nep-bec New Economics Papers
on Business Economics
Issue of 2018‒10‒22
eleven papers chosen by
Vasileios Bougioukos
Bangor University

  1. Firm Productivity and Exports: Firm-Level Evidence from the Korean Agro-Food Industries By Oh, Saera; Cho, Sung Ju
  2. A structural analysis of US entry and exit dynamicsn By Miguel Casares Polo; Sandra Miñes
  3. Firm Internal Network, Environmental Regulation, and Plant Death By Jingbo Cui; GianCarlo Moschini
  4. Does high growth persist? A focus on growth formulas and the influence of firm exits By Erhardt, Eva
  5. What happens after an investment spike - investment events and firm performance By Michal Gradzewicz
  6. The Role of Ownership and Governance Mechanism in Sukuk Financing by Malaysian Firms: An Application of A Double Selection Model By Ashraf, Dawood; Rizwan, Muhammad Suhail; Azmat, Saad
  7. 57 Channels (And Nothin On): Does TV-News on the Eurozone affect Government Bond Yield Spreads? By Wolfinger, Julia; Köhler, Ekkehard A.; Feld, Lars P.; Thomas, Tobias
  8. Export innovation of SMEs through the extensive margin in Latin America By Park, Hyunju; Mulder, Nanno; Park, Yuri
  9. Uncertainty is Change By Carstensen, Kai; Bachmann, Rüdiger; Schneider, Martin; Lautenbacher, Stefan
  10. Regulated Firm Strategy under Uncertainty about Regulatory Status By Andarge, Tihitina; Lichtenberg, Erik
  11. The effect of local industry competition on firm productivity. Evidence from the Mexican manufacturing industry By Barriga-Cabanillas, Oscar

  1. By: Oh, Saera; Cho, Sung Ju
    Keywords: International Trade, Agribusiness Economics and Management, Productivity Analysis and Emerging Technologies
    Date: 2018–06–20
  2. By: Miguel Casares Polo (Departamento de Economía-UPNA); Sandra Miñes (UPNA)
    Abstract: We report empirical evidence indicating that US business formation has recently turned more volatile, procyclical and persistent due to changes in exit dynamics. To study these stylized facts, we estimate a DSGE model with endogenous entry and exit. Business units feature heterogeneous productivity and they shut down if the present value of expected future dividends falls below the current liquidation value. The estimation results imply structural changes in US exit dynamics after 2007: the semi- elasticity of the exit rate to critical productivity has increased and the average plant-level productivity has decreased.
    Keywords: Endogenous entry and exit, DSGE models, US business cycles
    JEL: E20 E32
    Date: 2018
  3. By: Jingbo Cui; GianCarlo Moschini (Center for Agricultural and Rural Development (CARD))
    Abstract: This paper examines the role of a firm’s internal network in determining plant shutdown decisions in response to environmental regulations. Using unique plant-level data for U.S. manufacturing industries from 1990 to 2008, we find evidence that, in response to increasingly stringent environmental regulations at the county level, multi-plant firms do exercise their greater flexibility in adjusting production, relative to single-plant firms. Specifically, in regulated counties, the likelihood of a plant shutting down is higher for multi-plant firms. Moreover, we measure the firm internal network effect at the local, neighborhood, and the wider-area levels, as defined by the number of affiliated plants clustered in different regional levels. Their effects on plant closure decisions for dirty subsidiaries vary with the network level. We further decompose the neighborhood network into those in regulated and unregulated neighborhood counties, and examine how these network metrics are associated with closure decisions of dirty plants affiliated with multi-plant firms. The presence of more sibling plants residing in neighboring counties that are free from regulatory controls are associated with a higher closure probability of dirty plants in a regulated county.
    Date: 2018–10
  4. By: Erhardt, Eva
    Abstract: This study investigates the development of firms after high-growth. We argue that the formula used for measuring growth determines results. Implications from different formulas are tested with data from Amadeus on Bulgarian firms for the years 2001-2010. We provide first evidence for an absolute growth formula and its systematic comparison to alternative choices. The focus is on growth in employees, but we offer additional evidence for sales and profits. Using a two-part regression model with separate equations for survival and growth, we find that high-growth does not persist when size of exits is accounted for. Losses by exiting high-growth firms outweigh further gains in size by survivors. This result equally holds for the 1 percent fastest growers in absolute terms, the top 1 percent in terms of log growth and high-growth firms defined according to Eurostat-OECD. Implications for the future study of high-growth firms and policies focused at them are discussed.
    Keywords: high-growth firms,persistence,growth formulas,firm size,firm exit
    JEL: L26 J23 C18 D22 P23 L11 L25 D22 C18 P23
    Date: 2018
  5. By: Michal Gradzewicz
    Abstract: Our study aims at investigating the relationship between investment spikes andsubsequent productivity development at the firm level. We propose a novel identification scheme for the effects of an investment spike, using matching techniques andadequate econometric modelling. It allows us to find efficiency differentials againstmatched firms. We showed that TFP falls after an investment spike and slowly recovers thereafter, which is consistent with learning-by-doing effects. For smaller firmsthe fall is more pronounced and the subsequent recovery is longer. On the contrary, labor productivity rises after an investment spike, driven mainly by capital deepen-ing. The increase of sales after a spike suggests that expansion is the main purpose of an investment spike and rising employment confirms that this type of investmentis complementary to labor. As firms with spikes are on average more efficient andinvestment spikes attract resources and production factors, it suggests that improved allocative efficiency is an important factor driving positive macroeconomic correlation between investment and TFP.
    Keywords: difference-in-difference, investment spike, matching, productivity, TFP
    JEL: D22 D24 L16 O3
    Date: 2018–10
  6. By: Ashraf, Dawood (The Islamic Research and Teaching Institute (IRTI)); Rizwan, Muhammad Suhail (NUST Business School, National University of Sciences and Technology, Islamabad, Pakistan); Azmat, Saad (Lahore University of Management Sciences Lahore, Pakistan)
    Abstract: After controlling for the double selection bias in a sequential three-equation model of the decisions to issuance, to choose a Sukuk structure, and the volume of Sukuk engagements, we find robust evidence suggesting that ownership structure and governance mechanisms play a significant role in controlling agency costs through issuance of Sukuk. In line with monitoring hypothesis, we find that higher government ownership positively influences the decisions to participate, issue a debt-like Sukuk and volume thereof. Similarly, in line with complementarity hypothesis, the empirical evidence suggests that firms with higher board of directors’ independence are more likely to participate in issuing Sukuk with higher volumes. We also find that ethnicity, in the form of a higher proportion of Malay/Muslim members on the board of directors, does not influence the initial decision on whether or not to issue Sukuk. However, once the decision to issue Sukuk is made, firms with higher institutional ownership or a higher proportion of Malay/Muslim board members are more likely to issue equity-like Sukuk
    Keywords: ukuk Financing; Ownership Structure; Governance Mechanisms; Double Selection Models
    JEL: F40 G21 G29
    Date: 2018–05–14
  7. By: Wolfinger, Julia; Köhler, Ekkehard A.; Feld, Lars P.; Thomas, Tobias
    Abstract: This article empirically investigates the relationship between TV news coverage on the eurocrisis and the GIIPS countries bond yield spreads with daily data between January 1, 2007 and December 1, 2016. We use 1,542,233 human coded news items from evening news shows of leading TV stations in 12 countries. These news items include 37,859 news on the EU, on the Eurozone and on country-specific economic issues related to the GIIPS countries and Germany. We find that an increasing share of news about the Eurozone reduces yield spreads, especially when the news has a positive tonality. This, at least in the short run, hints at the effectiveness of political communication through the media by European institutions and in particular the European Central Bank (ECB). In conjunction with the tonality of the news, we find some hints on country-specific news to have a significant impact on GIIPS yield spreads. A higher share of positive/negative news is positively associated with a decrease/increase the GIIPS yield spreads vis-`a-vis Germany. Despite these hardly surprising results, we find some evidence that some news is not immediately and completely priced in by market participants when it is released: we still find a significant effect of prior days news on the GIIPS bond yield spreads. In addition, we find that this peculiar effect of country specific news is stronger when the respective news is aired on the North American media market. We explain this higher coefficient as follows: North American TV news air only those news that are truly surprising and have thus a strong effect on yield spreads
    Keywords: Eurozone,Euro,political communication,media coverage,yield spreads,dynamic macro panel,FGLS
    JEL: E58 G12 L8 N14 E58 G12 L8 N14
    Date: 2018
  8. By: Park, Hyunju; Mulder, Nanno; Park, Yuri
    Abstract: In Latin America and the Caribbean, there is little direct evidence on export innovation of small and medium-sized enterprises in (SMEs). This type of innovation refers to the adaptation of products and business processes to technical standards, tastes and other customer requirements in the target markets. The successful fulfillment of these requirements by a firm can be measured indirectly through the sale of a new product to an existing market, the entry of an existing product to a new destination, or both. These movements can be measured using firm-level customs data, as is done in this study for Chile, Colombia, Costa Rica, and Mexico for the period 2000 to 2015. The results confirm the well-known fact that a high share of SMEs enter and leave the universe of exporting firms each year. Among the four countries, exporting SMEs in Costa Rica had the lowest entry and exit rates and the highest survival rates. On average, SMEs in Costa Rica and Mexico incorporated more new products into their export basket than those in Chile and Colombia. This is because SMEs in the latter two countries exported mostly natural resources concentrated in few products, while SMEs in the former two countries were selling a relatively more diversified basket of manufactures. Within the sample, Costa Rica was the country where exporting SMEs added more destinations to their export basket each year. In contrast, Mexico was the one where SMEs added the smallest number of new destinations (less than one) on average, due to their great dependence on the United States as an export market. Export innovation is also analyzed with respect to the three dimensions (firms, products, and markets) simultaneously. For this purpose, the change in export value of each firm during this period is broken down into two parts. The first is the intensive margin, which refers to the change in export value of the same firms selling the same products to the same destinations. The second is the extensive margin, which has two components: (i) the extensive margin of entry (which reveals export innovation), including new combinations of companies, products and target markets, and (ii) the extensive margin of exit, referring to combinations of companies, products and destination markets that cease to exist. In all countries except Costa Rica, the extensive margin contributed proportionately more to the growth of exports of SMEs than to that of large companies. In Chile and Colombia, export innovation was concentrated in selling existing products to new markets. In contrast, in Costa Rica and Mexico the export of new products to established destinations was the predominant type of export innovation.
    Date: 2018–10–02
  9. By: Carstensen, Kai; Bachmann, Rüdiger; Schneider, Martin; Lautenbacher, Stefan
    Abstract: This paper provides survey evidence on firms’ subjective uncertainty about future sales growth from a new representative panel data set of the German manufacturing sector. The main finding is that uncertainty reflects change: firms report more subjective uncertainty after either high or low growth realizations. In the cross section of firms, subjective uncertainty differs from statistical measures of uncertainty such as volatility: fast-growing and large firms report lower subjective uncertainty than fast-shrinking and small firms, respectively, even if they face shocks of similar size. In contrast, the substantial time variation in firm-specific subjective uncertainty resembles that in conditional volatility: both measures of uncertainty are mildly persistent and rise more when growth is temporarily low.
    Keywords: expectation formation,firms,measurement,subjective uncertainty,survey data
    JEL: C83 D22 E23 C83 D22 E23
    Date: 2018
  10. By: Andarge, Tihitina; Lichtenberg, Erik
    Keywords: Resource and Environmental Policy Analysis, Food and Agricultural Policy Analysis, Natural Resource Economics
    Date: 2018–06–20
  11. By: Barriga-Cabanillas, Oscar
    Keywords: Productivity Analysis and Emerging Technologies, Industrial Org./Supply Chain Management, Demand and Price Analysis
    Date: 2018–06–20

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