nep-bec New Economics Papers
on Business Economics
Issue of 2022‒02‒07
six papers chosen by
Vasileios Bougioukos
London South Bank University

  1. Acquisition experience and director remuneration By Addis Gedefaw Birhanu; Philipp Geiler; Luc Renneboog; Yang Zhao
  2. Board Gender Diversity and Firm Risk By Zyed Achour
  3. Entrepreneurial Values, Cognitive Attitude toward Business and Business Behavioural Intention of ABM Grade 12 and Fourth-Year Business Management Students: A Comparative Study By Damianus Abun; Theogenia Magallanes; Frelyn B. Ranay; Nimfa Catbagan; Rodelyn J. Calairo
  4. Firm-to-Firm Trade: Imports, Exports, and the Labor Market By Jonathan Eaton; Samuel Kortum; Francis Kramarz
  5. Impact of Mergers and Acquisitions on Innovation: Evidence from a Panel of Indian Pharmaceutical Firms By Basant, Rakesh; Jaiswal, Neha
  6. Myopic Oligopoly Pricing By Iwan Bos; Marco A. Marini; Riccardo D. Saulle

  1. By: Addis Gedefaw Birhanu (emlyon business school); Philipp Geiler; Luc Renneboog; Yang Zhao
    Abstract: We investigate whether acquisition experience of executive and non-executive directors is priced in their remuneration contracts. Acquisition experience generates a contractual premium, and the relative size of this premium is higher for non-executive directors than for executives. Only a director's track record related to past successful acquisitions is priced. Acquisition experience of a director is not remunerated if this type of experience is already abundantly present in the firm through the firm's past acquisition record (substitution effect). We verify the results by examining potential endogeneity concerns, by analyzing a broad set of measures of acquisition experience (such as industry-specific, broad or international experience, experience on a target's board), and by ruling out alternative explanations (such as a director's general skills level or reputation, the CEO's power and delegation attitude, and the firm's corporate governance quality).
    Keywords: Directors,M&A,Takeovers,Mergers,remuneration contracting,Compensation,Experience,Human capital,skills
    Date: 2021–11–01
  2. By: Zyed Achour (INTES - Institut national du travail et des études sociales - Université de Carthage - University of Carthage)
    Abstract: In this chapter, we address the following question: Does board gender diversity affect global risk? Drawing on agency theory, upper echelon theory, and human capital theory, we hypothesize that gender diversity on the board of directors will decrease the volatility of firm risk. Applying fixed effect estimation on a panel data of listed French companies (SBF120) for the years 2011–2018, the results show a negative link between the percentage of female directors on the board and the standard deviation of monthly stock return as firm risk proxy suggesting that the inclusion of more women on corporate boards could improve financial stability. Our findings contribute to the literature by providing empirical evidence from France occupying the first place at the European level with the most female presence on the boards of directors.1
    Keywords: board gender diversity,board of directors,corporate governance,firm risk,SBF 120
    Date: 2021–11–15
  3. By: Damianus Abun (DWCL - Divine Word College of Laoag); Theogenia Magallanes; Frelyn B. Ranay (DWCL - Divine Word College of Laoag); Nimfa Catbagan (DWCL - Divine Word College of Laoag); Rodelyn J. Calairo (DWCL - Divine Word College of Laoag)
    Abstract: The study aimed to determine the difference in entrepreneurial values, cognitive attitude toward business, the business intention between ABM grade XII and the fourth-year college students of business management course. It also seeks to find out the effect of entrepreneurial values, cognitive attitude toward the business behavioral intention. The study found that entrepreneurial values, cognitive attitude toward business, and business intention of students are high and it further found that there is no significant difference between entrepreneurial values, cognitive attitude toward business, the business intention of ABM grade XII students, and the fourth-year college students of business management course. Thus, the hypothesis is rejected. It also found that there is a significant correlation between entrepreneurial values, cognitive attitude toward the business, and business behavioral intention. Therefore, the hypothesis is accepted.
    Keywords: attitude,entrepreneurial values,business intention,values education
    Date: 2021
  4. By: Jonathan Eaton (Pennsylvania State University); Samuel Kortum (Yale University); Francis Kramarz (CREST(ENSAE), Institut Polytechnique de Paris)
    Abstract: Customs data reveal heterogeneity and granularity of relationships among buyers and sellers. A key insight is how more exports to a destination break down into more firms selling there and more buyers per exporter. We develop a quantitative general equilibrium model of firm-to-firm matching that builds on this insight to separate the roles of iceberg costs and matching frictions in gravity. In the cross section, we find matching frictions as important as iceberg costs in impeding trade, and more sensitive to distance. Because domestic and imported intermediates compete directly with labor in performing production tasks, our model also fits the heterogeneity of labor shares across French producers. Applying the framework to the 2004 expansion of the European Union, reduced iceberg costs and reduced matching frictions contributed equally to the increase in French exports to the new members. While workers benefited overall, those competing most directly with imports gained less, even losing in some countries entering the EU.
    Date: 2022–01–16
  5. By: Basant, Rakesh; Jaiswal, Neha
    Abstract: Based on the literature, the paper identifies processes that get initiated post an M&A event and affect the acquiring firm’s innovation efforts. We apply panel fixed effects estimation techniques to analyze the individual impact of mergers and acquisitions on R&D intensity of acquiring firms using data for 217 publically listed Indian pharmaceutical firms (both acquirers and non-acquirers) during 1999-2018. The study finds that acquisitions rather than mergers provide impetus to R&D in the acquiring firms. This suggests that these two combinations – mergers and acquisitions - do not unleash the same type of innovation activity related processes in the acquiring firm. Results also show that when mergers or acquisitions are combined with purchase of assets, they have a positive impact on R&D intensity. Purchase of assets when combined with M&A seem to provide access to relevant complementary assets that makes R&D activity profitable for the acquirer post the merger or acquisition event. Possibly, firms view purchase of assets as a strategy that is complementary to M&A strategies for enhancing innovation. The paper shows that impact of M&A on R&D takes time and it is useful to analyze the impact of mergers and acquisitions separately, rather than combining the two together.
    Date: 2022–01–25
  6. By: Iwan Bos (Maastricht University); Marco A. Marini (Sapienza University of Rome); Riccardo D. Saulle (University of Padova)
    Abstract: This paper examines capacity-constrained oligopoly pricing with sellers who seek myopic improvements. We employ the Myopic Stable Set solution concept and establish the existence of a unique pure-strategy price solution for any given level of capacity. This solution is shown to coincide with the set of pure-strategy Nash equilibria when capacities are large or small. For an intermediate range of capacities, it predicts a price interval that includes the mixed-strategy support. This stability concept thus encompasses all Nash equilibria and oers a pure-strategy solution when there is none in Nash terms. It particularly provides a behavioral rationale for di erent pricing patterns, including Edgeworth price cycles and states of hypercompetition with supply shortages. We also analyze the impact of a change in firm size distribution. A merger among the biggest firms may lead to more price dispersion as it increases the maximum and decreases the minimum myopically stable price.
    Keywords: Bounded Rationality, Capacity Constraints, Mergers, Myopic Stable Set, Oligopoly Pricing, Supply Shortages
    JEL: C72 D43 L13
    Date: 2021–12

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