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on Business Economics |
| By: | Andrey Launov |
| Abstract: | Working time account is an organization tool that allows firms to smooth their demand for hours employed. Descriptive literature suggests that working time accounts are likely to reduce layoffs and inhibit increases in unemployment during recessions. In a model of optimal labour demand I show that working time account does not necessarily guarantee less layoffs at the firm level. These may be reduced or increased depending on whether the firm meets economic downturn with surplus or deficit of hours and on how productive the firm is. In expected terms, however, working time account reduces net job destruction at almost any level of firm’s productivity. Model predictions are consistent with dynamics of aggregate turnover in Germany during the Great Recession. |
| Keywords: | labour demand, working hours, working time account, turnover, layoff, Great Recession, Germany |
| JEL: | J23 J63 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7933&r=all |
| By: | Décamps, Jean-Paul; Villeneuve, Stéphane |
| Abstract: | We develop a dynamic model of a firm whose shareholders learn about its long-term profitability, face costs of external financing and costs of holding cash. Cash management policy generates a corporate life-cycle with two stages: a "probation stage" where the firm has no access to the capital markets, pays little in dividends, increases its cash target levels and a "mature stage" where the firm does have access to external financing, pays dividends, decreases its cash target levels. The model provides new insights on the corporate propensity to save and the firm's value dynamics when its profitability is difficult to ascertain. |
| Date: | 2019–11 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:123685&r=all |
| By: | Philippe Aghion; Antonin Bergeaud; Timo Boppart; Peter J. Klenow; Huiyu Li |
| Abstract: | Growth has fallen in the U.S., while firm concentration and profits have risen. Meanwhile, labor’s share of national income is down, mostly due to the rising market share of low labor share firms. We propose a theory for these trends in which the driving force is falling firm-level costs of spanning multiple markets, perhaps due to accelerating IT advances. In response, the most efficient firms (with higher markups) spread into new markets, thereby generating a temporary burst of growth. Because their efficiency is difficult to imitate, less efficient firms find markets more difficult to enter profitably and therefore innovate less. Eventually, due to greater competition from efficient firms, within-firm markups actually fall. Despite the increase in the aggregate markup and rents, firm incentives to innovate decline—lowering the long run growth rate. |
| JEL: | O31 O47 O51 |
| Date: | 2019–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:26448&r=all |
| By: | José de Sousa (Université Paris-Saclay); Anne-Célia Disdier (PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics); Carl Gaigné (INRA Rennes - INRA Rennes - INRA - Institut National de la Recherche Agronomique, University of Laval) |
| Abstract: | We show that economic uncertainty in foreign markets affects firms' economic decisions, particularly those of the most productive firms. Using export data at both the industry and firm levels, we uncover two empirical regularities. First, demand uncertainty in foreign markets affects export entry/exit decisions (extensive margin) and export sales (intensive margin). If all destination countries exhibited the lowest volatility observed across destinations, then total French exports would rise by approximately 18% (an increase primarily driven by the extensive margin). Second, the most productive exporters are more affected by a higher industry-wide expenditure volatility than are the least productive exporters. The 25% most productive firms export, on average, 27% more in value than the 25% least productive firms in less volatile markets, while this difference decreases to 12% in the most volatile markets. |
| Keywords: | firm exports,demand uncertainty,expenditure volatility,skewness |
| Date: | 2019–10 |
| URL: | http://d.repec.org/n?u=RePEc:hal:psewpa:halshs-02332958&r=all |
| By: | Phi, Nguyet Thi Minh (Asian Development Bank Institute); Taghizadeh-Hesary, Farhad (Asian Development Bank Institute); Tu, Chuc Anh (Asian Development Bank Institute); Yoshino, Naoyuki (Asian Development Bank Institute); Kim, Chul Ju (Asian Development Bank Institute) |
| Abstract: | We investigate empirically the relationship between ownership identity and the performance of firms in terms of profitability and solvency. Using cross-sectional data covering over 25,000 firms worldwide and by employing various empirical methods, we find robust support for the inferior performance of government enterprises over privately owned firms. Specifically, state-owned enterprises (SOEs) tend to be less profitable than privately owned enterprises. However, they appear to be more dependent on debt for their financial needs and are, thus, better leveraged. Additionally, SOEs are more labor intensive and have higher labor costs. Thus, evidence from this study could be interpreted to mean that privatization could improve the performance of public firms. However, a study over a longer period is needed before these results can be considered conclusive. |
| Keywords: | performance; ownership; solvency; state-owned enterprises; private-owned enterprises |
| JEL: | G32 G34 |
| Date: | 2019–05–13 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbiwp:0950&r=all |
| By: | Yoshiaki Ogura; Ryo Okui; Yukiko Umeno Saito |
| Abstract: | We demonstrate theoretically and empirically the presence of forbearance lending by profit maximizing banks to influential buyers in a supply network. If the financial market is concentrated, then banks can internalize the negative externality of an influential firm¡¯s exit. As a result, they may keep refinancing for a loss-making influential firm at an interest rate lower than the prime rate. This mechanism sheds new light on the discussion about bailouts offered to zombie firms. Our empirical study, with a unique dataset containing information about interfirm relationships and main banks, provides evidence for such network-motivated lending decisions. |
| Keywords: | supply network; influence coefficient; forbearance; bailout; zombie |
| JEL: | C55 D57 G21 G32 L13 L14 |
| Date: | 2019–10 |
| URL: | http://d.repec.org/n?u=RePEc:snu:ioerwp:no127&r=all |
| By: | Natália P. Monteiro (NIPE and Department of Economics, University of Minho); Odd Rune Straume (NIPE and Department of Economics, University of Minho); Marieta Valente (NIPE and Department of Economics, University of Minho) |
| Abstract: | Whether or not the use of remote work increases firm labour productivity is theoretically ambiguous. We use a rich and representative sample of Portuguese firms, and within-firm variation in the policy on remote work, over the period 2011-2016, to empirically assess the causal productivity effect of remote work. Our findings from estimations of models with firm fixed effects suggest that the average productivity effect of allowing remote work is significantly negative, though relatively small in magnitude. However, we also find a substantial degree of heterogeneity across different categories of firms. In particular, we find evidence of opposite effects of remote work for firms that do not undertake R&D activities and for firms that do, where remote work has a significantly negative (positive) effect on labour productivity for the former (latter) type of firms. Negative effects of remote work are also more likely for small firms that do not export and employ a workforce with a below-average skill level. |
| Keywords: | Remote work; firm labour productivity; panel data |
| JEL: | D24 L23 M54 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:nip:nipewp:14/2019&r=all |
| By: | Femg, Xunan (Shanghai University of Finance and Economics); Johansson, Anders C. (Stockholm China Economic Research Institute) |
| Abstract: | We examine the role top executives’ social media activity plays for the stock market. When analyzing a unique data set of board chairs’ posts on Chinese social media platform Sina Weibo, we find that they are positively associated with stock returns. When we take a closer look at content, we show it is work-related content that drives stock returns. Non-work-related content has an immediate but transitory effect, suggesting that such posts grab the attention of investors but only contain noise. We also find that information asymmetry plays a significant role in the relationship between board chairs’ Weibo posts and stock returns. Also, the more followers that board chairs have on their Weibo account, the larger the effect Weibo posts have on stock returns. Furthermore, relative to state-controlled firms, Weibo posts by board chairs in private firms exhibit a significantly larger effect on stock returns. Finally, we find that a laxer regulatory environment translates into board chairs’ work-related Weibo posts having a larger effect on stock returns. Top executive social media activity thus acts as a complementary channel for firm-specific information being disseminated to the stock market. |
| Keywords: | Social Media; Microblogging; Information dissemination; Stock market; Investors; China |
| JEL: | G12 G14 N20 |
| Date: | 2019–11–15 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:hascer:2019-052&r=all |
| By: | Taghizadeh-Hesary, Farhad (Asian Development Bank Institute); Yoshino, Naoyuki (Asian Development Bank Institute); Kim, Chul Ju (Asian Development Bank Institute); Mortha, Aline (Asian Development Bank Institute) |
| Abstract: | State-owned enterprises (SOEs) play a key role in the economy of many countries. They are usually thought to be in charge of increasing social welfare. At the same time, their relatively low performance poses several problems, including slowing down economic growth, which is especially pronounced in countries where these firms represent a large share of the economy. Therefore, it is crucial for central governments to implement a comprehensive evaluation method to assess the performance of SOEs. By employing the principal component analysis technique and using data of 1,148 SOEs, mostly from European countries, we provide a more comprehensive framework for assessing SOE performance, which includes various factors: profitability, per capita productivity, per capita costs, debt due days, and solvency. The results of our empirical study show that solvency, per capita costs, and per employee productivity have more deterministic power over the success or failure of SOEs than profitability. Focusing on profitability as the sole assessment criterion will mislead policy makers, keeping in mind also that the nature of many SOEs is to generate social welfare and not profit. |
| Keywords: | state-owned enterprises; SOEs; performance assessment; public economics |
| JEL: | H11 L32 P11 |
| Date: | 2019–05–10 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbiwp:0949&r=all |