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on Business Economics |
| By: | Bertheau, Antoine (University of Copenhagen); Bunzel, Henning (Aarhus University); Vejlin, Rune Majlund (Aarhus University) |
| Abstract: | We present new evidence on how employment growth varies across firm types (size, productivity, and wage) and over the business cycle using Danish data covering almost 30 years. We decompose net employment growth into two recruitment margins: net hirings from/to employment (poaching) and net hirings from nonemployment. High-productivity firms are the most growing firms due to poaching. High wage firms poach almost as many workers, but shed an almost equal amount to non-employment. Large firms do not poach workers from smaller firms. In terms of employment cyclicality, we find that low-productive and low-wage firms shed proportionally more jobs in recessions. We relate our findings to recent models of employment fluctuations that jointly analyze worker and firm dynamics. |
| Keywords: | worker flows, firm heterogeneity, matched employer-employee data, business cycle, equilibrium search models |
| JEL: | E24 E32 J63 |
| Date: | 2020–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13681&r=all |
| By: | Michael Ewens; Nadya Malenko |
| Abstract: | Venture capital (VC) backed firms face neither the governance requirements nor a major separation of ownership and control of their public peers. These differences suggest that independent directors could play a unique role on private firm boards. This paper explores the dynamics of VC-backed startup boards using new data on board member entry, exit, and individual director characteristics. We document several new facts about board size, the allocation of control, and composition dynamics. At formation, a typical board has four members and is entrepreneur-controlled. Independent directors are found on the median board after the second financing event, when control over the board becomes shared, with independent directors holding the tie-breaking vote. These patterns are consistent with independent directors playing both a mediating and advising role over the startup lifecycle, and thus representing another potential source of value-add to entrepreneurial firm performance. |
| JEL: | G24 G34 |
| Date: | 2020–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:27769&r=all |
| By: | Davin Chor; Kalina B. Manova |
| Abstract: | Global value chains have fundamentally transformed international trade and development in recent decades. We use matched firm-level customs and manufacturing survey data, together with Input-Output tables for China, to examine how Chinese firms position themselves in global production lines and how this evolves with productivity and performance over the firm lifecycle. We document a sharp rise in the upstreamness of imports, stable positioning of exports, and rapid expansion in production stages conducted in China over the 1992-2014 period, both in the aggregate and within firms over time. Firms span more stages as they grow more productive, bigger and more experienced. This is accompanied by a rise in input purchases, value added in production, and fixed cost levels and shares. It is also associated with higher pro fits though not with changing profit margins. We rationalize these patterns with a stylized model of the firm lifecycle with complementarity between the scale of production and the scope of stages performed. |
| Keywords: | global value chains, production line position, upstreamness, firm heterogeneity, firm lifecycle, China |
| JEL: | F10 F14 F23 L23 L24 L25 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8536&r=all |
| By: | Lukas Mergele; Moritz Hennicke; Moritz Lubczyk |
| Abstract: | The end of communism in the 1990s probably is the most fundamental restructuring of institutions witnessed in recent history. At its core was the large-scale redistribution of previously state-owned companies. We construct a unique firm-level dataset to study this redistribution in East Germany where the entire state-owned economy was either privatized or liquidated within less than five years. We examine whether the privatization authority followed its mandate to privatize competitive firms using initial labor productivity to indicate firms’ competitiveness. Our results highlight that firms with higher baseline productivity are more likely to be privatized, yield higher sales prices, are more often acquired by West German investors, and are more likely to remain in business even 20 years after leaving public ownership. The privatization agency plausibly contributed to these outcomes by rating and prioritizing productive firms |
| Keywords: | Privatization; labor productivity; German reunification |
| JEL: | D24 G38 H11 L33 P31 |
| Date: | 2020–09 |
| URL: | http://d.repec.org/n?u=RePEc:eca:wpaper:2013/312650&r=all |
| By: | Alvaro Garcia-Marin; Santiago Justel; Tim Schmidt-Eisenlohr |
| Abstract: | Trade credit is the most important form of short-term finance for firms. In 2019, U.S. non-financial firms had about $4.5 trillion in trade credit outstanding equaling 21 percent of U.S. GDP. This paper documents two striking facts about trade credit use. First, firms with higher markups supply more trade credit. Second, trade credit use increases in relationship length, as firms often switch from cash in advance to trade credit but rarely away from trade credit. These two facts can be rationalized in a model where firms learn about their trading partners, sellers charge markups over production costs, and financial intermediation is costly. The model also shows that saving on financial intermediation costs provides a strong rationale for the dominance of trade credit. Using Chilean data at the firm-product-level and the trade-transaction level, we find support for all predictions of the model. |
| Keywords: | Trade credit; Markups; Financial intermediation; Learning |
| JEL: | F12 F14 G21 G32 |
| Date: | 2020–09–18 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgif:1303&r=all |
| By: | Kresimir Zigic; Jiri Strelicky; Michal Kunin |
| Abstract: | We study the interaction between public and private intellectual property rights (IPR) protection in a duopoly in which software developers offer a product variety of differing quality and compete for heterogeneous users, who have an option to buy a legal version, possibly use an illegal copy, or not buy a product at all. Illegal usage implies violation of IPR and is punishable. A developer may use private IPR protection for his software if the level of piracy is high. An important intermediate step in our analysis addresses firms’ pricing strategies and the analysis of the impact of both private and public IPR protection on these strategies (with monopoly serving as a benchmark case). Last but not least, we make some comparisons with an analogous model based on horizontal product differentiation. |
| Keywords: | vertically differentiated duopoly; software piracy; Bertrand competition; copyright protection; private and public intellectual property rights protection; |
| JEL: | D43 L11 L21 O25 O34 |
| Date: | 2020–09 |
| URL: | http://d.repec.org/n?u=RePEc:cer:papers:wp671&r=all |
| By: | Georgij Alekseev; Safaa Amer; Manasa Gopal; Theresa Kuchler; JW Schneider; Johannes Stroebel; Nils C. Wernerfelt |
| Abstract: | We analyze a large-scale survey of owners, managers, and employees of small businesses in the United States to understand the effects of the early stages of the COVID-19 pandemic on those businesses. The survey was fielded in late April 2020 among Facebook business page administrators, frequent sellers on Facebook's e-commerce platform Marketplace, and the general Facebook user population. We observe more than 66,000 responses covering most sectors of the economy, including many businesses that had stopped operating due to the pandemic. The survey asks 136 questions covering topics such as changes in business operations and employment, changes in financing patterns, and the interaction of household and business responsibilities. We characterize the adjustments implemented to survive the pandemic and explore the key challenges to continue operating or to re-open. We show how these patterns differ across industry, firm size, owner gender, and other firm characteristics. |
| JEL: | G0 M1 |
| Date: | 2020–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:27833&r=all |
| By: | Ufuk Akcigit (University of Chicago, CEPR and NBER); Stefanie Stantcheva (Harvard University, CEPR and NBER) |
| Abstract: | Tax policies are a wide array of tools, commonly used by governments to influence the economy. In this paper, we review the many margins through which tax policies can affect innovation, the main driver of economic growth in the long-run. These margins include the impact of tax policy on i) the quantity and quality of innovation; ii) the geographic mobility of innovation and inventors across U.S. states and countries; iii) the declining business dynamism in the U.S., firm entry, and productivity; iv) the quality composition of firms, inventors, and teams; and v) the direction of research effort, e.g., toward applied versus basic research, or toward dirty versus clean technologies. We give ideas drawn from research on how the design of policy can allow policy makers to foster the most productive firms without wasting public funds on less productive ones. |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:bfi:wpaper:2020-70&r=all |
| By: | Frank Packer; Mark M. Spiegel |
| Abstract: | Theory suggests that initial public offerings (IPOs) can adversely impact listed firms, both directly by increasing intra-industry competition, and in-directly by completing related asset market spaces. However, the endogeneity of individual IPO activity hinders testing these channels. This paper examines listing suspensions in China in a panel specification that accounts for macroeconomic and financial conditions, isolating the firm-level IPO impact. We measure the competi-tive impact of listing suspensions through the value share of postponed firms in the IPO queue in their industry, and asset-space competition by firms’ historical covariance with a synthetic portfolio of listed firms with the IPO queue industry mix at the time of suspension. Our results support the predicted IPO effects through both channels. We also document heterogeneity in IPO effects. Stronger firms–measured through a variety of proxies–benefit less from the suspension news. These results are robust to a battery of sensitivity tests |
| Keywords: | Initial public offerings; China; competition; asset space |
| JEL: | G14 G18 G32 |
| Date: | 2020–09–23 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedfwp:88766&r=all |
| By: | Falco J. Bargagli-Stoffi; Jan Niederreiter; Massimo Riccaboni |
| Abstract: | Thanks to the increasing availability of granular, yet high-dimensional, firm level data, machine learning (ML) algorithms have been successfully applied to address multiple research questions related to firm dynamics. Especially supervised learning (SL), the branch of ML dealing with the prediction of labelled outcomes, has been used to better predict firms' performance. In this contribution, we will illustrate a series of SL approaches to be used for prediction tasks, relevant at different stages of the company life cycle. The stages we will focus on are (i) startup and innovation, (ii) growth and performance of companies, and (iii) firms exit from the market. First, we review SL implementations to predict successful startups and R&D projects. Next, we describe how SL tools can be used to analyze company growth and performance. Finally, we review SL applications to better forecast financial distress and company failure. In the concluding Section, we extend the discussion of SL methods in the light of targeted policies, result interpretability, and causality. |
| Date: | 2020–09 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2009.06413&r=all |
| By: | Chris D'Souza; Timothy Grieder; Daniel Hyun; Jonathan Witmer |
| Abstract: | Business investment has been lower than expected in Canada and abroad since the financial crisis of 2007–09. This corporate investment gap is mirrored in firms’ other financing decisions, as they have increased cash holdings and dividend payments and decreased issuance of debt and equity. |
| Keywords: | Firm dynamics; Transmission of monetary policy |
| JEL: | D2 D22 D9 D92 G3 G31 G32 |
| Date: | 2020–09 |
| URL: | http://d.repec.org/n?u=RePEc:bca:bocsan:20-19&r=all |