|
on Business Economics |
| By: | Oleksandr Talavera (University of Birmingham); Shuxing Yin (University of Sheffield); Mao Zhang (University of St Andrews) |
| Abstract: | This study introduces a new dimension, age diversity of non-CEO executives, which moderates the relationship between promotion-based tournament incentives, measured as the pay gap between the CEO and non-CEO executives, and firm performance. For a sample of Chinese listed firms from 2005 to 2015, we find that the tournament incentives for non-CEO executives relate positively to firm performance. This relationship is weaker when non-CEO executives are from different age cohorts, whereas the tournament effect is enhanced when non-CEO executives are from the same age cohort. The negative moderation effect of age diversity is more pronounced in state firms and in the Northern China Plain cultural region. The negative moderation effect disappears in firms with CEOs who have overseas experience. We reason that the peer pressure among the similar-aged non-CEO executives enhances the tournament competition and that age hierarchy reduces incentives for younger executives to compete. Our findings have important implications for firms not only in China, but also in countries and regions where seniority is highly valued when setting executive compensation and optimizing organizational structure. |
| Keywords: | Executive compensation; Tournament effect; Non-CEO executives; Age diversity; Seniority |
| JEL: | G30 J10 J33 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:bir:birmec:20-12&r=all |
| By: | Nurmi, Satu; Vanhala, Juuso; Virén, Matti |
| Abstract: | We analyze the demographics of zombie firms and durations of zombie spells as well as their determinants, including an application on public subsidies using firm level population panel data from Finland. Firm-level analysis of firm demographics reveals that zombie-firms, as commonly defined in the literature, are often not truly distressed firms but rather companies with temporarily low revenues relative to interest payments. More importantly, we find that roughly a third of these firms are in fact growing companies and two thirds recover from the zombie status to become healthy firms. We also show that the increase of zombie firms over the past 15 years has mainly been driven by cyclical factors, as opposed to a secular trend. In our policy application on government subsidies to firms, estimation results strongly suggest that subsidy-receiving firms are less likely to die, regardless of the type of subsidy. However, with regard to recovery there is heterogeneity in the effects depending on the type of firm and the type of subsidy received. Thus, we do not find a robust positive association of subsidies with zombie recovery. |
| JEL: | D22 D24 G33 H25 L16 L25 O25 |
| Date: | 2020–05–14 |
| URL: | http://d.repec.org/n?u=RePEc:bof:bofrdp:2020_008&r=all |
| By: | Antoine Berthou; John Jong-Hyun Chung; Kalina Manova; Charlotte Sandoz-Dit-Bragard |
| Abstract: | We examine the gains from globalization in the presence of firm heterogeneity and potential resource misallocation. We show theoretically that without distortions, bilateral and export liberalizations increase aggregate welfare and productivity, while import liberalization has ambiguous effects. Resource misallocation can either amplify, dampen or reverse the gains from trade. Using model-consistent measures and unique new data on 14 European countries and 20 industries in 1998-2011, we empirically establish that exogenous shocks to export demand and import competition both generate large aggregate productivity gains. Guided by theory, we provide evidence consistent with these effects operating through reallocations across firms in the presence of distortions. (i) Both export and import expansion increase average firm productivity, but the former also shifts activity towards more productive firms, while the latter acts in reverse. (ii) Both export and import exposure raise the productivity threshold for survival, but this cut-off is not a sufficient statistic for aggregate productivity. (iii) Efficient institutions, factor and product markets amplify the gains from import competition but dampen those from export access. |
| Keywords: | : International Trade, Productivity, Allocative Efficiency. |
| JEL: | F10 F14 F43 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:bfr:banfra:749&r=all |
| By: | Sami Kajalo (Aalto University School of Business) |
| Abstract: | The present paper focuses on creating an organizing framework that would integrate the two distinct research domains of Market Orientation and Corporate Social Responsibility. Market Orientation (MO) consists of intelligence gathering, dissemination and management?s efforts to implement this new market knowledge for firm?s benefit. Although there is evidence of benefits of MO, recent research also suggests that MO itself does not anymore provide superior performance. Instead MO has become a ?cost of competing?. On the other hand, there is evidence that it is difficult (or even impossible) to achieve high performance without MO. Corporate Social Responsibility (CSR) represents companies? business practices that are intended to improve societal well-being. CSR has taken its place as a key component of firms? overall strategy and its importance is represented in annual reports and corporate websites. Moreover, recent recent suggests that CSR has a small positive impact on companies? financial performance and even a positive effect on shareholder wealth. There are only few previous attemps to focus on the interplay of MO and CSR. The present paper focuses on this research gap and provides an organizing framework to facilitate further research on the interplay of MO and CSR. |
| Keywords: | Market Orientation, Corporate Social Responsibility, Marketing |
| JEL: | M31 M14 |
| Date: | 2020–02 |
| URL: | http://d.repec.org/n?u=RePEc:sek:iacpro:10012405&r=all |
| By: | Hirofumi Uchida (Graduate School of Business Administration Kobe University); Kazuo Yamada (Faculty of Economics and Graduate School of Economics Nagasaki University); Alberto Zazzaro (Universita' degli Studi di Napoli Federico II) |
| Abstract: | In this paper, we examine whether family firms are more or less likely to foster management innovation, expanded incumbent business activities, or make advance to new business fields after CEO succession than non-family firms. Using data of 1,149 SMEs (small- and medium-sized enterprises) obtained from a corporate survey in Japan, we find that the new CEOs of family firms are not systematically less or more innovative than their counterparts in non-family firms. However, we also find that this zero effect of family ownership on innovation likelihood is the result of a negative impact of professional successors and a positive impact of heir successors. Finally, we show that access to intangible family assets increases the innovativeness of heir successors and decreases that of professional successors. |
| Keywords: | Innovation, Family Firm, Family Ownership, Succession |
| JEL: | L21 J12 Z13 G32 G21 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:anc:wmofir:161&r=all |
| By: | Peter J. Klenow; Huiyu Li |
| Abstract: | Recent work highlights a falling entry rate of new firms and a rising market share of large firms in the United States. To understand how these changing firm demographics have affected growth, we decompose productivity growth into the firms doing the innovating. We trace how much each firm innovates by the rate at which it opens and closes plants, the market share of those plants, and how fast its surviving plants grow. Using data on all nonfarm businesses from 1982-2013, we find that new and young firms (ages Oto 5 years) account for almost one-half of growth- three times their share of employment. Large established firms contribute only one-tenth of growth despite representing one-fourth of employment. Older firms do explain most of the speedup and slowdown during the middle of our sample. Finally, most growth takes the form of incumbents improving their own products, as opposed to creative destruction or new varieties. |
| Keywords: | firm demographics; productivity growth; innovation |
| Date: | 2020–04–10 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedfwp:87890&r=all |
| By: | Jakob Grazzini; Lorenza Rossi |
| Abstract: | This paper considers a two sectors heterogeneous firms model where firms’ specific production technology and capital intensity are endogenously determined through business dynamics. It shows that a shock to the relative price of investment goods is followed by the entrance of new firms characterized by higher capital intensity of production and lower labor income share. Using ORBIS firm-level data of the US economy, the paper finds strong and robust evidence confirming that new firms enter the market with higher capital intensity. Furthermore, firms-level data are used to show that the labor share is significantly affected by capital intensity, as well as by firms’ size and firms’ mark-up. |
| Keywords: | firms dynamics, firms heterogeneity, labor income share, capital intensity, capital technological change, ORBIS microdata |
| JEL: | E21 E22 E25 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8255&r=all |
| By: | Michael Danquah; Kunal Sen |
| Abstract: | In many low-income transition countries, where formal institutions such as courts do not function effectively, informal institutions are often used by firms to minimize transaction risks. We examine the role of informal institutions, in the forms of relational contracting and social networks, in determining the risks that firms are willing to bear in their transactions with their suppliers and customers, and whether firms that bear such risks have higher firm productivity. Our country context is Myanmar, a country which is making a transition from a socialist to market-oriented economy. |
| Keywords: | Firm productivity, informal institutions, relational contracting, Social networks, Transitional economies, Myanmar |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:wp-2020-54&r=all |
| By: | San Juan Mesonada, Carlos; Sheng, Yu; Sunyer Manteiga, Carlos; Ball, Eldon V. |
| Abstract: | The article tests the hypothesis of convergence in relative levels of total factor productivityacross seventeen member countries of the Organization for Economic Cooperation and Development and tries to identify factors that affect the speed of convergence. Using a paneldata model, we investigate the role of relative factor intensities (i.e. embodiment) and assess the impact of fluctuations in aggregate economic activity (i.e., the business cycle). We also consider the role of human capital spillovers and agricultural policy differences such as the Common Agricultural Policy of the European Union. We use a two-step difference Generalised Method of Moments estimator to quantify the contributions of each of these factors. We find evidence of convergence in productivity levels across the different phases of the business cycle.However, the speed of convergence was higher during contractions (negative output gap) than along expansions. Results show that the speed of convergence among the European countries during the economic slowdown is slower than in Australia, Canada and the United States. Finally, we found significant spillovers from investment in human capital and the productivity of the national economy leading to more rapid productivity growth. |
| Keywords: | Generalised Method of Moments; OECD Agriculture; Productivity Convergence; Business Cycle; Total Factor Productivity |
| JEL: | Q17 Q16 |
| Date: | 2020–05–13 |
| URL: | http://d.repec.org/n?u=RePEc:cte:werepe:30393&r=all |
| By: | Brändle, Tobias; Grunau, Philipp; Haylock, Michael; Kampkötter, Patrick |
| Abstract: | In economics, the recruitment process of firms is largely treated as a black box. To shed light on this process, we use new representative linked employer-employee data for German private-sector establishments to explore search, selection and screening activities over the years 2012-2018. We document longitudinal changes in hiring policies and address the heterogeneity across establishments relating to size, ownership, sector, and unobserved heterogeneity. Firms' recruitment strategies have sizeable effects on the composition of worker productivity, worker-firm match quality, the number of open vacancies, as well as expected staffing problems. Finally, we outline potential mechanisms and research gaps for future work, where there is room for more detailed and causal evidence. |
| Keywords: | Recruitment,Hiring Policies,Linked Employer-Employee Data,Worker Productivity,Vacancies,Match Quality |
| JEL: | J21 J63 M51 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:tuewef:134&r=all |
| By: | Ana María Iregui-Bohórquez (Banco de la República de Colombia); Ligia Alba Melo-Becerra (Banco de la República de Colombia); Antonio José Orozco-Gallo (Banco de la República de Colombia) |
| Abstract: | Corporate taxes play an important role in the firm's decision-making as they are part of the cost of capital. Thus, understanding the effect of taxes on the performance of firms in the context of frequent tax reforms, as is the case of Colombia, is of great relevance. We use meta-frontier stochastic techniques,which allow us to estimate in two-steps the technical effciency of firms within each economic sector and between economic sectors in relation to the set of firms in the country. Then, using quantile regression analysis, we estimate both the effect of corporate taxation on firm performance as well as the effect of efficiency on firms' tax payments. Results indicate that firms in some economic sectors could be benefiting form better production conditions and that the most effcient firms within each sector paid more taxes, as a share of assets. However, when compared to the meta-frontier, firms with higher effciency paid less taxes, suggesting differences in the tax burden of firms across economic sectors. **** RESUMEN: Los impuestos corporativos juegan un papel importante en la toma de decisiones de las empresas, ya que son parte del costo de uso del capital. Por lo tanto, estudiar la relación entre los impuestos corporativos y el desempeño de las empresas es de gran relevancia, en un contexto de frecuentes reformas tributarias, como es el caso de Colombia. Para el análisis se utilizan técnicas de meta-frontera estocástica que permiten estimar, en dos etapas, la eficiencia técnica de las empresas dentro de cada sector económico y entre sectores económicos en relación con el conjunto de empresas en el país. Luego, se utiliza el análisis de regresión cuantílica para estimar tanto el efecto de los impuestos corporativos sobre el desempeño de las empresas, como el efecto de la eficiencia sobre los pagos de impuestos. Los resultados indican que las empresas, en algunos sectores económicos, podrían beneficiarse de mejores condiciones de producción y que las más eficientes dentro de cada sector pagan más impuestos, como proporción de sus activos. Sin embargo, cuando se comparan con la frontera de producción global del país, las empresas con mayor eficiencia pagan menos impuestos, lo que sugiere diferencias en la carga tributaria entre sectores económicos. |
| Keywords: | Corporate taxes, Stochastic frontier analysis, firm performance, Impuestos corporativos, frontera estocástica, desempeño empresas |
| JEL: | C23 D22 H25 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:bdr:borrec:1116&r=all |