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on Business Economics |
| By: | Jose Asturias; Sewon Hur; Timothy J. Kehoe; Kim J. Ruhl |
| Abstract: | Applying the Foster, Haltiwanger and Krizan (FHK) (2001) decomposition to plant-level manufacturing data from Chile and Korea, we find that the entry and exit of plants account for a larger fraction of aggregate productivity growth during periods of fast GDP growth. To analyze this relationship, we develop a model of firm entry and exit based on Hopenhayn (1992). When we introduce reforms that reduce entry costs or reduce barriers to technology adoption into a calibrated model, we find that the entry and exit terms in the FHK decomposition become more important as GDP grows rapidly, just as they do in the data from Chile and Korea. |
| Keywords: | Entry; Exit; Productivity; Entry costs; Barriers to technology adoption |
| JEL: | E22 O10 O38 O47 |
| Date: | 2021–10–19 |
| URL: | http://d.repec.org/n?u=RePEc:fip:feddgw:93268&r= |
| By: | Chanont Banternghansa; Athiphat Muthitacharoen; Archawa Paweenawat; Krislert Samphantharak |
| Abstract: | This paper studies the effects of SME tax incentives on firm behaviors. We use firm-level panel data of all registered firms in Thailand to analyze the effects of a large reduction in corporate income tax rates for SMEs in 2011. First, we find that firms responded strongly to the SME tax incentive as indicated by a sharp bunching of firms just below the threshold after the incentive was introduced. The responses were concentrated among firms with positive EBIT, implying a financial motive for firms to remain small. Second, the bunching was prominent for stand-alone firms, where we observe slower revenue growth for those below the threshold. Third, we do not observe bunching for corporate-group firms, but we find evidence of tax-motivated profit shifting among them instead, especially among firms in small groups with weak corporate governance. Our analysis suggests that transfer pricing was likely a primary channel. Finally, despite the unintended consequences, we find that the incentive significantly raised the probability of firm's survival and encouraged new firm registration, as the policy intended. |
| Keywords: | Bunching; Tax Incentives; Business Group; Corporate Tax; Size-dependent Policy; Tax Evasion |
| JEL: | F23 H25 H26 K34 M42 |
| Date: | 2021–02 |
| URL: | http://d.repec.org/n?u=RePEc:pui:dpaper:148&r= |
| By: | Andrew Hawley; Marco Migueis |
| Abstract: | The failure of large and connected financial institutions often leads to system-wide financial crises and economic downturns (Labonte 2015). Even absent outright failure and bankruptcy, perceived weakness of a large and connected financial firm can result in decrease valuation of other firms – due to perceived linkages – and overall decrease in market liquidity. |
| Date: | 2021–09–30 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfn:2021-09-30&r= |
| By: | Kaldorf, Matthias; Wicknig, Florian |
| JEL: | E23 E44 G11 G32 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc21:242413&r= |
| By: | Shijun Gu; Chengcheng Jia |
| Abstract: | We study China’s state-owned enterprises (SOE) reform with a focus on the corporatization of SOEs. We first empirically document that small SOEs are more likely to exit or become privatized, whereas big SOEs are more likely to be corporatized while remaining under state ownership. We then build a heterogeneous-firm model featuring financial frictions, endogenous entry and exit, and optimal firm-type choices. Our calibrated model suggests that in the long run, the SOE reform increases the aggregate output by facilitating resource reallocation to the private sector. Along the transition, the corporatization option leads to higher aggregate output than the privatization-only policy by giving a higher financing capacity to more productive incumbent SOEs. |
| Keywords: | firm dynamics; economic reform; Chinese economy |
| JEL: | E23 E44 O16 O41 O43 |
| Date: | 2021–10–19 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedcwq:93174&r= |
| By: | Ricard Gil; Jean-François Houde; Shilong Sun; Yuya Takahashi |
| Abstract: | This paper studies the role and incidence of entry preemption strategic motives on the dynamics of new industries, while providing an empirical test for entry preemption, and quantifying its impact on market structure. The empirical context is the evolution of the U.S. drive-in theater market between 1945 and 1957. We exploit a robust prediction of dynamic entry games to test for preemption incentives: the deterrence effect of entering early is only relevant for firms in markets of intermediate size. Potential entrants in small and large markets face little uncertainty about the actual number of firms that will eventually enter. This leads to a non-monotonic relationship between market size and the probability of observing an early entrant. We find robust empirical support for this prediction using a large cross-section of markets. We then estimate the parameters of a dynamic entry game that matches the reduced-form prediction and quantify the strength of the preemption incentive. Our counterfactual analysis shows that strategic motives can increase the number of early entrants by as much as 50 percent in mid-size markets without affecting the number of firms in the long run. By causing firms to enter the market too early, we show that strategic entry preemption leads on average to a 5% increase in entry costs and a 1% decrease in firms' expected value (relative to an environment without strategic investments). |
| JEL: | L1 L12 L82 |
| Date: | 2021–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29408&r= |
| By: | Xiao, Jing (CIRCLE, Lund University); Lindholm Dahlstrand, Åsa (CIRCLE, Lund University) |
| Abstract: | The purpose of this study is to investigate the relationship between acquisitions and mobility of knowledge workers and managers in small technology companies and how individual skills and capabilities moderate the relationship. Relying on the matched employer-employee data of the Swedish high-tech sectors from 2007 to 2015, we find that acquisitions increase the likelihood of employee departures, mainly in the form of switching to another employer, but that these acquisition effects are weaker for employees with technological competences. Moreover, we also find that managers, compared to other employees, are more likely to exit from the (national) labor market after acquisitions. Our results show that acquiring firms tend to gain access to and retain knowledge workers with engineering background. |
| Keywords: | Acquisitions; Target employee mobility; High-tech sectors; Knowledge workers; Technological capabilities; Managerial capabilities |
| JEL: | C23 G34 J63 L26 |
| Date: | 2021–10–22 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:lucirc:2021_012&r= |
| By: | Hennig, Jan-Luca; Stadler, Balazs |
| JEL: | J16 J18 J31 J52 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc21:242354&r= |