nep-bec New Economics Papers
on Business Economics
Issue of 2019‒08‒12
nine papers chosen by
Vasileios Bougioukos
Bangor University

  1. The Effect of Working Capital Management on Dividend Policy: An Empirical Analysis of Listed Firms in Ghana By Yakubu, Ibrahim Nandom
  2. Ownership Structure, Board of Directors and Firm Performance: Evidence from Taiwan By Aziz Jaafar; Lynn Hodgkinson; Mao-Feng Kao
  3. Damage to the Transportation Infrastructure and Disruption of Inter-firm Transactional Relationships By HOSONO Kaoru; MIYAKAWA Daisuke; ONO Arito; UCHIDA Hirofumi; UESUGI Iichiro
  4. Environmental Pollution Policy of Small Businesses in Nigeria and Ghana: Extent and Impact By Uchenna Efobi; Tanankem Belmondo; Emmanuel Orkoh; Scholastica N. Atata; Opeyemi Akinyemi; Ibukun Beecroft
  5. Firm- specific human capital in different market conditions: evidence from the Japanese football league By Yamamura, Eiji; Ohtake, Fumio
  6. Markups and Productivity under Heterogeneous Financial Frictions By Carlo Altomonte; Domenico Favoino; Tommaso Sonno
  7. What Firms Do: Gender Inequality in Linked Employer-Employee Data By Casarico, A.; Lattanzio, S.
  8. Rating firms and sensitivity analysis By Magni, Carlo Alberto; Malagoli, Stefano; Marchioni, Andrea; Mastroleo, Giovanni
  9. Exuberant Proclivity Towards Non-Standard Employment:Evidence from Linked Employer-Employee Data By Alessandro Arrighetti; Eleonora Bartoloni; Fabio Landini; Chiara Pollio

  1. By: Yakubu, Ibrahim Nandom
    Abstract: Relying on more recent data spanning 2007-2016, this paper investigates the impact of working capital management (WCM) on dividend policy of listed non-financial firms in Ghana. Specifically, the study assesses the effect of cash conversion cycle (CCC), days inventory outstanding (DIO), profitability, and firm growth on dividend policy. Employing the ordinary least squares (OLS) analytical technique, the findings reported that working capital management (in terms of cash conversion cycle and days inventory outstanding) and dividend policy are positively related, with DIO having a significant effect on dividend policy. The results also established a positive association between the control variables (profitability and firm growth) and dividend policy albeit insignificantly. Based on the findings, the study concludes that working capital management in terms of days inventory outstanding (DIO) is a critical factor influencing firms’ dividend policy decisions. The study extends the inconclusive empirical evidence on the determinants of dividend policy and fills the lacuna in existing literature by focusing on how working capital management practices influence dividend policy of firms in Ghana. The findings are also useful to the board of directors of non-financial firms in deciding an appropriate dividend policy, and to the shareholders in making investment decisions.
    Keywords: Dividend policy; working capital; profitability; firms; Ghana
    JEL: M00 M1 M21 M41
    Date: 2019–05–13
  2. By: Aziz Jaafar (Bangor University); Lynn Hodgkinson (Bangor University); Mao-Feng Kao (National Dong Hwa University)
    Abstract: Purpose Using a dataset of listed firms domiciled in Taiwan, the main aim of this paper is empirically assess the effects of ownership structure, board of directors on firm value. Design/methodology/approach Using a sample of Taiwanese listed firms from 1997 to 2015, the study uses a panel estimation to exploit both the cross-section and time-series nature of the data. Furthermore, a 2SLS regression model is used as robustness test to mitigate the endogeneity issue. Findings Our main results show that the higher the proportion of independent directors, the smaller the board size, and together with a two-tier board system and no CEO duality, the stronger the firm’s performance. With respect to ownership structure, block-holders’ ownership, institutional ownership, foreign ownership and family ownership, are all positively related to firm value. Practical implications Although the Taiwanese corporate governance reform concerning the independent director system which is mandatory only for newly-listed companies is a successful, the regulatory authority should require all listed companies to appoint independent directors to further enhance the Taiwanese corporate governance. Originality/value First, unlike much of the previous literature on western developed countries, this study examines the effects of corporate governance mechanisms on firm performance in a newly-industrialised country, Taiwan. Second, while a number of studies use a single indicator of firm performance this study examines both accounting-based and market-based firm performance. Third, this study addresses the endogeneity issue between corporate governance factors and firm performance by using two stage least squares (2SLS) estimation, and details the econometric tests for justifying the appropriateness of using 2SLS estimation
    Keywords: corporate governance, independent directors, board characteristics, ownership structure
    JEL: M40 G34
    Date: 2019–03
  3. By: HOSONO Kaoru; MIYAKAWA Daisuke; ONO Arito; UCHIDA Hirofumi; UESUGI Iichiro
    Abstract: We investigate the effects of an exogenous increase in transportation costs caused by the disruption of a highway due to the Tohoku Earthquake in Japan, on inter-firm transactional relationships and firm performance. We find that as the transit time to partner firms (suppliers and customers) increased due to the disrupted highway, the likelihood of continued transactional relationships decreased. This effect is more pronounced when the corresponding partner is a customer with a lower share of sales. We also find that the disruption to the transactional relationships deteriorates the firms' ex-post business conditions and credit scores.
    Date: 2019–06
  4. By: Uchenna Efobi (Covenant University, Ota, Ogun State, Nigeria); Tanankem Belmondo (MINEPAT, Yaoundé, Cameroon); Emmanuel Orkoh (North-West University, South Africa); Scholastica N. Atata (Federal University of Agriculture, Abeokuta Nigeri); Opeyemi Akinyemi (Covenant University, Ota, Ogun State, Nigeria); Ibukun Beecroft (Covenant University, Ota, Ogun State, Nigeria)
    Abstract: This study provides a comprehensive assessment of firms’ operation and environmental protection polices in Nigeria and Ghana, where there has been a rising industrial growth amidst low regulatory and institutional frameworks. We analyze the extents to which firms’ adoption of environmental protection policies affect their performances. We use firm-level data of 842 firms (447 for Nigeria and 395 for Ghana) distributed across different regions of both countries for our descriptive and econometric estimations. We find, among other things, that firms’ adoption of internal policies on environmental protection is dismally low in both Nigeria (32 percent) and Ghana (17 percent), with policies focused on reducing solid (38 percent, Nigeria; and 35 percent, Ghana), gaseous (22 percent, Nigeria; and 44 percent, Ghana), and liquid (24 percent, Nigeria; and 14 percent, Ghana) pollution. Training appears to be an important intervention that can help improve firms’ adoption of such policies. We also found that firms’ adoption and implementation of environmental protection policies significantly improve their performance.
    Keywords: Environment; Green Industrialization; Performance; Pollution; Small Businesses; West Africa
    JEL: H32 L25 Q52 Q53
    Date: 2018–01
  5. By: Yamamura, Eiji; Ohtake, Fumio
    Abstract: This paper examined how meeting the team-specific human capital is important in a football player’s performance by comparing the top two league teams. From panel data of the Japan Professional Football League, we find that changing the team reduced a player’s performance and that the team’s performance improved as each player’s tenure in the team increased, the returns from team-specific skills over time increased and then decreased as the years passed, the benefit from moving to a new team depends on the timing of moving, and neither tenure in the team nor experience affects a professional football player’s performance.
    Keywords: Firm-specific human capital; Professional football; Player performance; Matching
    JEL: J49 J62
    Date: 2019–06–10
  6. By: Carlo Altomonte; Domenico Favoino; Tommaso Sonno
    Abstract: We incorporate heterogeneous financial frictions in a setting of monopolistically competitive firms with endogenous markups. Before producing, firms must pledge collateral to obtain a bank loan, needed to cover part of production costs. Firms differ both in productivity and in their cost of raising collateral. Firm-specic financial frictions, together with productivity, therefore figure in the equilibrium expressions of prices and markups. We validate our theoretical results on a representative sample of European manufacturing firms surveyed during the financial crisis. Guided by our model we retrieve from balance-sheet data firm-specic measures of access to finance, total factor productivity and markups, and then use these variables to estimate our equilibrium equations structurally. Consistent with our model, we show how heterogeneity in access to finance explains part of the dispersion of prices and markups, even after controlling for firms' productivity and size. In the aggregate industry equilibrium, the amount of collateral required by banks significantly affects the cost pass-through to prices.
    Keywords: Financial frictions, heterogeneous firms, markups
    JEL: D24 E22 F36 G20
    Date: 2018
  7. By: Casarico, A.; Lattanzio, S.
    Abstract: This paper investigates the contribution of firms to the gender gap in earnings on average, at different quantiles of the earnings distribution, and over time to shed light on the role of firm pay policies in hindering or reinforcing the gender wage gap and to identify how their impact comes about. Using a linked employer-employee dataset for Italy, we show that the gap in firm pay policies explains on average 30% of the gender pay gap in the period 1995-2015. Sorting of women in low pay firms explains a larger fraction of the gender pay gap than differences in bargaining, on average and at the bottom of the distribution, whereas the latter dominates at the top. Moreover, differences in bargaining have increased in importance over the two decades. To explain sorting, we investigate whether women have a lower probability of moving towards firms with higher pay rates, and find that this is indeed the case. This differential mobility penalises, in particular, highly skilled women and can be related to the variability in wages in destination firms, with women not moving to those with high (unexplained) variance in pay. We also find some evidence that the firm environment as captured by exogenous changes in the gender balance in leadership positions influences the bargaining power of women, indicating that the latter is partly institution-driven.
    Keywords: Bargaining, Sorting, Linked Employer-Employee Data, Mobility gap, Gender quotas
    JEL: J16 J31 J71
    Date: 2019–07–09
  8. By: Magni, Carlo Alberto; Malagoli, Stefano; Marchioni, Andrea; Mastroleo, Giovanni
    Abstract: This paper introduces a model for rating a firm's default risk based on fuzzy logic and expert system and an associated model of sensitivity analysis (SA) for managerial purposes. The rating model automatically replicates the evaluation process of default risk performed by human experts. It makes use of a modular approach based on rules blocks and conditional implications. The SA model investigates the change in the firm's default risk under changes in the model inputs and employs recent results in the engineering literature of Sensitivity Analysis. In particular, it (i) allows the decomposition of the historical variation of default risk, (ii) identifies the most relevant parameters for the risk variation, and (iii) suggests managerial actions to be undertaken for improving the firm's rating.
    Keywords: Credit rating, default risk, fuzzy logic, fuzzy expert system, sensitivity analysis.
    JEL: C63 C67 G32
    Date: 2019–07–21
  9. By: Alessandro Arrighetti (University of Parma); Eleonora Bartoloni (ISTAT, Regional Office for Lombardy in Milan, University of Parma); Fabio Landini (University of Parma, Bocconi University, ICRIO); Chiara Pollio (University of Ferrara, EmiliaLab – Network of Departments of Economics of the Emilia-Romagna Region)
    Abstract: In most industrialized countries temporary andnon-standard forms of employment (NSFE)have become a pervasive featureof the labor market. However, at the firm level, the diffusion of NSFE is less uniform than expected: while some firms exhibit high propensity to use NSFE, others make no use of it.Most conventional explanationsof NSFE use (market uncertainty, production regimes, competitive pressure)fail to account for such heterogeneity. In this article the authors develop an alternative explanationthat links the use of NSFE to firm-specific availability of managerial resources: whenever the latter are relatively scarce, firms make larger use of NSFE to reduce coordination and operating costs. Using a linked employer-employeepanel of manufacturing firms from the Emilia-Romagna region (Italy), the authors provide empirical support for this hypothesis. The result is robust to different estimation strategies and controlling for alternative drivers of NSFE use. This novel finding suggests that, the use of NSFE has strong managerial roots: it allows firms to compensate for firm-specific managerial weaknesses.
    Keywords: non-standard employment, managerial resources, span of control, firm heterogeneity.
    JEL: D22 L23 M51 M52 J41 J23
    Date: 2019

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