nep-bec New Economics Papers
on Business Economics
Issue of 2024‒02‒05
five papers chosen by
Vasileios Bougioukos, London South Bank University

  1. Non-Wage Job Values and Implications for Inequality By Lehmann, Tobias
  2. Protecting wall street or main street: SEC monitoring and enforcement of retail-owned firms By Iselin, Michael; Johnson, Bret; Ott, Jacob; Raleigh, Jacob
  3. The long-term earnings' effects of a credit market disruption By Adamopoulou, Effrosyni; De Philippis, Marta; Sette, Enrico; Viviano, Eliana
  4. The Granular Origins of Agglomeration By KIKUCHI Shinnosuke; Daniel G. O'CONNOR
  5. Does the Ind AS moderate the relationship between capital structure and firm performance? By M N, Nikhil; S Shenoy, Sandeep; Chakraborty, Suman; B M, Lithin

  1. By: Lehmann, Tobias (USI Università della Svizzera Italiana)
    Abstract: I study inequality in job values, both in terms of wages and non-wage values, in Austria over the period 1996 to 2011. I show that differences in non-wage job value between firms are non-parametrically identified from data on worker flows and wage differentials. Intuitively, firms with high non-wage value attract workers without paying a wage premium. I study the distribution of job value among workers and find a positive correlation between wage and non-wage value. Inequality in job value is thus considerably greater than wage inequality, reflected in the standard deviation of job value being more than twice as large as the standard deviation of wage. Job value inequality increases between 1996 and 2011, although wage inequality remains constant. An important reason is that, over time, dispersion of rents offered by firms increases, while compensating differentials lose importance.
    Keywords: inequality, amenities, worker heterogeneity, firm heterogeneity, on-the-job search, wage dispersion, matched employer-employee data
    JEL: E24 J31 J32
    Date: 2023–12
  2. By: Iselin, Michael; Johnson, Bret; Ott, Jacob; Raleigh, Jacob
    Abstract: This study examines whether retail ownership of a firm is associated with the likelihood that the firm is subject to monitoring and enforcement by the two largest divisions of the SEC. Monitoring is a form of ex ante or preventative regulatory oversight, while enforcement is a form of ex post or punitive oversight. We find a negative association between retail ownership and SEC monitoring. In contrast, we find a positive association between retail ownership and SEC enforcement. These results suggest that the SEC is less likely to monitor firms with high retail ownership, potentially leaving current retail investors more vulnerable to unresolved financial reporting issues. Additionally, the SEC is more likely to issue enforcement actions against firms with high retail ownership, imposing costs on current retail investors when the firm is accused of egregious cases of perceived financial misreporting.
    Keywords: retail ownership; SEC enforcement; SEC monitoring
    JEL: M41 G18
    Date: 2022–12–16
  3. By: Adamopoulou, Effrosyni; De Philippis, Marta; Sette, Enrico; Viviano, Eliana
    Abstract: This paper studies the long-term consequences on firms and workers of the credit crunch triggered by the 2007-2008 global financial crisis. Relying on a unique matched bank-employer-employee administrative dataset, we construct a firm-specific credit supply shock and examine firms' and workers' outcomes for 11 years after the crisis. We find that highly-exposed firms shrink permanently and invest less; these effects are larger for high capital-intensive firms. The impact on workers' earnings is also long-lasting, especially for high skilled workers, who are more complementary to capital. Displaced workers reallocate mostly to low capital-intensive firms, experiencing persistent wage losses.
    Keywords: credit crunch, employment, wages, long term effects, linked bank-employer-employee panel data, capital-skill complementarity
    JEL: E24 E44 G21 J21 J31 J63
    Date: 2023
  4. By: KIKUCHI Shinnosuke; Daniel G. O'CONNOR
    Abstract: A few large firms dominate many local labor markets. This leaves workers vulnerable to firm-specific shocks. If one firm has a bad productivity shock in a small market, workers will be stuck with that unproductive employer, while in a large labor market, workers can move to another firm. Building on that insight, we present a model of local labor markets with a finite number of firms subject to idiosyncratic shocks. We show that there are increasing returns to scale which disappear as the number of firms goes to infinity. We also show that there can be under-entry of firms, especially in small markets. We then test the main mechanism in Japanese administrative data. We first confirm that payroll is less volatile in larger, less concentrated local labor markets. We also show that establishments with larger payroll shares respond less in adjusting employment to a demand shock. Finally, we propose a quantitative, granular model of economic geography with free entry of firms and costly mobility of workers across sectors and commuting zones that could be used to quantify our mechanisms and do counterfactuals.
    Date: 2024–01
  5. By: M N, Nikhil; S Shenoy, Sandeep; Chakraborty, Suman; B M, Lithin
    Abstract: In line with the wide implementation of IFRS around the globe, the significant shift in the Indian accounting system appertained to the Ind AS is expected to have a substantial impact on the firm-level information environment. Nevertheless, the question of whether the adoption of such standards moderates the relationship between leverage and firm performance remains unanswered. In this backdrop, we aim to close this research gap employing 3120 firm-year observations from 401 Indian non-financial firms for a period from 2013 to 2022. Notably, we found that the leverage among Indian firms discourages profitability. Further, the adoption of Ind AS negatively moderates the leverage and firm performance association. The findings suggest that the enhanced transparency and the firm's reporting quality dissuade risk-averse investors from investing in highly levered companies. As a result, investors avoid risky investments, and firms must strive to foster their trust and motivation. The conclusion of the present research draws significant implications for management and policymakers while also contributing to the ongoing debate on capital structure and firm performance.
    Keywords: emerging country, debt, GMM, IFRS convergence, India, investors, information environment, leverage
    JEL: C33 G32 M48
    Date: 2023–09–02

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