nep-bec New Economics Papers
on Business Economics
Issue of 2021‒09‒13
seven papers chosen by
Vasileios Bougioukos
London South Bank University

  1. The Gender Gap Among Top Business Executives By Wolfgang Keller; Teresa Molina; William W. Olney
  2. Financial Frictions, Equity Constraints, and Average Firm Size Across Countries By Bento, Pedro; Ranasinghe, Ashantha
  3. Cournot-Bertrand equilibria under two-part tariff contract By Basak, Debasmita
  4. Project Aid and Firm Performance By Silvia Marchesi; Tania Masi; Saumik Paul
  5. Who Benefits from Tax Incentives? The Heterogeneous Wage Incidence of a Tax Credit By Carbonnier, Clément; Malgouyres, Clément; Py, Loriane; Urvoy, Camille
  7. A firm level approach on the e¤ects of IMF programs By Silvia Marchesi; Pietro Bomprezzi

  1. By: Wolfgang Keller (University of Colorado); Teresa Molina (University of Hawaii); William W. Olney (University of Hawaii)
    Abstract: This paper examines gender differences among top business executives using a large executive-employer matched data set spanning the last quarter century. Female executives make up 6.2% of the sample and we find they exhibit more labor market churning – both higher entry and higher exit rates. Unconditionally, women earn 26% less than men, which decreases to 7.9% once executive characteristics, firm characteristics, and in particular job title are accounted for. The paper explores the extent to which firm-level temporal flexibility and corporate culture can explain these gender differences. Although we find that women tend to select into firms with temporal flexibility and a female-friendly corporate culture, there is no evidence that this sorting drives the gender pay gap. However, we do find evidence that corporate culture affects pay gaps within firms: the within-firm gender pay gap disappears entirely at female-friendly firms. Overall, while both corporate culture and flexibility affect the female share of employment, only corporate culture influences the gender pay gap.
    Keywords: Women; Executive Compensation; Gender Pay Gap; Corporate Culture
    JEL: J16 J24 J33 J82 F16
    Date: 2020–12
  2. By: Bento, Pedro (Texas A&M University); Ranasinghe, Ashantha (University of Alberta, Department of Economics)
    Abstract: We document new evidence that low equity in financially under-developed economies is associated with lower productivity investment, a smaller employment share of large firms, and smaller average firm size within sectors. We present a tractable model with heterogeneous entrepreneurs that face equity constraints that limit investment at entry. The model can be solved analytically, making clear predictions for the impact of equity constraints on outcomes of interest consistent with the evidence we document. The model can account for one-fifth to one-third of the variance in observed average firm size and TFP across countries, all substantial relative to the literature.
    Keywords: financial development; equity; firm size; investment; aggregate productivity
    JEL: O10 O14 O41 O43
    Date: 2021–08–31
  3. By: Basak, Debasmita
    Abstract: We consider a vertically related market where one quantity setting and another price setting downstream firm negotiate the terms of a two-part tariff contract with an upstream input supplier. In contrast to the traditional belief, we show that when bargaining is decentralised, the price setting firm produces a higher output and earns a higher profit than the quantity setting firm. And, when bargaining is centralised, both firms produce the same output whereas the profit is higher under the price setting firm than the quantity setting firm.
    Keywords: Bargaining; Bertrand; Cournot; Two-part tariffs; Vertical pricing; Welfare
    JEL: L13 L2 L22
    Date: 2021–09–04
  4. By: Silvia Marchesi; Tania Masi; Saumik Paul
    Abstract: This paper evaluates the effect of development project aid from the World Bank and China on firms' Â’sales growth, using a large dataset of 110864 firms, spanning 121 countries between 2001 and 2016. We find that, contrary to the World Bank, Chinese ODA projects increase, on average, firm sales and, compared to sector-specific, Chinese region-speciÂ…c aid positively affect firm performance. Finally, we show that the positive effect of Chinese aid is stronger for firms lacking transport infrastructure (and with better electricity provision), suggesting that aid may improve firm performance by releasing their infrastructure constraints.
    Keywords: Aid effectiveness, World Bank projects, Chinese projects, Geo-coding, Firm growth.
    JEL: F35 O19 E24 E25
    Date: 2021–09
  5. By: Carbonnier, Clément (Sciences Po, Paris); Malgouyres, Clément (Paris School of Economics); Py, Loriane (Banque de France); Urvoy, Camille (Sciences Po, Paris)
    Abstract: Do workers gain from lower business taxes, and why? We estimate how a large corporate income tax credit in France is passed on to wages and explore the firm- and employee-level underlying mechanisms. The amount of tax credit firms get depends on their payroll share of workers paid less than a wage threshold. Exposure to the policy thus varies both across workers depending on their wage and across firms depending on their wage structure. Using exhaustive employer-employee data, we find that half of the surplus generated by the reform falls onto workers. Wage gains load on incumbents in high-skill occupations. The wage earnings of low-skill workers—nearly all individually eligible—do not change. This heterogeneous wage incidence is unlikely to be driven by scale effects or skill complementarities. We find that the groups of workers benefiting from wage gains are also more likely to continue working for the same firm. Further, we show that firms do not change their wage-setting behavior in response to the individual eligibility status of workers. Overall, our results suggest that the wage incidence of the tax credit operated collectively through rent-sharing and benefited workers most costly to replace.
    Keywords: business taxation, tax incentives, wage incidence, rent sharing
    JEL: D22 H25 H32
    Date: 2021–08
  6. By: Krammer, Sorin
    Abstract: This paper examines the effects of human resource (HR) policies on firm innovation. Specifically, we argue that firms who implement policies to stimulate job autonomy and performance-based pay will be more likely to innovate, as proxied by investments in R&D. In addition, we contend that the institutional (i.e., labour regulations) and competitive (i.e., pressure from imports) contexts in which a firm operates will affect the relationship between HR policies and innovation, albeit in different ways. We test these hypotheses using a dataset of more than 900 firms across a heterogenous set of 12 countries, majority of which are emerging markets. We find strong empirical backing for the role of both job autonomy and performance-based pay policies in stimulating firm innovation, and partial support for the moderating effects of institutional and competitive contexts of this relationship.
    Keywords: Human Resource Management; Job autonomy; Performance-based pay; Firm innovation; Labour regulations; Import competition
    JEL: D4 J33 J8 O17 O3 O32
    Date: 2021–07–28
  7. By: Silvia Marchesi; Pietro Bomprezzi
    Abstract: This paper evaluates the effects of IMF programs at the firm level, using a panel of about 130,000 firms, over the period 2003-2018. We consider the different dimensions of a Fund program, namely participation, loan size and number and scope of conditions, and we look at their effects on growth of firm sales, as well as on income redistribution within the firm. Our identiÂ…cation strategy exploits the differential effect of changes in IMF liquidity on program participation (Lang 2016). We find a positive impact of IMF programs on firms' Â’sales growth, and the effect is persistent through time. What is more, we find that performance is improved through the alleviation of the firm financing constraint. More severe conditionality seems to worsen firm performance in the short run, but then turns beneficial over the years. Finally, we find that participating to an IMF program reduces the labor income share in the short term, but employment increases in the long run, suggesting that the increased income is reinvested into the firm.
    Keywords: IMF conditionality, IMF, Firm growth, Labor Income Share.
    JEL: F33 O19 E24
    Date: 2021–08

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