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on Corporate Finance |
| By: | Guido Franco; Mauricio Hitschfeld; Álvaro Pina; Damien Puy |
| Abstract: | Using data on more than 150.000 non-financial companies operating in both manufacturing and services sectors around the world, we analyse the drivers of firm performance throughout the whole COVID cycle (until end 2021). We highlight three key results. First, if anything, larger and older firms did worse than smaller and younger ones in terms of revenues and investment spending, both during COVID-19 and the subsequent recovery. Even in sectors that were under scrutiny from a competition standpoint, such as technology and healthcare, larger firms did not systematically over-perform. Second, ex-ante financial strength attenuated the effects of the shock on revenues during the COVID cycle. Third, there is some evidence of debt overhang: firms that entered the crisis with a higher leverage ratio invested less than others, including on R&D, both in 2020 and in 2021, while firms that became more debt-burdened during the pandemic tended to record weaker investment spending during the recovery. These insights shed light on market power, competition, and more generally on the performance of the corporate sector since the start of COVID-19 pandemic. |
| Keywords: | competition, corporate sector, COVID-19, debt overhang, financial fragility, firm performance, firm size, investment, market power |
| JEL: | D25 G01 G32 L25 |
| Date: | 2023–12–12 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:1779-en&r=cfn |
| By: | Xinyi CAO; Norio SAWABE |
| Abstract: | This study investigates the application of Relative Performance Evaluation (RPE) theory on forced CEO turnover decisions in the context of Chinese listed firms. Using CEO dismissal data spanning from 2009 to 2019, we observe a negative correlation between industry peer performance and the likelihood of forced CEO turnover, which contradicts the assumption of RPE theory. Furthermore, we emphasize the significance of considering Non-Financial Performance Measures (NFPMs) in CEO turnover research. Our research reveals that the extent of excess employment is negatively associated with the probability of forced CEO dismissal, and it also affects how a firm responds to peer performance. Specifically, when firms exhibit high social performance, proxied by excess employment, they tend not to lay off more CEOs due to industry downturns. This study offers a potential explanation for Jenter and Kanaan (2015)’s puzzle of why firms terminate more CEOs when their industry experiences a recession. We argue that prior literature, which predominantly focuses on the relationship between financial performance and CEO turnover, may be incomplete. It is imperative to also account for the impact of NFPMs. |
| Keywords: | Consistency, Relative performance evaluation, excess employment, forced CEO turnover, Chinese listed firms |
| JEL: | G32 M21 M41 |
| Date: | 2023–12 |
| URL: | http://d.repec.org/n?u=RePEc:kue:epaper:e-23-006&r=cfn |
| By: | Radeef Chundakkadan (Indian Institute of Technology Bombay, Mumbai, India); Subash Sasidharan (Indian Institute of Technology (IIT), Madras); Ketan Reddy (Indian Institute of Management Raipur, India) |
| Abstract: | The aim of this study is threefold. First, we analyse the relationship between export incentives on firm survival during the coronavirus disease (COVID-19) crisis; second, we explore the nexus between bank dependency and survival in the export market; and finally, we test the complementarity and substitutability effect of export incentives and bank dependency on export market survival. We use firm-level information on Indian firms from 2016 to 2022, covering 4 years of the pre-pandemic period and 2 years of the post-pandemic period. We find that both export incentives and bank dependency improve the probability of export market survival in the post-pandemic period. These results are applicable to both the manufacturing and services sector, stand-alone firms, and business group affiliates. Our results remain robust while employing alternative proxies for the primary variable of interest and different methodologies. |
| Keywords: | Export incentives; bank dependency; survival; export |
| Date: | 2023–08–29 |
| URL: | http://d.repec.org/n?u=RePEc:era:wpaper:dp-2023-12&r=cfn |
| By: | Alfonso Expósito ((University of Málaga, Spain). ORCID number: 0000-0002-9248-4879); Juan A. Amparo Sanchis-Llopis ((University of Valencia and ERICES, Spain). ORCID number: 0000-0002-0872-7859); Juan A. Juan A. Sanchis-Llopis ((University of Valencia and ERICES, Spain). ORCID number: 0000-0001-9664-4668) |
| Abstract: | This study explores whether there are significant differences between female- and male-led businesses in terms of the performance results they obtain from innovating. We use a sample of 1, 376 Spanish small and medium enterprises (SMEs) to analyze the impact of entrepreneur gender on business performance considering the mediating effect of innovations, that is, the possibility that gender indirectly influences business performance by affecting the introduction of innovations. Using econometric techniques, we estimate discrete choice models to explore the relationship among gender, innovations and business’ performance. Our analysis is multidimensional in that we consider two types of performance indicators, financial and operational, and three types of innovations: product, process and organisational innovations. Our empirical findings show that, after controlling for other entrepreneurial and business characteristics, menled SMEs are more likely to obtain better performance from their innovations, and in particular, from their higher propensity to introduce process innovations, as compared to women-led SMEs. We extend existing empirical literature in the gender and entrepreneur research fields regarding the role of entrepreneur gender in the innovation-performance relationship, and contribute to the understanding of the role of gender in SMEs performance. Our study suggests the need to incorporate a gender perspective in those policies dealing with enhancing SMEs innovativeness and performance. |
| Keywords: | Gender of entrepreneur; small and medium-enterprises; innovations; financial performance; operational performance; bivariate probit model. |
| JEL: | C35 J16 F14 M21 |
| Date: | 2023–10 |
| URL: | http://d.repec.org/n?u=RePEc:eec:wpaper:2308&r=cfn |
| By: | Diep Phan (University of Wisconsin-Madison and Institute of Developing Economies (IDE-JETRO), Tokyo); Ian Coxhead (University of Wisconsin-Madison and Institute of Developing Economies (IDE-JETRO), Tokyo) |
| Abstract: | This paper explores the consequences of a policy regime in which state firms enjoy privileged access to capital while private firms are crowded out. Consequently, state firms choose technologies that are capital-intensive and thus demand more skilled labour. Econometric estimates using Viet Nam's enterprise censuses confirm some of the propositions generated by the model. Relative to private firms, state firms have higher fixed capital stocks but do not have lower variable capital costs; they also employ more skilled labour. Also, as predicted, there is a U-shaped relationship between production scale and skills intensity; many private firms (which are mostly small) are limited to labour-intensive techniques and increase output simply by adding unskilled labour, whereas larger firms are more likely to operate at scales at which it is profitable to employ more skills-intensive and efficient technologies. |
| Keywords: | state-owned enterprises, Viet Nam, skills intensity, technological choice |
| JEL: | O14 O25 J24 L25 |
| Date: | 2023–07–03 |
| URL: | http://d.repec.org/n?u=RePEc:era:wpaper:dp-2023-07&r=cfn |