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on Business Economics |
| By: | J. M. L. Chan; H. Qi (Audencia Business School) |
| Abstract: | We study the firm dynamics associated with mergers and acquisitions (M&A) and their implications at the micro and macro levels. Our paper presents three main findings: (i) mergers generate a more fat-tailed firm-size distribution, thereby amplifying granular fluctuations and increasing aggregate volatility; (ii) the impact of mergers depends on strategic market power and endogenous markups; and (iii) under endogenous markups, we provide a novel characterization of the firm size-volatility relationship in which volatility declines disproportionately with size. We build a quantitative model of domestic horizontal mergers and find a sizeable impact of mergers on aggregate volatility using counterfactual analysis. |
| Keywords: | firm-size distribution, mergers and acquisitions, granularity, size-volatility relationship, variable markups |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-04719146 |
| By: | Jonathan Adams; Min Fang; Zheng Liu; Yajie Wang |
| Abstract: | We document key stylized facts about the time-series trends and cross-sectional distributions of AI pricing and study its implications for firm performance, both on average and conditional on monetary policy shocks. We use the universe of online job posting data from Lightcast to measure the adoption of AI pricing. We infer that a firm is adopting AI pricing if it posts a job opening that requires AI-related skills and contains the keyword “pricing.” At the aggregate level, the share of AI-pricing jobs in all pricing jobs has increased by more than tenfold since 2010. The increase in AI-pricing jobs has been broad-based, spreading to more industries than other types of AI jobs. At the firm level, larger and more productive firms are more likely to adopt AI pricing. Moreover, firms that adopted AI pricing experienced faster growth in sales, employment, assets, and markups, and their stock returns are also more sensitive to high-frequency monetary policy surprises than non-adopters. We show that these empirical observations can be rationalized by a simple model where a monopolist firm with incomplete information about the demand function invests in AI pricing to acquire information. |
| Keywords: | artificial intelligence; firms; pricing; jobs; monetary policy; technology adoption; AI |
| JEL: | D40 E31 E52 O33 |
| Date: | 2024–11–01 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedfwp:99052 |
| By: | Adela Luque; Vitaliy Novik |
| Abstract: | Nonemployers, businesses without employees, account for most businesses in the U.S. yet are poorly understood. We use restricted administrative and survey data to describe nonemployer dynamics, overall performance, and performance by demographic group. We find that eventual outcome – migration to employer status, continuing as a nonemployer, or exit – is closely related to receipt growth. We provide estimates of employment creation by firms that began as nonemployers and become employers (migrants), estimating that relative to all firms born in 1996, nonemployer migrants accounted for 3-17% of all net jobs in the seventh year after startup. Moreover, we find that migrants’ employment creation declined by 54% for the cohorts born between 1996 to 2014. Our results are consistent with increased adjustment frictions in recent periods, and suggest accessibility to transformative entrepreneurship for everyday Americans has declined. |
| Keywords: | nonemployers, business owner demographics, nonemployer transition to employer, business dynamism, startups, entrepreneurship |
| JEL: | L21 L25 L26 D22 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:cen:wpaper:24-61 |
| By: | Chang, Pao-li (School of Economics, Singapore Management University); MAKIOKA, Ryo (School of Economics and Business, Hokkaido University); Ng, Bo Lin (School of Economics, Singapore Management University); Yang, Zhenlin (School of Economics, Singapore Management University) |
| Abstract: | This paper proposes a three-stage efficient GMM estimation algorithm for estimating firm-level production functions given spatial dependence across firms due to supplier-customer relationships, sharing of input markets, or knowledge spillover. The procedure builds on Ackerberg, Caves and Frazer (2015) and Wooldridge (2009), but in addition, allows the productivity process to depend on the lagged output levels and lagged input usages of related firms, and spatially correlated productivity shocks across firms, where the set of related firms can differ across the three dimensions of spatial dependence. We establish the asymptotic properties of the proposed estimator, and conduct Monte Carlo simulations to validate these properties. The proposed estimator is consistent under DGPs with or without spatial dependence, and with strong/weak or positive/negative spatial dependence. In contrast, the conventional estimators lead to biased estimates of the production function parameters if the underlying DGPs have spatial dependence structure, and the magnitudes of the bias increase with the strength of spatial dependence in the underlying DGPs. We apply the proposed estimation algorithm to a Japanese firm-to-firm dataset of 14, 178 firms during the period 2009–2018. We find significant and positive spatial coefficients in the Japanese firm-level productivity process via all three channels proposed above. |
| Keywords: | productivity estimation; spatial dependence; supplier-customer network; factor market pooling; knowledge spillover |
| JEL: | C31 D24 |
| Date: | 2024–10–15 |
| URL: | https://d.repec.org/n?u=RePEc:ris:smuesw:2024_010 |
| By: | Anqi Chen |
| Abstract: | Our 2023 Small Business Retirement Survey looks at why some small firms offer a retirement savings plan and others do not. Factors that affect whether small firms offer a plan include firm size, wages, and industry, as well as beliefs on whether it will help attract workers. The main barriers to offering a plan are concerns about the stability/size of the firm and the perceived costs of a plan. Concerns about costs are driven by misperceptions; many firms are unaware of lower-cost options for employers and tax credits. The results also suggest that state auto-IRA programs are more likely to encourage than discourage firms from offering their own plan. |
| Date: | 2024–03 |
| URL: | https://d.repec.org/n?u=RePEc:crr:issbrf:ib2024-07 |
| By: | Ketan REDDY (Indian Institute of Management Raipur, India); Subash SASIDHARAN (Indian Institute of Technology, Madras, Chennai, India.); Shandre Mugan THANGAVELU (Sunway University, The University of Adelaide) |
| Abstract: | In this study, we examine the implications of economic policy uncertainty on global value chain (GVC) participation and the integration of Indian manufacturing firms using firm-level data. Using panel data from 2004 to 2021, we find that economic policy uncertainty (EPU) impedes GVC participation and firm integration. Further, we find that the impact of EPU on GVC participation operates through the financial constraint channel with highly leveraged and low-liquidity firms. Using survival analysis, we also highlight that higher EPU results in higher exit from GVCs and reduces entry into GVCs. |
| Keywords: | Economic policy uncertainty; GVC participation; Manufacturing firms |
| Date: | 2024–09–26 |
| URL: | https://d.repec.org/n?u=RePEc:era:wpaper:dp-2024-23 |