioral Corporate Finance,PhD,Doctorate |
| JEL: | G30 G32 F31 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:upadbr:b3218&r=bec |
| By: | Carlo Altomonte; Domenico Favoino; Tommaso Sonno |
| Abstract: | We extend a framework of monopolistically competitive firms heterogeneous in productivity and with endogenous markups (as in Melitz and Ottaviano, 2008) to incorporate the presence of financial frictions. Before producing, firms need to obtain a loan necessary to cover part of production costs, for which they have to pledge collateral in the form of tangible assets. In addition to productivity, firms are also heterogeneous in their financial capability: some firms have access to collateral at lower costs. As a result, financial capability and collateral requirements enter together with productivity in the expression of the equilibrium firm-level markup. At the aggregate level, the model shows that tighter credit constraints in the form of higher collateral requirements mitigate the pro-competitive effect of trade. We validate our theoretical results capitalizing on a representative sample of manufacturing firms surveyed across a subset of European countries during the financial crisis. Guided by theory, we estimate for each firm financial capability, TFP and markups. We then employ those estimates to structurally retrieve from the model a firm-specific measure of collateral requirements (a proxy of credit constraint), and test our main propositions. |
| Keywords: | Credit constraints, heterogeneous rms, markups, international trade |
| JEL: | F10 F14 G32 |
| URL: | http://d.repec.org/n?u=RePEc:baf:cbafwp:cbafwp1755&r=bec |
| By: | Franziska Prockl (University of Paderborn); Bernd Frick (University of Paderborn) |
| Abstract: | The North American top tier Major League Soccer presents a unique research setting to study a regulated labor market. Contrary to the situation in Europe, where player salaries remain private and confidential (the only exception here is “Serie A” in Italy), the player unions regu-larly publish this kind of information for each of the US Major Leagues. In this paper we use an unbalanced panel with detailed player-season-information from the seasons 2006 to 2016 to estimate a multi-stage salary model for MLS players. We differentiate in the analysis be-tween regular and designated players (aka DP, a status unknown in Europe) due to their heter-ogenic profiles. For regular players we find that the impact of age on salaries follows an in-verted u-shape with a very late turning point at 33.6 years. In addition, we find a statistically significant positive of last season’s performance and career performance. Experience abroad yields a significantly higher salary as does tenure with the current team (controlling for team-specific fixed effects). Perhaps surprisingly, career length in MLS is negatively associated with salary. Also, the results suggest that local player suffer a pay discrimination compared to similar players from Western Europe, Central and South America. Thus, we confirm most of the findings that have been reported in previous research using data from European football leagues (e.g. Lucifora & Simmons, 2003; Frick, 2007; Bryson et al., 2014). This finding alone is not straightforward considering the various regulations that help the leagues to keep espe-cially salary budgets in check. The effectiveness of salary regulations, e.g. put in place via Collective Bargaining Agreements, is shown for two instances, as is the impact of a regulatory change. In contrast, the key driver of the unregulated DP salaries are club-specific fixed effects, ex-plaining already 58 percent of the observable variation in player salaries. Next important driv-ers are career games played and the region of origin. Local superstar players earn a surprising premium over players from Western Europe, South America and the Carribean’s. Neither for regular nor for designated players’ positions are rewarded significantly different. This is a big difference compared to European leagues where Forwards are usually paid better. |
| Keywords: | Wage Differentials, Major League Soccer, Panel Study |
| JEL: | J31 J49 |
| Date: | 2018–05 |
| URL: | http://d.repec.org/n?u=RePEc:pdn:dispap:39&r=bec |
| By: | Kalkanci, Basak (Georgia Institute of Technology); Plambeck, Erica (Stanford University) |
| Abstract: | This paper contributes to a recent thrust in the OM literature on how various sorts of transparency influence social and environmental responsibility in a supply chain. In practice, companies are under pressure to publish their supplier lists and suppliers' violations, and some are beginning to do so. This paper shows how a buying firm can use transparency to reward a supplier for responsibility effort to eliminate social or environmental violations. By publishing its supplier list, the buying firm can signal that a supplier is responsible and generate profitable new business for the supplier. However, the resulting competition for the supplier's scarce capacity could cause the buying firm to obtain fewer units or pay a higher price. We identify the conditions under which a buying firm should commit to publish its supplier list, and the conditions under which the buying firm should make complementary investments to help the supplier become more productive. In addition, the paper shows how a buying firm can use transparency to punish a supplier for a responsibility violation- by warning other buying firms not to source from the violating supplier. Commitment to do so increases the supplier's responsibility effort and can screen out a supplier with a known responsibility violation, thereby increasing a buying firm's expected profit. If the supplier is uncertain whether or not it has a violation (e.g., faulty electrical wiring likely to cause a fire) then the two forms of transparency are complementary. Buying firms should consider transparency as a potentially profitable approach to mitigating social and environmental violations in their supply chains. |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:stabus:repec:ecl:stabus:3638&r=bec |
| By: | Alves, Paulo |
| Abstract: | Using a firm-level survey database covering 41 countries, we evaluate firms’ abnormal retained earnings. The results of our work show that the trends of cash holdings and retained earnings are independent. While cash holdings around the world are increasing, the opposite has occurred for retained earnings. We show that cash holdings are influenced by precautionary motive and retained earnings by firms’ growth opportunities. Abnormal retained earnings have risen with GDP growth and decreased following the 2008 financial crisis. This result also confirms the hypothesis of firms’ growth opportunities. US firms present positive abnormal retained earnings after the 2008 financial crisis, contrary to the remaining firms around the world. This can explain recent trends in the US stock market. |
| Keywords: | Abnormal retained earnings; Cash holdings; Firms’ growth opportunities; Precautionary motive. |
| JEL: | G32 G38 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:86660&r=bec |
| By: | Melisa Newham; Jo Seldeslachts; Albert Banal-Estañol |
| Abstract: | Common ownership - where two firms are at least partially owned by the same investor - and its impact on product market outcomes has recently drawn a lot of attention from scholars and practitioners alike. Theoretical and empirical research suggests that common ownership can lead to higher prices. This paper focuses on implications for market entry. To estimate the effect of common ownership on entry decisions, we focus on the pharmaceutical industry. In particular, we consider the entry decisions of generic pharmaceutical firms into drug markets opened up by the end of regulatory protection in the US. We first provide a theoretical framework that shows that a higher level of common ownership between the brand firm (incumbent) and potential generic entrant reduces the generic's incentives to entry. We provide robust evidence for this prediction. The effect is large: a one-standard-deviation increase in common ownership decreases the probability of generic entry by 9-13%. We extend our basic theoretical framework and allow for multiple entrants. Our model shows that for sufficiently high levels of common ownership, the classical idea of entry decisions being strategic substitutes can be reversed into being strategic complements. Our empirical results provide some support for these predictions. |
| Keywords: | Market Entry, Ownership Structure, Pharma |
| JEL: | G23 K21 L11 L41 L65 |
| Date: | 2018–05 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:1612&r=bec |
| By: | Albert Banal-Estañol; Jo Seldeslachts; Melissa Newham |
| Abstract: | Common ownership - where two firms are at least partially owned by the same investor - and its impact on product market outcomes has recently drawn a lot of attention from scholars and practitioners alike. Theoretical and empirical research suggests that common ownership can lead to higher prices. This paper focuses on implications for market entry. To estimate the effect of common ownership on entry decisions, we focus on the pharmaceutical industry. In particular, we consider the entry decisions of generic pharmaceutical firms into drug markets opened up by the end of regulatory protection in the US. We first provide a theoretical framework that shows that a higher level of common ownership between the brand firm (incumbent) and potential generic entrant reduces the generic's incentives to entry. We provide robust evidence for this prediction. The effect is large: a one-standard-deviation increase in common ownership decreases the probability of generic entry by 9-13%. We extend our basic theoretical framework and allow for multiple entrants. Our model shows that for sufficiently high levels of common ownership, the classical idea of entry decisions being strategic substitutes can be reversed into being strategic complements. Our empirical results provide some support for these predictions. |
| Keywords: | market entry, ownership structure, pharma |
| JEL: | G23 K21 L11 L41 L65 |
| Date: | 2018–05 |
| URL: | http://d.repec.org/n?u=RePEc:bge:wpaper:1042&r=bec |
| By: | Yi-Fan Chen (Institute of Economics, Academia Sinica, Taipei, Taiwan); Wen-Tai Hsu (School of Economics, Singapore Management University); Shin-Kun Peng (Institute of Economics, Academia Sinica, Taipei, Taiwan; Department of Economics, National Taiwan University, Taipei, Taiwan) |
| Abstract: | We study a trade model with monopolistic competition a la Melitz (2003) that is standard except that firm heterogeneity is endogenously determined by firms investing to enhance their productivities. We show that the equilibrium productivity and firm-size distributions exhibit power-law tails under rather general conditions on demand and technology. In particular, the emergence of the power laws is essentially independent of the underlying primitive heterogeneity among firms. We explore the welfare implication of productivity investment, and find that it results in a higher welfare gains from trade than the Melitz-Pareto framework due to productivity investment. Our quantitative analysis shows that, conditional on the same trade elasticity and values of the common parameters, our model yields 36% higher welfare gains from trade than Melitz-Pareto and the margin due to productivity investment alone contributes 31% of the welfare gains. |
| Keywords: | : Productivity investment, power law, regular variation, welfare gains from trade, firm heterogeneity. |
| JEL: | F12 F13 F41 |
| Date: | 2018–04 |
| URL: | http://d.repec.org/n?u=RePEc:sin:wpaper:18-a006&r=bec |