|
on Business Economics |
| By: | Christian Keuschnigg (University of St. Gallen – Department of Economics (FGN-HSG); CESifo (Center for Economic Studies and Ifo Institute); Centre for Economic Policy Research (CEPR); Swiss Finance Institute); Michael Kogler (University of St. Gallen); Johannes Matt (London School of Economics & Political Science (LSE)) |
| Abstract: | How do banks facilitate creative destruction and shape firm turnover? We develop a dynamic general equilibrium model of bank credit reallocation with endogenous firm entry and exit that allows for both theoretical and quantitative analysis. By restructuring loans to firms with poor prospects and high default risk, banks not only accelerate the exit of unproductive firms but also redirect existing credit to more productive entrants. This reduces banks’ dependence on household deposits that are often supplied inelastically, thereby relaxing the economy’s resource constraint. A more efficient loan restructuring process thus fosters firm creation and improves aggregate productivity. It also complements policies that stimulate firm entry (e.g., R&D subsidies) and renders them more effective by avoiding a crowding-out via a higher interest rate. |
| Keywords: | creative destruction, reallocation, bank credit, productivity |
| JEL: | E23 E44 G21 O4 |
| Date: | 2022–11 |
| URL: | http://d.repec.org/n?u=RePEc:chf:rpseri:rp2283&r=bec |
| By: | Albert Banal-Estanol; 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. |
| Keywords: | Common ownership, investor diversification, product markets |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp2023&r=bec |
| By: | Hiesinger, Karolin (Institute for Employment Research (IAB), Nuremberg, Germany) |
| Abstract: | "This paper analyzes whether financial disincentives affect firm demand for disabled workers. In Germany, firms must pay a noncompliance fine if they do not meet their legal quota for disabled workers. I exploit a threshold in this quota: Firms with fewer than 40 employees are required to employ one disabled worker, whereas firms with 40 or more employees must employ two disabled workers. Using administrative firm data, my results suggest that firms respond partially to the threshold and employ 0.388 more disabled workers when they are located just above the threshold. The effect remains positive after correcting for bunching behavior." (Author's abstract, IAB-Doku) ((en)) |
| Keywords: | IAB-Open-Access-Publikation |
| JEL: | J15 J21 J23 J71 J78 |
| Date: | 2022–11–16 |
| URL: | http://d.repec.org/n?u=RePEc:iab:iabdpa:202225&r=bec |
| By: | Kuntal K. Das (University of Canterbury); Mona Yaghoubi (University of Canterbury) |
| Abstract: | Exploiting a novel measure of firm-level political risk based on earnings conference calls, we examine the effect of firm-level political risk on stock liquidity. We show that liquidity decreases significantly more in firms that are exposed to political risk. An increase in firm-level political risk by one standard deviation lowers liquidity by around 3.64%. We further investigate whether the effect of firm-level political risk on stock liquidity can be mitigated or exacerbated by the political environment of the U.S. economy and find some evidence of the Democratic liquidity premium. Our results are robust to alternative measures of (il)liquidity, and an estimation method. |
| Keywords: | Stock liquidity, political risk |
| JEL: | G11 G14 |
| Date: | 2022–11–01 |
| URL: | http://d.repec.org/n?u=RePEc:cbt:econwp:22/18&r=bec |
| By: | Chaoran Chen; Ashique Habib; Xiaodong Zhu |
| Abstract: | n standard macro-finance models, financial constraints mainly affect small or young firms but not large or old ones due to the self-financing mechanism, and the dispersion of marginal revenue product of capital (MRPK) of a firm cohort is less persistent than in the data. We extend a standard model by allowing firms to hire managers and large firms hire disproportionately more managers, consistent with data. In our model, financial constraints and the dispersion of MRPK persist, and even large firms are likely to be constrained. The productivity loss from financial frictions is also substantially amplified. |
| Keywords: | Collateral Constraint, Managerial Inputs, Elasticity of Scale, Misallocation, Aggregate Productivity, China |
| JEL: | E13 G21 L16 L26 O16 O41 |
| Date: | 2022–11–23 |
| URL: | http://d.repec.org/n?u=RePEc:tor:tecipa:tecipa-744&r=bec |
| By: | Mayda, Anna Maria (Georgetown University); Orefice, Gianluca (Université Paris-Dauphine); Santoni, Gianluca (CEPII, Paris) |
| Abstract: | This paper analyses the impact of skilled migrants on the innovation (patenting) activity of French firms between 1995 and 2010, and investigates the underlying mechanism. We present districtlevel and firm-level estimates and address endogeneity using a modified version of the shift-share instrument. Skilled migrants increase the number of patents at both the district and firm level. Large, high-productivity and capital-intensive firms benefit the most, in terms of innovation activity, from skilled immigrant workers. Importantly, we provide evidence that one channel through which the effect works is task specialization (as in Peri and Sparber, 2009). The arrival of skilled immigrants drives French skilled workers towards language-intensive, managerial tasks while foreign skilled workers specialize in technical, research-oriented tasks. This mechanism manifests itself in the estimated increase in the share of foreign inventors in patenting teams as a consequence of skilled migration. Through this channel, greater innovation is the result of productivity gains from specialization. |
| Keywords: | skilled immigration, innovation, patents |
| JEL: | F22 J61 |
| Date: | 2022–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15693&r=bec |
| By: | Benjamin G. Hyman; Matthew Freedman; Shantanu Khanna; David Neumark |
| Abstract: | We examine firm responses to location-based hiring subsidies. We leverage institutional features of the California Competes Tax Credit (CCTC), a large-scale business incentive program that incorporates best practices from prior job creation policies. The CCTC award selection procedure combines formula-based and discretionary components. Leveraging applicant score eligibility cutoffs in a regression discontinuity design and taking advantage of rich longitudinal microdata on establishments and their parent firms, we find that firms expand activity in California in response to CCTC awards, particularly in disadvantaged parts of the state. Moreover, we find little evidence of spillovers to other states. Our results suggest that targeted and audited hiring subsidies can be effective in promoting local business expansions without significant cross-state displacement effects. |
| JEL: | H25 H71 H73 J23 J38 R12 R38 R58 |
| Date: | 2022–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:30664&r=bec |
| By: | Daron Acemoglu; Gary W. Anderson; David N. Beede; Cathy Buffington; Eric E. Childress; Emin Dinlersoz; Lucia S. Foster; Nathan Goldschlag; John C. Haltiwanger; Zachary Kroff; Pascual Restrepo; Nikolas Zolas |
| Abstract: | This paper describes the adoption of automation technologies by US firms across all economic sectors by leveraging a new module introduced in the 2019 Annual Business Survey, conducted by the US Census Bureau in partnership with the National Center for Science and Engineering Statistics (NCSES). The module collects data from over 300,000 firms on the use of five advanced technologies: AI, robotics, dedicated equipment, specialized software, and cloud computing. The adoption of these technologies remains low (especially for AI and robotics), varies substantially across industries, and concentrates on large and young firms. However, because larger firms are much more likely to adopt them, 12-64% of US workers and 22-72% of manufacturing workers are exposed to these technologies. Firms report a variety of motivations for adoption, including automating tasks previously performed by labor. Consistent with the use of these technologies for automation, adopters have higher labor productivity and lower labor shares. In particular, the use of these technologies is associated with a 11.4% higher labor productivity, which accounts for 20-30% of the difference in labor productivity between large firms and the median firm in an industry. Adopters report that these technologies raised skill requirements and led to greater demand for skilled labor but brought limited or ambiguous effects to their employment levels. |
| JEL: | E22 J20 J24 |
| Date: | 2022–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:30659&r=bec |
| By: | Amoroso, Sara (European Commission, Joint Research Centre); Bruno, Randolph Luca (University College London); Magazzini, Laura (Sant'Anna School of Advanced Studies) |
| Abstract: | Recent literature has raised the attention on the estimation of time-invariant variables both in a static and a dynmamic framework. In this context, Hausman-Taylor type estimators have been applied, relying crucially on the distinction between exogenous and endogenous variables (in terms of correlation with the time-invariant error component). We show that this provision can be relaxed, and identification can be achieved by relying on the milder assumption that the correlation between the individual effect and the time-varying regressors is homogenous over time. The methodology is applied to identify the role of inputs from "Science" (firm-level publications' stock) on firms' labour productivity, showing that the effect is larger for those firms with higher level of R&D investments. The results further support the dual – direct and indirect – role of R&D. |
| Keywords: | panel data, time-invariant variables, science, productivity, R&D |
| JEL: | C23 O32 L20 |
| Date: | 2022–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15708&r=bec |
| By: | Heng Geng (Victoria University of Wellington); Harald Hau (University of Geneva - Geneva Finance Research Institute (GFRI); Swiss Finance Institute; Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute)); Roni Michaely (The University of Hong Kong; ECGI); Binh Nguyen (RMIT University Vietnam) |
| Abstract: | The large increase in common institutional ownership raises significant antitrust concerns, even if the precise channel of any potential influence on market outcomes is unclear. Using a novel dataset on shareholders’ board representation, we examine the role of common institutional directors (i.e., joint board representation by institutional shareholders) as one such potential channel with three main findings. First, institutional board representation is extremely low relative to extensive institutional ownership. Second, common institutional directors on rival firm boards are rare. Third, common institutional directors show no incremental effect on market outcomes amidst the positive relationship between common ownership and firm profitability. |
| Keywords: | Common ownership, institutional board representation, competition policy |
| JEL: | G32 G34 L4 |
| Date: | 2022–11 |
| URL: | http://d.repec.org/n?u=RePEc:chf:rpseri:rp2289&r=bec |
| By: | René BELDERBOS; FUKAO Kyoji; IKEUCHI Kenta; KIM Young Gak; KWON Hyeog Ug |
| Abstract: | Do high or low productivity firms self-select into locations characterized by high industry agglomeration? On the one hand, productive firms may benefit more from the availability of specialized (labour) inputs and they are also more likely to survive heightened competition. On the other hand, productive firms face greater risks of knowledge dissipation to collocated rival firms, as they may contribute more than they receive in terms of knowledge spillovers. We examine location decisions for new plant establishments by firms in Japan with established productivity records (multi-plant firms) at the fine-grained level of towns, wards, and cities where knowledge spillovers are most likely to occur. We find that the adverse selection effects of industry agglomeration–the process of agglomerated areas attracting weaker rather than stronger firms–dominate if knowledge spillovers are most harmful to productive entrants when the focal firm and local incumbent establishments target the same (domestic) product market. We conclude that negative sorting processes do occur, but that these can only be uncovered in a more fine-grained analysis that takes into account ex ante measures of firm heterogeneity and the nature of product markets. |
| Date: | 2022–11 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:22105&r=bec |
| By: | Dobbelaere, Sabien (Vrije Universiteit Amsterdam); McCormack, Grace (University of Southern California); Prinz, Daniel (World Bank); Sovago, Sandor (University of Groningen) |
| Abstract: | Using rich administrative data from the Netherlands, we study the consequences of firm consolidation for workers. For workers at acquired firms, takeovers are associated with a 8.5% drop in employment at the consolidated firm and a 2.6% drop in total labor income. These effects are persistent even four years later. We show that the primary mechanism for this job loss is labor restructuring at consolidating firms. Specifically, workers with higher-than-expected pay relative to their human capital and workers with skills that are likely already present at acquirers are less likely to be retained. |
| Keywords: | takeovers, labor market outcomes, labor restructuring |
| JEL: | G34 J2 J3 M51 |
| Date: | 2022–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15724&r=bec |
| By: | Vo, Long Hai (University of Western Australia); Le, Thai-Ha (VinFuture Foundation); Park, Donghyun (Asian Development Bank) |
| Abstract: | We examine the adverse impact of coronavirus disease (COVID-19) on the performance of more than 12,000 firms in 32 countries along several dimensions; namely, revenue, production, and labor outcomes. We find that the majority of firms experienced permanent or temporary closures, decreased sales and working hours, reduced production capacity, and worker layoffs. However, the impact was heterogeneous across countries and industries. To explain the diverse firm performance, we identify key factors that significantly contribute to firm resilience during the COVID-19 pandemic, especially access to digital infrastructure. After controlling for firm characteristics, macroeconomic conditions, and pandemic prevalence, we found that firms that have access to digital infrastructure performed better than those that do not. The key channel is an enhanced capacity to adopt electronic commerce business models and employ a larger share of the remote workforce, which boosts resilience during the pandemic when social distancing measures are mandated. |
| Keywords: | organizational reform; digital infrastructure; technology transformation; working from home; labor productivity |
| JEL: | H12 L25 M11 |
| Date: | 2022–08–16 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbewp:0667&r=bec |