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on Business Economics |
| By: | Joanna Tyrowicz (Group for Research in Applied Economics (GRAPE); University of Warsaw; Institute of Labor Economics (IZA); University of Warsaw; Group for Research in Applied Economics (GRAPE)); Katarzyna Bech - Wysocka (Group for Research in Applied Economics (GRAPE); Warsaw School of Economics) |
| Abstract: | We study the effects of gender board diversity on firm performance. We use novel and rich firm-level data covering over seven million private and public firms spanning the years 1995- 2020 in Europe. We augment a standard TFP estimation with firm fixed effects to explore the role of gender board diversity. We construct a shift-share instrument for gender board diversity and find that increasing the share of women on boards is conducive to better economic performance. The results prove robust to a variety of sensitivity analysis. This outcome is driven primarily by firms from the service sector and by smaller firms. The impact was stronger during the early years of our sample. |
| Keywords: | firm performance, gender board diversity |
| JEL: | J16 J88 D22 L25 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:fme:wpaper:95 |
| By: | Boza, István (Centre for Economic and Regional Studies); Reizer, Balázs (Corvinus University of Budapest) |
| Abstract: | A main driver of the gender wage gap is that women earn a lower firm-specific wage premium than men. We document the role of flexible wage components in driving both within-firm and between-firm gender differences in firm premia. For this purpose, we link wage survey data on performance payments and overtime to an administrative linked employer-employee dataset from Hungary. We find that the gender gap in firm premia is negligible at firms that do not pay either performance payments or overtime, while it is more than 11 percent at firms where all employees receive performance- and overtime payments. These patterns are also present when we control for differences in the labor productivity of firms or after composition differences are accounted for using AKM models. Finally, a decomposition exercise shows that performance payments and overtime payments contribute 60 percent to the gender gap in firm premia and 25 percent to the overall gender gap. |
| Keywords: | wage inequality, bargaining, sorting, overtime, performance payments |
| JEL: | J31 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17125 |
| By: | Amore, Mario Daniele (HEC Paris); Epure, Mircea (Universitat Pompeu Fabra - Department of Economics and Business; Barcelona School of Economics; UPF Barcelona School of Management); Garofalo, Orsola (Copenhagen Business School) |
| Abstract: | Choosing the right company name is challenging and may have major consequences for firm prospects. Drawing on the strategic conformity literature, we investigate the implications of “nonconforming” company names, i.e. foreign sounding and family-unrelated, for family firms’ performance. Consistent with the idea that such names endow the business with greater visibility and recognition, we find that nonconforming names are positively associated with financial performance. This association is stronger when the firm operates in an industry with a low share of nonconforming peers and a high share of eponymous peers, in a crowded product class, and is smaller than industry peers. Collectively, our analysis provides new evidence on the strategic implications of company names. |
| Keywords: | Organizational identity; company names; family firms; performance |
| JEL: | G30 M10 M14 |
| Date: | 2023–10–26 |
| URL: | https://d.repec.org/n?u=RePEc:ebg:heccah:1495 |
| By: | Stephen Ayerst; Duc M. Nguyen; Diego Restuccia |
| Abstract: | We examine aggregate productivity differences across nations using cross-country firm-level data and a quantitative model of production heterogeneity with distortions featuring operation decisions (selection) and productivity-enhancing investments (technology). Empirically, less developed countries feature higher distortions and larger dispersion in firm-level productivity, mostly resulting from the higher prevalence of unproductive firms. Quantitatively, measured cross-country differences in the elasticity of distortions with respect to firm productivity generate the bulk of empirical patterns and over two-thirds of cross-country labor productivity differences. Both selection and technology channels are important. Variation in static misallocation also plays an important role, albeit smaller. |
| JEL: | O11 O14 O4 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32750 |
| By: | Tarsia, Romano |
| Abstract: | This paper provides novel, firm-level estimates of the economic damages induced by temperature shocks. Leveraging European firm-level data, this study investigates the heterogeneity of damages across firms characteristics overlooked in aggregate analyses. The analysis consistently highlights negative (positive) impacts on the least (most) productive firms, contributing to both climate economics and the literature on aggregate productivity. Industry-specific effects indicate different susceptibilities across sectors to weather shocks. These results delve into the findings from the pooled sample which reveal a moderate U-shaped relationship between temperature and economic outcomes, suggesting significant adaptation for firms located in warmer areas. Temperature impacts on economic performance manifest with a lag, and varying persistence across firms. Methodologically, this work employs quantitative methods to address the potential drawbacks highlighted in the current climate econometrics discussion. |
| Keywords: | weather; climate change; firms; climate damages; economic performance |
| JEL: | D24 O13 O14 O52 Q51 Q54 R11 |
| Date: | 2024–07–01 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:124251 |
| By: | Koch, Florian; Hoellen, Max; Konrad, Elmar D.; Kock, Alexander |
| Abstract: | Creative industries contain paradoxes because conflicting tensions arise between the market and the arts. Entrepreneurs need to find and maintain a balance between those two sides to create innovation. This study tests the interaction between business and creative orientations of a founder in their influence on innovation in the context of creative entrepreneurial firms and provides recommendations for how creative agents can leverage and manage their innovations based on their creative visions. Determinants on the individual level, such as the founder's creative or business orientations, have a lasting impact on the practices and process of their venture. To trace the imprinting influence of the founder's orientation on innovation, the empirical setting is a time‐lagged study of German firm owners in the cultural and creative industries surveyed 5 years apart. The results show a significant relationship between creative orientation and innovation, whereas business orientation does not significantly relate to innovation. However, creative and business orientations reveal a negative interaction effect. This study contributes empirical evidence to the paradox theory and the interaction between the opposite poles. Our findings provide valuable insights about the relevance of creative orientation and its visionary impact on the firms' innovation process. Furthermore, the results shed new light on the tension between art and the market, as different compositions of the two orientation poles seem to have a varying impact on the degree of innovation. Thus, the study reveals the complexity of creative entrepreneurship and provides managerial guidance for other knowledge‐based industries. |
| Date: | 2023 |
| URL: | https://d.repec.org/n?u=RePEc:dar:wpaper:147985 |
| By: | Davaasukh Damdinjav (Bank of Mongolia); Dulamzaya Batjargal (Bank of Mongolia); Ninjin Batmunkh (Bank of Mongolia) |
| Abstract: | This paper investigates the resilience of non-financial firms in Mongolia against financial distress. Utilizing firm-level financial data from 2013 to 2022, we employed a LASSO variable selection technique and logistic regression analysis to develop a distress prediction model for these firms. Among the 54 calculated financial ratios and indexes, the key indicators predictive of financial distress were identified as three profitability ratios, one liquidity ratio, one leverage ratio, and two financial indexes. Furthermore, our micro stress tests revealed that reductions in sales revenue significantly increase the likelihood of financial distress, with the probability rising to 32% under scenarios involving a 50% decline in sales. Additionally, sensitivity to income and expenditure shocks varies by firm size and economic sector. Firms in the mining and transportation sectors exhibit a higher probability of distress compared to those in the services sector. Similarly, micro and small firms are more vulnerable to distress than medium and large firms when subjected to stress scenarios. |
| Keywords: | Distress prediction; corporate distress; non-financial firms; stress testing; Mongolia |
| JEL: | C50 C52 D22 L25 |
| Date: | 2024–08–06 |
| URL: | https://d.repec.org/n?u=RePEc:gii:giihei:heidwp16-2024 |
| By: | James R. Markusen |
| Abstract: | Applied general-equilibrium (AGE) models have often made compromises to circumvent difficult modeling problems. One of these is avoiding endogenous zeros, ruling out important questions. Traditional perfect competition models: when do technologies or trade links switch from active to inactive or vice versa? Heterogeneous firms: what types of firms are active in equilibrium? Multinationals: when do firms switch from exporting to foreign production? Capacity constraints: could trade links or production sectors hit capacity limits? Here I exploit the complementarity approach to general equilibrium, focusing on modeling heterogeneous firms and endogenous multinational production. Instead of the traditional continuum formulation, there is a discrete and finite set of firm types, differing in marginal costs across but not within types. There is an upper bound on the number of firms that can enter in each firm type. Formulated as a non-linear complementarity problem, we can solve for the set of active firm types in relation to characteristics of the economy such as size or trade costs and their modes of operation: no entry, domestic, exporting, multinational. The analysis easily incorporates endogenous markups and positive aggregate profits. Productivities can be calculated directly from data and no integrals/integration/parametric distributions are required. |
| JEL: | C63 F12 F23 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32721 |
| By: | Rosina Rodríguez Olivera |
| Abstract: | I study the incentives of an informed firm to share its private information with its competitor and the incentives of a regulator to constrain or enforce disclosure in order to benefit consumers. Firms offer differentiated goods, compete a là Bertrand and one firm has an information advantage about demand over its competitor. I show that full disclosure of information is optimal for the informed firm, because it increases price correlation and surplus extraction from consumers. A regulator can increase expected consumer surplus and welfare by restricting disclosure, but consumers can benefit from the regulator privately disclosing some information to the competitor. Disclosure increases the ability of firms to extract surplus from consumers, but private disclosure creates a coordination failure in firm pricing. The optimal disclosure policy is chosen to induce goods to be closer substitutes and intensify the competition across firms. |
| Keywords: | Competition, Information |
| JEL: | D18 D43 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2024_578 |
| By: | Thibaut Lamadon; Jeremy Lise; Costas Meghir; Jean-Marc Robin |
| Abstract: | This paper develops the nonparametric identification of models with production complementarities, worker-firm specific disutility of labor and search frictions. Mobility in the model is subject to preference shocks, and we assume that firms can write wage contracts. We develop a constructive proof for the nonparametric identification of the model primitives from matched employer-employee data. We use the estimated model to decompose the sources of wage dispersion into worker heterogeneity, compensating differentials, and search frictions that generate between-firm and within-firm dispersion. We find that compensating differentials are substantial on average, but the contribution differs greatly between the lowest and highest types of workers. Finally, we use the model to provide an economic interpretation of several empirical regularities. |
| JEL: | J0 J01 J20 J31 J41 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32687 |