nep-bec New Economics Papers
on Business Economics
Issue of 2022‒12‒05
eight papers chosen by
Vasileios Bougioukos
London South Bank University

  1. The Role of Nonemployers in Business Dynamism and Aggregate Productivity By Pedro Bento; Diego Restuccia
  2. Online Channels Sales Premia in Times of COVID-19: First Evidence from Germany By Joachim Wagner
  3. Ownership Diversification and Product Market Pricing Incentives By Albert Banal-Estañol; Jo Seldeslachts; Xavier Vives
  4. Private sanctions By Hart, Oliver D.; Thesmar, David; Zingales, Luigi
  5. Expectations Formation with Fat-tailed Processes: Evidence from Sales Forecasts By Eugene Larsen-Hallock; Adam Rej; David Thesmar
  6. Characteristics of the Board of Directors and corporate financial performance – An empirical evidence By Nguyen, V.C.; Thuan, Huynh
  7. Product Mix and Firm Productivity Responses to Trade Competition By Thierry Mayer; Marc Melitz; Gianmarco Ottaviano
  8. The Effect of Performance Pay Incentives on Market Frictions: Evidence from Medicare By Atul Gupta; Guy David; Lucy (Kunhee) Kim

  1. By: Pedro Bento; Diego Restuccia
    Abstract: The well-documented decline in business dynamism, measured by the net entry rate of employer firms, has been proposed as an explanation for the productivity growth slowdown in the United States. We assess the role of nonemployers, firms without paid employees, in business dynamism and aggregate productivity. Including nonemployers, the total number of firms has instead increased since the early 1980s, which in the context of a standard model of firm dynamics implies an annualized growth of measured aggregate productivity of 0.22%, one-quarter of the productivity growth in the data. Further accounting for time changes in the share of nonemployer firms and in the distribution of employment across firms, we find that productivity growth is even higher (0.47% per year). The productivity growth slowdown is not due to changes in net firm entry.
    Keywords: nonemployers, employer firms, business dynamism, productivity, TFP.
    JEL: O4 O51 E1
    Date: 2022–10–28
  2. By: Joachim Wagner (Leuphana University Lüneburg and Kiel, Institute for the Word Economy)
    Abstract: Presence on the web tends to be important for firms. Empirical studies show that firms with a better performance along various dimensions, and firms that are more internationally active, tend to have a website. Furthermore, a website helped firms to survive in times of the COVID-19 pandemic. An open question that is not discussed in this literature is how the use of online channels for sales is related to various dimensions of firm performance. This note contributes to the literature by using a unique recently released set of firm level data from Germany to investigate for the first time the links between online channels sales and firm characteristics.
    Keywords: Online channels sales; firm performance; COVID-19; Germany 2021, Enterprise Survey Data Set
    JEL: D22 L25
    Date: 2022–11
  3. By: Albert Banal-Estañol; Jo Seldeslachts; Xavier Vives
    Abstract: We link investor ownership to profit loads on rival firms by the managers of a firm. We propose a theory model in which we distinguish between passive and active investors’ holdings, where passive investors are relatively more diversified. We find that if passive investors become relatively bigger, then common ownership incentives increase. We show that these higher incentives, in turn, are linked to higher firm markups. We empirically confirm these relationships for public US firms in the years 2004-2012, where the financial crisis coincides with passive investors’ rise. The found effects are small but non-negligible.
    Date: 2022–11
  4. By: Hart, Oliver D.; Thesmar, David; Zingales, Luigi
    Abstract: We survey a representative sample of the U.S. population to understand stakeholders' desire to see their firms exit Russia after the invasion of Ukraine. 61% of respondents think that firms should exit Russia, regardless of the consequences. Only 37% think that leaving Russia is a purely business decision. If a firm does not conform with these desires, 66% of the respondents are willing to boycott it. This desire diminishes with the costs they face in boycotting. At $500, 43% would want to boycott. Our model is able to explain up to 24% of the cross-sectional variability in attitudes to boycotting. Nevertheless, it is difficult to separate deontological and consequentialist motives to boycott, because subjects' beliefs are highly correlated with values. When we randomize the beliefs we find a strong effect for shareholders, but not for the other stakeholders. We discuss what are the geopolitical and economic implications of a world where private corporations discontinue profitable business relationships for moral or political reasons.
    Date: 2022
  5. By: Eugene Larsen-Hallock; Adam Rej; David Thesmar
    Abstract: We empirically analyze a large sample of firm sales growth expectations. We find that the relationship between forecast errors and lagged revision is non-linear. Forecasters underreact to typical (positive or negative) news about future sales, but overreact to very significant news. To account for this non-linearity, we propose a simple framework, where (1) sales growth dynamics have a fat-tailed high frequency component and (2) forecasters use a simple linear rule. This framework qualitatively fits several additional features of data on sales growth dynamics, forecast errors, and stock returns.
    Date: 2022–10
  6. By: Nguyen, V.C.; Thuan, Huynh
    Abstract: The objectives of the research are to investigate the characteristics of the board of directors on the financial performance of the enterprise. Using a sample data from 52 construction and real estate enterprises listed on Vietnam stock exchange in the period 2006-2020. Using typical regression methods such as pooled OLS, FEM, REM and assessing the defects of the research model, the FGLS method is selected. At the same time, due to the existence of endogenous phenomena and the nature of interdependence among enterprises in Vietnam, research using the instrumental variables two-step generalized method of moments (IV-GMM) in order to correct for cross-sectional dependence, autocorrelation, endogeneity, and heteroskedasticity in the analysis. Research results suggest that board size, female board members, meeting frequency, and board members' education have a positive influence on financial performance. Moreover, the independence of the Board of Directors increases, the business efficiency decreases. The research also found a positive relationship of tangible fixed assets, and a negative relationship between capital structure choice, firm size and corporate financial performance.
    Date: 2022–10–05
  7. By: Thierry Mayer (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique, CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique, CEPR - Center for Economic Policy Research - CEPR); Marc Melitz (Department of Economics, Harvard University - Harvard University [Cambridge], NBER - National Bureau of Economic Research [New York] - NBER - The National Bureau of Economic Research, CEPR - Center for Economic Policy Research - CEPR); Gianmarco Ottaviano (Bocconi University [Milan, Italy], CEP - LSE - Centre for Economic Performance - LSE - London School of Economics and Political Science, CEPR - Center for Economic Policy Research - CEPR)
    Abstract: We document how demand shocks in export markets lead French multiproduct exporters to reallocate the mix of products sold in those destinations. In response to positive demand shocks, French firms skew their export sales toward their best-performing products. We develop a theoretical model of multiproduct firms and derive the specific demand conditions (with endogenous price elasticities) needed to generate these product-mix reallocations. Under those demand conditions, the increased competition from demand shocks in export markets also induces productivity changes within the firm. We empirically test for this connection between demand shocks and the productivity of multiproduct firms. We find that this connection is economically substantial.
    Date: 2021–12–02
  8. By: Atul Gupta; Guy David; Lucy (Kunhee) Kim
    Abstract: Medicare has increased the use of performance pay incentives for hospitals, with the goal of increasing care coordination across providers, reducing market frictions, and ultimately to improve quality of care. This paper provides new empirical evidence by using novel operations and claims data from a large, independent home health care firm with the Hospital Readmissions Reduction Program (HRRP) penalty on hospitals providing identifying variation. We find that the penalty incentive to reduce re-hospitalizations passed through from hospitals to the firm at least for some types of patients, since it provided more care inputs for heart disease patients discharged from hospitals at greater penalty risk and that contributed more patients to the firm. This evidence suggests that HRRP helped increase coordination between hospitals and home health firms without formal integration. Greater home health effort does not appear to have led to lower patient readmissions.
    JEL: I11 I13 I18
    Date: 2022–11

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