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on Business Economics |
| By: | Ako Viou Bahun-Wilson (Université de Sherbrooke) |
| Abstract: | Recent empirical investigations by Argente et al. (2018) reveal that product reallocation, i.e. creation and destruction of products, happens through two leading margins: entry and exit of production modules within firms, the so-called "extensions", and changes in the characteristics of products within incumbent production modules, the so-called "improvements". This paper develops a DSGE model in which product reallocation involves these two margins and examines the impact on macroeconomic dynamics. I show that relative to the standard model that only accounts for extensions, the model augmented with product improvements does a better job at explaining the dynamics of production modules within firms and the firm-level TFP. A recession facilitates the production of low-quality/low-cost products, which allows the survival of low-productivity modules that would not survive in a fixed quality environment. As the recessionary shock dissipates, the share of high-quality products increases, eliminating low-productivity and low-quality modules and increasing the firm-level TFP. My results illustrate the importance of recognizing the dynamics of product characteristics within firms’ production lines in addition to the dynamics of production lines per se to understand business cycles. |
| Keywords: | product creation and destruction, multi-line firm, quality switching, business cycles. |
| JEL: | D24 E23 E32 L15 L60 |
| Date: | 2022–03 |
| URL: | http://d.repec.org/n?u=RePEc:shr:wpaper:22-01&r=bec |
| By: | Owen, Ann; Temesvary, Judit; Wei, Andrew |
| Abstract: | Leadership roles in banking remain dominated by men; only about one in six bank board members is female. Connections among board members can improve firm performance, but women on boards are much less connected than men. In this paper, we study how gender relates to the role of connections: how do connected female versus male board members affect banks’ performance? Using IV techniques to account for the endogeneity of connections, we find that (1) better connected female (but not male) board members improve bank profitability and reduce earnings management; (2) connections of women on important board committees also improve performance – especially when the share of women on the board is relatively high (above the median). |
| Keywords: | bank boards; professional networks; gender diversity; instrumental variables |
| JEL: | G21 G34 J16 |
| Date: | 2023–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:116811&r=bec |
| By: | Osei-Tutu, Francis; Weill, Laurent |
| Abstract: | We examine the effect of regional favoritism on the access of firms to credit. Using firm-level data on a large sample of 29, 000 firms covering 47 countries, we investigate the hypothesis that firms in the birth regions of national political leaders have better access to credit. Our evidence suggests that firms located in birth regions of political leaders are less likely to be credit constrained. The effect takes place through the demand channel: firms in leader regions face fewer hurdles in applying for loans. We find no evidence, however, of preferential lending from banks to firms in leader regions. Thus, regional favoritism affects access to credit through differences in perceptions of firm managers, not deliberate changes in the allocation of resources by political leaders. |
| Keywords: | regional favoritism, access to credit, borrower discouragement |
| JEL: | D72 G21 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:bofitp:12023&r=bec |
| By: | Peters, Jan Cornelius (Thünen Institute); Niebuhr, Annekatrin (Institute for Employment Research (IAB), Nuremberg, Germany ; Univ, Kiel) |
| Abstract: | "Using linked employer-employee data on labor market biographies of workers in Germany, this paper analyzes where valuable work experience is primarily acquired. It distinguishes between learning effects related to firm size and labor market size. We show that wages increase with the size of the cities and establishments in which experience was accumulated. Almost 40 percent of the dynamic benefits of working in large cities are in fact due to working in large firms. We provide evidence on two potential explanations for the role of size: formal training increases with firm size and the frequency of job changes with city size." (Author's abstract, IAB-Doku) ((en)) |
| Keywords: | IAB-Open-Access-Publikation |
| JEL: | J31 R12 R23 |
| Date: | 2023–03–30 |
| URL: | http://d.repec.org/n?u=RePEc:iab:iabdpa:202304&r=bec |
| By: | Erik Brynjolfsson; Wang Jin; Xiupeng Wang |
| Abstract: | Information flows, and thus information technology (IT) are central to the structure of firms and markets. Using data from the U.S. Census Bureau, we provide firm-level evidence that increases in IT intensity are associated with increases in firm size and concentration in both employment and sales. Results from instrumental variables and long-difference models suggest that the effect is likely causal. The effect of IT on size is more pronounced for sales than employment, which leads to a decline in the labor share, consistent with the “scale without mass” theory of digitization. Furthermore, we find that IT provides greater benefits to larger firms by increasing their capability to replicate their operations across establishments, markets, and industries. Our findings provide empirical evidence suggesting that the substantial rise in IT investment is one of the main driving forces for the increase in firm size, decline of labor share, the growth of superstar firms, and increased market concentration in recent years. |
| JEL: | L10 O3 O30 |
| Date: | 2023–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:31065&r=bec |
| By: | Esther Ann Boler; Andreas Moxnes; Karen Helene Ulltveit-Moe |
| Abstract: | This paper makes use of a reform that allowed firms to use patents as stand-alone collateral, to estimate the magnitude of collateral constraints and to quantify the aggregate impact of these constraints on misallocation and productivity. Using matched firm-bank data for Norway, we find that bank borrowing increased for firms affected by the reform relative to the control group. We also find an increase in the capital stock, employment and innovation as well as equity funding. We interpret the results through the lens of a model of monopolistic competition with potentially collateral constrained heterogeneous firms. Parameterizing the model using well-identified moments from the reduced form exercise, we find quantitatively large gains in output per worker in the sectors in the economy dominated by constrained (and intangible-intensive) firms. The gains are primarily driven by capital deepening, whereas within-industry misallocation plays a smaller role. |
| Keywords: | intangible capital, patents, credit constraints, misallocation, productivity |
| Date: | 2023–03–14 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1905&r=bec |
| By: | Schoonjans, Eline; Hottenrott, Hanna; Buchwald, Achim |
| Abstract: | Increasing the participation of women in top-level corporate boards is high on the agenda of policymakers. Yet, we know little about director appointment dynamics and the drivers and impediments of women appointments. This study builds on organizational and group-level behavior theories and empirically investigates how ex-ante board structures and gender-specific board dynamics impact the representation of women on corporate boards. We study boards of listed firms in Europe between 2002 and 2019 and find a declining appointment probability for every additional woman, i.e. the share of women already on the board negatively predicts the likelihood of additional women appointments. Further, we find evidence of a replacement effect, i.e. the likelihood of a woman being appointed as director is significantly larger when a woman, compared to when a man, leaves the board. We do not find spillover effects from non-executive to executive boards. These results are robust to econometric model specifications that address potential endogeneity concerns using matching and instrumental variables. Our results confirm that board director appointments are gender specific and suggest that demand-side factors such as explicit and implicit norms drive women appointments up to a certain threshold. |
| Keywords: | Executive Directors, Non-Executive Directors, Appointments, Board Dynamics, Gender, Tokenism, Critical Mass, Corporate Governance |
| JEL: | G34 J08 J16 J71 L22 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:23005&r=bec |
| By: | Konrad Kuhmann |
| Abstract: | I study the role of firm heterogeneity for the transmission of unconventional monetary policy in the form of “credit policy†à la Gertler and Karadi (2011). To this end, I lay out a Two-Agent New-Keynesian model with financially constrained and unconstrained firms and a financial intermediary with an endogenous leverage constraint. I find that, when firms are heterogeneous, aggregate investment is substantially less responsive to credit policy compared to an identical firm setting. Moreover, when debt markets are segmented, credit policy directed exclusively at financially unconstrained firms is most effective. My paper provides a tractable framework to illustrate mechanisms through which firm heterogeneity affects the transmission of credit policy. According to my findings, the presence of firm heterogeneity can be expected to make credit policy less effective than predicted by a representative agent framework. |
| Keywords: | Credit Policy, Firm Heterogeneity, Investment, Financial Frictions |
| JEL: | E50 E52 E58 |
| Date: | 2023–03–23 |
| URL: | http://d.repec.org/n?u=RePEc:bdp:dpaper:0012&r=bec |