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on Business Economics |
| By: | Vivien Lefebvre (LARGE - Laboratoire de Recherche en Gestion et Economie - UNISTRA - Université de Strasbourg) |
| Keywords: | Potential slack zero-debt firms performance SMEs, Potential slack, zero-debt firms, performance, SMEs |
| Date: | 2023–03–16 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-04585954&r= |
| By: | Philipp Krug; Dominika Langenmayr |
| Abstract: | In many OECD countries, family firms face lower or no succession taxes if they fulfill continuation requirements. We study the effects of such preferential treat- ment in a two-generation model. Preferential treatment of continued firms leads to more entrepreneurship and higher wages, as entrepreneurs invest more as they value passing on a larger firm. However, more low-ability heirs continue the firm, leading to efficiency losses. In the presence of financial frictions, richer (but less able) heirs may invest more than buyers from outside. |
| Keywords: | Inheritance taxation, family firms, preferential tax treatment, estate taxation |
| Date: | 2024–04 |
| URL: | https://d.repec.org/n?u=RePEc:bav:wpaper:233_krug_langenmayr&r= |
| By: | Gao, Longfei; Tang, Yao |
| Abstract: | In a multi-product Melitz model, we demonstrate that after a drop in domestic trade costs, the cost savings on the shipping of domestic intermediate inputs dominate the pressure from increased competition, thus aiding surviving domestic firms in increasing the number of export varieties. The response of export revenue at the product level is heterogeneous; revenue from a firm’s low-markup varieties will increase, while that from high-markup varieties will decrease. Total export revenue of a firm increases if its export varieties or its exports of low-markup products expand significantly. Using 2SLS regressions, we test this theory with data on Chinese manufacturing firms from 2000 to 2007 and find supportive evidence. As access to domestic intermediate inputs improves with the expansion of the railway network, the number of export varieties of domestic firms increases. Meanwhile, revenue per product drops. Because the positive effect on varieties dominates the negative effect on revenue per product, the total export revenue of firms increases on average. Furthermore, the entry of new firms also increases, lending additional support to our theoretical model. |
| Keywords: | export performance, domestic transportation infrastructure, access to intermediate inputs, railway network, Chinese manufacturing firms |
| JEL: | F10 F15 R40 |
| Date: | 2024–05–01 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:121155&r= |
| By: | Biro, Aniko (Centre for Economic and Regional Studies); Boza, István (Central European University, Budapest); Gyetvai, Attila (Banco de Portugal); Prinz, Daniel (World Bank) |
| Abstract: | We study the role that firms play in social insurance benefit uptake after their workers experience health shocks. Social insurance in our setting, Hungary, is universal and comprehensive, thus allowing us to quantify the heterogeneous impact of firms on benefit uptake and labor market outcomes on top of the social safety net. Using matched employer-employee administrative data linked to individual-level health records, we find that firm responses to worker health shocks are heterogeneous. Workers hit by a health shock at high-quality firms are less likely to take up disability insurance or exit the labor force than those at low-quality firms. These empirical patterns are consistent with worker-firm match quality increasing in firm quality in a setting where recovery from health shocks is uncertain. Our results imply that beyond higher wages, high-quality firms also offer more protection against the consequences of health shocks. This suggests that heterogeneous firm behavior should be taken into account when designing social insurance policies. |
| Keywords: | health shock, disability insurance, firm heterogeneity |
| JEL: | H55 I10 J22 J23 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17069&r= |
| By: | Diegmann, André (IWH Halle); Pohlan, Laura (Institute for Employment Research (IAB), Nuremberg); Weber, Andrea (Central European University) |
| Abstract: | We study how connections to German federal parliamentarians affect firm dynamics by constructing a novel dataset to measure connections between politicians and the universe of firms. To identify the causal effect of access to political power, we exploit (i) new appointments to the company leadership team and (ii) discontinuities around the marginal seat of party election lists. Our results reveal that connections lead to reductions in firm exits, gradual increases in employment growth without improvements in productivity. The economic effects are mediated by better credit ratings while access to subsidies or procurement contracts are documented to be of lower importance. |
| Keywords: | politicians, firm performance, identification, political connections |
| JEL: | O43 L25 D72 |
| Date: | 2024–05 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17031&r= |
| By: | Agnes Norris-Keiller; John Van Reenen |
| Abstract: | Climate change is making natural disasters more frequent, yet little is known about the capacity of firms to withstand such disasters and adapt to their increased frequency. We examine this issue using the latest wave of the World Management Survey (WMS) that includes new questions on firms' climate change perceptions and adaptation behaviour. Combining this with geocoded data on natural disasters and previous WMS waves, we create a panel spanning 8, 000 firms across 33 countries and three decades that shows exposure to disasters decreases growth inputs, outputs and firm survival. More importantly, firms with structured management practices are more resilient, suffering much smaller drops in jobs and capital. To understand the mechanisms behind this resilience, we use the new WMS climate questions to show better managed firms have more accurate perceptions of climate-related risks to their businesses. Such firms are also more likely to have implemented measures to adapt to climate change both overall and in response to their perceived climate risk. Other aspects of firm organisation, such as decentralisation, also help protect against disasters, but their adaptation behaviour is not well-targeted. These results show that improving management is one way to help protect economies from climate change shocks. |
| Keywords: | climate, natural disasters, management practices, firm performance |
| Date: | 2024–06–13 |
| URL: | https://d.repec.org/n?u=RePEc:cep:cepdps:dp2007&r= |
| By: | Lu, Yue; Ma, Minghui; Gao, Longfei; Tang, Yao |
| Abstract: | In a trade model incorporating within-firm productivity differences in intermediate products, we show that specialization in the production of intermediate products enabled by decreased trade costs can reduce firm-level emissions. Using firm-level data from China (1998-2012), we provide supporting evidence in the context of domestic trade. Increased domestic trade integration, associated with the expansion of China's railway network, reduces emissions of sulfur dioxide, carbon dioxide, and other pollutants. Counterfactual analysis indicates that without the 1.88% (1, 203-kilometer) railway expansion in 2005—--the year in the middle of our sample period, as an example---national SO2 emissions would have been 0.43% higher. |
| Keywords: | emissions, market access, railway network, Chinese manufacturing firms |
| JEL: | F18 Q56 R40 |
| Date: | 2024–06–06 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:121156&r= |
| By: | Francesco Del Prato; Paolo Zacchia |
| Abstract: | We document how a reduction in labor costs led to heterogeneous effects on the total factor productivity (TFP) of manufacturing firms. Leveraging an Italian labor legislation reform and unique institutional features of the local collective bargaining system, we show that such effects vary along the TFP distribution. Relative to the counterfactual, TFP markedly declines on the left tail, which we explain via selection mechanisms; on the right, TFP mildly increases as firms are able to expand and reallocate their workforce. To guide the evaluation of welfare implications, we develop a general equilibrium model featuring firm selection and frictions in input markets. |
| Keywords: | labor costs, productivity, collective bargaining, quantile effects |
| JEL: | D22 D24 J08 O14 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:cer:papers:wp783&r= |