nep-bec New Economics Papers
on Business Economics
Issue of 2021‒12‒13
seven papers chosen by
Vasileios Bougioukos
London South Bank University

  1. Resource Misallocation Among Listed Firms in China: The Evolving Role of State-Owned Enterprises By Ms. Emilia M Jurzyk; Mr. Cian Ruane
  2. Young Firms and Monetary Policy Transmission By Thomas McGregor
  3. Profit-Sharing vs Price-Fixing Collusion with Heterogeneous Firms By Hattori, Keisuke
  4. Assessing EU Merger Control through Compensating Efficiencies By Pauline Affeldt; Tomaso Duso; Klaus Gugler; Joanna Piechucka
  5. Did US Business Dynamism Recover in the 2010s? By Asier Aguilera-Bravo; Miguel Casares; Hashmat Khan
  6. Overconfident CEOs, Corporate Social Responsibility & Tax Avoidance: Evidence from China By Panagiotis Karavitis; Pantelis Kazakis; Tianyue Xu
  7. The Ability to Work Remotely Measures and Implications By Kathryn Langemeier; Maria D. Tito

  1. By: Ms. Emilia M Jurzyk; Mr. Cian Ruane
    Abstract: We document that publicly listed Chinese state-owned enterprises (SOEs) are less productive and profitable than publicly listed firms in which the state has no ownership stake. In particular, Chinese listed SOEs are more capital intensive and have a lower average product of capital than non-SOEs. These productivity differences increased between 2002 and 2009, and remain sizeable in 2019. Using a heterogeneous firm model of resource misallocation, we find that there are large potential productivity gains from reforms which could equalize the marginal products of listed SOEs and listed non-SOEs.
    Keywords: State-Owned Enterprises;Misallocation;WP;private firm;firm distortion;productivity difference;representative firm;firm Fe;productivity gap;technical efficiency; Productivity; Capital productivity; Public enterprises; Total factor productivity; Labor productivity
    Date: 2021–03–12
  2. By: Thomas McGregor
    Abstract: We investigate the role of business dynamism in the transmission of monetary policy by exploitingthe variation in firm demographics across U.S. states. Using local projections, we find that a larger fraction of young firms significantly mutes the effects of monetary policy on the labor market and personal income over the medium term. The firm entry rate and the employment share of young firms are key factors underpinning these results, which are robust to a battery of robustness tests. We develop a heterogeneous-firm model with age-dependent financial frictions that rationalizes the empirical evidence.
    Keywords: firm demographics; business dynamism; monetary policy; local projections; U.S. states.; U.S. states; monetary policy shock; entry rate; population demographics; policy function; startup firm; exit rate; firm productivity; growth rate; Employment; Wages; Personal income; Credit ratings; Global
    Date: 2021–03–05
  3. By: Hattori, Keisuke
    Abstract: This paper compares the profitability and sustainability between profit-sharing collusion with side payments and price-fixing collusion without side payments in a two-firm repeated Bertrand game when firms differ in both cost and discount factor. Although profit-sharing collusion yields larger joint profits, bargaining over collusive agreements makes heterogeneous firms prefer different types of collusion: a low-cost (high cost) firm is more likely to adhere to profit-sharing (price-fixing) collusion. If both firms have the same discount factor, profit-sharing collusion is more sustainable. However, price-fixing collusion can be the only sustainable collusion if the efficient firm is more patient than the inefficient firm. Furthermore, we extend profit-sharing collusion by incorporating side payments with different enforcement procedures (i.e., different timing of side payments) and different purposes: to reach agreement and to make the agreement sustainable. Our results provide a theoretical rationale for why firms fail or succeed at reaching and sustaining some forms of collusion.
    Keywords: Collusion; Asymmetric costs; Asymmetric discount factors; Side payments; Repeated game
    JEL: C73 C78 L13 L41
    Date: 2021–11–23
  4. By: Pauline Affeldt; Tomaso Duso; Klaus Gugler; Joanna Piechucka
    Abstract: Worldwide, the overwhelming majority of large horizontal mergers are cleared by antitrust authorities unconditionally. The presumption seems to be that efficiencies from these mergers are sizeable. We calculate the compensating efficiencies that would prevent a merger from harming consumers for 1,014 mergers affecting 12,325 antitrust markets scrutinized by the European Commission between 1990 and 2018. Compensating efficiencies seem too large to be achievable for many mergers. Barriers to entry and the number of firms active in the market are the most important factors determining their size. We highlight concerns about the Commission’s merger enforcement being too lax.
    Keywords: compensating efficiencies, efficiency gains, merger control, concentration, screens, HHI, mergers, unilateral effects, market definition, entry barriers
    JEL: L19 L24 L00 K21
    Date: 2021
  5. By: Asier Aguilera-Bravo (Department of Business, Universidad de Navarra); Miguel Casares (Departamento de Economía, Universidad P´ublica de Navarra); Hashmat Khan (Department of Economics, Carleton University)
    Abstract: We provide evidence showing that the US business entry rates have been either rising or remained flat over the past decade ending their secular decline observed over previous decades. Although the number of startups relative to incumbents has been increasing, their job-size (intensive margin) has decreased substantially. Controlling for these opposite trends reveals that the size-adjusted entry rates have remained flat after 2010 at historically minimum values. The vigorous business dynamism reflected in actual entry rates, therefore, masks the weakness of employment creation in new businesses. The average number of hirings per new establishment has fallen from around 6 jobs in the 1990s to nearly 3 jobs in recent observations.
    Keywords: Business entry rates; Business dynamism; Size-adjusted entry rates; BED; BDS
    JEL: E22 E32
    Date: 2021–04–26
  6. By: Panagiotis Karavitis; Pantelis Kazakis; Tianyue Xu
    Abstract: CEO overconfidence is a significant factor in corporate decisions. We investigate whether CEO overconfidence affects the relationship between corporate social responsibility (CSR) and tax avoidance using a dataset of Chinese listed companies. We find that firms with higher CSR scores avoid paying more taxes. This relationship is moderated, however, by CEO overconfidence. While firms with higher CSR scores avoid more taxes on average, those led by overconfident CEOs avoid less. We contend that overconfident CEOs are less likely to use CSR strategically to mitigate risk. Our conclusion stands up to a battery of sensitivity tests, including the use of CSR subdimensions.
    Keywords: Corporate social responsibility; Tax avoidance; CEO overconfidence
    JEL: G30 H26
    Date: 2021–11
  7. By: Kathryn Langemeier; Maria D. Tito
    Abstract: At the onset of the COVID-19 recession, a large share of the employed switched to remote work. Individual- and firm-level surveys indicated that the switch affected between 35 and 45 percent of workers.
    Date: 2021–11–26

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