nep-bec New Economics Papers
on Business Economics
Issue of 2023‒05‒22
eight papers chosen by
Vasileios Bougioukos
London South Bank University

  1. Industrial dynamics throughout the ICT innovation cycle: The rise and decline of business dynamism in Portugal during 1986-2018 By Ernesto Nieto-Carrillo; Carlos Carreira; Paulino Teixeira
  2. Disentangling trade reform impacts on firm market and production decisions By Maria Bas; Caroline Paunov
  3. Business group heterogeneity and firm outcomes: Evidence from Korean chaebols By Ducret, Romain; Isakov, Dušan
  4. The Collateral Channel and Bank Credit By Arun Gupta; Horacio Sapriza; Vladimir Yankov
  5. Management and Human Capital Employment: an overlooked Relationship By Marcelo Serra Santos; Susana Garrido Azevedo; Tiago Miguel Guterres Neves Sequeira
  6. Board Generational Diversity in Emerging Markets By IWASAKI, Ichiro; MA, Xinxin; MIZOBATA, Satoshi
  7. Effects of CEO Duality, Board Independence, Ownership Concentration, Company Age on Profit Persistence and Firm Value: An Empirical Study of Manufacturing Companies in West Java, Indonesia By Sutrisno, Sutrisno
  8. The Effects of the Legal Minimum Working Time on Workers, Firms and the Labor Market By Pauline Carry

  1. By: Ernesto Nieto-Carrillo (University of Coimbra, Centre for Business and Economics Research, CeBER and Faculty of Economics); Carlos Carreira (Univ of Coimbra, CeBER, Faculty of Economics); Paulino Teixeira (niversity of Coimbra, Centre for Business and Economics Research, CeBER and Faculty of Economics)
    Abstract: Increasing evidence shows that business dynamism has weakened in most developed economies. However, except for the US literature, most previous research has only portrayed the new century’s changes in firm dynamics. Instead, we focus on a longer period, 1986-2018, assembling an extensive longitudinal database with a time-consistent industry classification covering the population of Portuguese firmsin the manufacturing and service sectors. The BaiPerron estimate for unknown break dates in time series indicates two structural changes in industrial dynamics, one in its ascending wave (1993) and another in the declining phase (2003). Accordingly, our (HP) estimated trends show that, after an initial period of intense creative destruction, firm dynamics have become less turbulent since 2003, with lower entry, declined job reallocation, and decreased growth rates. Furthermore, survival and counterfactual firm-level regressions suggest that an otherwise-equal post-2003 start-up faced a significantly higher exit hazard than its pre-1993 counterpart (i.e., without any structural change). As a result, new and young companies have seen their share in aggregate employment and net job creation decline, notwithstanding the increasingly higher performance of young, high-growth firms. Lower labour and firm turnover suggest a weakened contribution of reallocation to productivity growth. On the other hand, decreased entry and the higher exit hazard have likely undermined the disruptive potential of transformative entrepreneurship
    Keywords: Firm dynamics; Entry; High-growth firms; Resource reallocation; Survival.
    Date: 2023–04
  2. By: Maria Bas (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Caroline Paunov (OCDE - Organisation de Coopération et de Développement Economiques = Organisation for Economic Co-operation and Development)
    Abstract: This paper disentangles the impacts of trade liberalization on firm market and production decisions. Using firm-product data for Ecuador, we exploit exogenous tariff changes at entry to the World Trade Organization and find positive effects of trade liberalization on revenue total factor productivity (TFP-R). Input-trade liberalization improves firm efficiency, measured by quantity total factor productivity (TFP-Q) and leads firms to raise their markups and to introduce new products following an increase in imported input quality. Output-trade liberalization also improves firm efficiency and raises marginal costs as firms increase input quality and improve the quality of their core products. Firms' markups and product scope decrease. Chinese imports also contributed positively to productivity while the exchange rate's volatility prior to dollarization had reverse effects. We find positive welfare effects as consumers were offered better and cheaper products. Trade liberalization also benefited the more productive firms introduce new or better products while less productive firms were more likely to exit.
    Keywords: Gains from trade, Input and output tariff reduction, Revenue and physical quantity total factor productivity (TFP-R, TFP-Q), Markups, Output and input prices, Firm-product-level data, Ecuador
    Date: 2021–06
  3. By: Ducret, Romain (Faculty of Economics and Social Sciences); Isakov, Dušan
    Abstract: This paper examines the impact of business group affiliation on the performance and corporate policies of Korean listed firms over the period 2007-2019. This study proposes a novel approach allowing the observation of heterogeneity in the affiliation effects. Overall, we conclude that business group characteristics are reflected in firm outcomes. We find that investors perceive group membership positively as they pay a premium to hold affiliated firms. The premium is related to profitability and size of business groups, consistent with resourcebased theories. The analysis also identifies significant group specific effects on firm policies. These findings suggest that several business groups follow group-level strategies and apply homogeneous financial and investment policies to all their affiliates.
    Keywords: Business groups; performance; financing policies; investment; Korea
    JEL: G30 G32 G35 L22
    Date: 2023–04–07
  4. By: Arun Gupta; Horacio Sapriza; Vladimir Yankov
    Abstract: Our paper studies the role of the collateral channel for bank credit using confidential bank-firm-loan data. We estimate that for a 1 percent increase in collateral values, firms pledging real estate collateral experience a 12 basis point higher growth in bank lending with higher sensitivities for more credit constrained firms. Higher real estate values boost firm capital expenditures and lead to lower unemployment and higher employment growth and business creation. Our estimates imply that as much as 37 percent of employment growth over the period from 2013 to 2019 can be attributed to the relaxation of borrowing constraints.
    Keywords: Collateral channel; firm borrowing constraints; bank credit allocation; corporate investment; macro-finance; transmission mechanisms
    JEL: E44 G21
    Date: 2022–04–25
  5. By: Marcelo Serra Santos (CeBER); Susana Garrido Azevedo (Univ of Coimbra, CeBER, Faculty of Economics); Tiago Miguel Guterres Neves Sequeira (University of Coimbra, Centre for Business and Economics, CeBER and Faculty of Economics)
    Abstract: We look at data for Management and Skills demand of firms in existing databases and we highlight the strong positive relationship between both variables. We devise a model that explains this relationship and calibrate it in order to present quantitative results and compare those results with the estimated ones. We discover that a simple model with Management as Technology can replicate well the estimated influence of Management in the skills demand of firms. We also present evidence of the influence of the subitems of Management on skills’ demand and discovered that aside from the talent component of Management, target and performance components greatly influence the demand for skills.
    Keywords: management practices, productivity, human capital
    Date: 2023–01
  6. By: IWASAKI, Ichiro; MA, Xinxin; MIZOBATA, Satoshi
    Abstract: To identify the determinants of the generational diversity of board membership in emerging market firms, we conducted an empirical analysis using state-level social inequality indices and data on 14, 598 listed/unlisted firms from 20 Eastern European countries and China. We found that, in these emerging markets, social inequality strongly inhibits the generational diversity of board membership, regardless of the gender of board members. The results also reveal that four firm attributes—board size, CEO duality, state ownership, and the presence of foreign investors from non-advanced economies as firm owners—significantly affect the age composition of board directors in line with our expectations. Two other firm attributes—ownership concentration and firm ownership by foreign investors from advanced economies—are also found to have a significant impact on board generational diversity; however, the direction of their impact contradicts our predictions. Supplementary estimations carried out by introducing various sample restrictions produce similar results, thus confirming the statistical robustness of our findings.
    Keywords: board generational diversity, social inequality, emerging markets, Eastern Europe, China
    JEL: D22 G32 J44 K22 L22 P34
    Date: 2023–04
  7. By: Sutrisno, Sutrisno
    Abstract: This research examines the dual effect of CEO, board independence, ownership concentration, and company age on earnings persistence and firm value in manufacturing companies in West Java, Indonesia. The study conducted a survey of 78 manufacturing companies in West Java in 2022. The results show that CEO duality has a negative effect on earnings persistence, while board independence has a positive effect on earnings persistence. Ownership concentration has no significant effect on earnings persistence, and company age has a positive effect on earnings persistence. In addition, board independence and company age have a positive effect on firm value, while CEO duality and ownership concentration have no significant effect on firm value. These findings suggest that companies with separate CEO and board chairman positions and higher board independence are more likely to have persistent earnings and higher firm value. The study also implies that company age plays an important role in determining earnings persistence and firm value.
    Date: 2023–03–30
  8. By: Pauline Carry (CREST - Centre de Recherche en Économie et Statistique - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz] - X - École polytechnique - ENSAE Paris - École Nationale de la Statistique et de l'Administration Économique - CNRS - Centre National de la Recherche Scientifique, ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique)
    Abstract: This paper provides new evidence on how firms and workers adjust to a restriction on lowhour jobs. I exploit a unique reform introducing a minimum workweek of 24 hours in France in 2014, affecting 15% of jobs. Drawing on linked employer-employee data and an event study design, I find a firm-level reduction in the number of jobs and an increase in average hours per worker. Overall, total hours worked in the firm decreased significantly, showing imperfect substitutability between workers and hours. The effects differ by gender: part-time female workers were replaced by full-time male workers. Importantly, reduced-form evidence indicates the reallocation of workers from firms highly exposed to the policy to firms less exposed. To quantify the aggregate impact taking into account these effects, I build and estimate a search and matching model with heterogeneous workers and firms. I find that the minimum workweek destroyed 1% of jobs but had no effect on total hours, due to positive general equilibrium effects. Finally, the gender gap in welfare increased by 3% because women were more affected by the direct negative employment effects and benefited less from reallocation effects.
    Keywords: Working time regulation, Hours of work, Reallocation effects, Gender inequality
    Date: 2022–12–29

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