Application of a double bootstrap to investigation of determinants of technical efficiency of farms in Central Europe

The paper provides one of the first applications of the double bootstrap procedure (Simar and Wilson 2007) in a two-stage estimation of the effect of environmental variables on non-parametric estimates of technical efficiency. This procedure enables consistent inference within models explaining efficiency scores, while simultaneously producing standard errors and confidence intervals for these efficiency scores. The application is to 88 livestock and 256 crop farms in the Czech Republic, split into individual and corporate.

Accounting for growth in retail trade: an international productivity comparison

In this paper we argue that the standard approach for measuring output and productivity in the trade sector has become obsolete. The key problem is that changes in prices of goods purchased for resale are not accounted for. We outline a consistent accounting framework for measuring trade productivity and provide new estimates, taking into account purchase prices of goods sold in a double deflation procedure. We find strong productivity improvements in the UK and US compared to France, Germany and The Netherlands since the mid-1990s. This finding is robust for various productivity measurement models.

Do we estimate an input or an output distance function? An application of the mixture approach to European railways

In this paper, we estimate parametric input and output distance functions and discuss how to estimate a mixture/latent class model (LCM) involving the output and input distance functions in the context of multi-input and multi-output production technology. The proposed technique is applied to a panel data on European Railways (1971–1994). This model allows us to identify determinants of the efficiency orientation, thereby providing useful information that can help researchers to choose between the input and the output-oriented approaches. In addition, we develop cross-indices that can be used to compute input (output) technical inefficiency from the estimates of output (input) distance function.

The geography of new firm formation: Evidence from independent start-ups and new subsidiaries in the Netherlands

This paper investigates to what extent determinants of the rate of independent start-ups and the rate of new subsidiaries are different. Using a regional database for the Netherlands over the period 1988–2002, we investigate the impact of two types of agglomeration effects, localization and urbanization, while controlling for a range of economic variables. We find urbanization economies to be particularly important for the creation of new subsidiaries while localization economies are more important for the creation of independent new ventures. Finally, the effect of agglomeration variables is found to be stronger for manufacturing industries compared to services industries.

Pricing behavior of exchange traded funds

We attempt to determine whether characteristics found to be effective indicators of individual stock price performance are effective indicators of exchange traded fund (ETF) price performance. Specifically, we test the performance of investing strategies based on separately categorizing ETFs into deciles according to size, trading volume, and momentum. When analyzing the entire sample, we find that the indicators can effectively signal differences in future performance. However, the indicators appear to be indirect proxies for the types of ETFs (broad-based, sector, or international). When we isolate each type of ETF, the indicators are not as effective. The indicators are not as useful for signaling unusual stock price performance of ETFs as they have been for individual stocks. We attribute the distinctly different results found here for ETFs to the unusual characteristics of ETFs that distinguish them from individual stocks. Investing strategies that rely on these indicators for selecting individual stocks may be indirectly driven by stock-specific fundamentals. However, fundamentals are not as meaningful for stock indexes (represented by ETFs) as for individual stocks.

Investment and dynamic DEA

A dynamic version of data envelopment analysis (DEA) is developed in the present paper. Our model introduces investment in traditional DEA and imposes intertemporal cost minimization. Adding an intertemporal adjustment constraint into the cost minimization problem, we derive the relation between the DEA variables of the variable cost function and those of the primary production frontiers’ coefficients. The augmented DEA model can be solved using standard linear programming. This dynamic framework enables computing the production frontiers, measuring the productive efficiencies and evaluating the potential economies all in the presence of adjustment costs.

A generalized procedure to recover the first derivatives of a production function when the firm is a profit maximizer

Partial derivatives of production functions are necessary in many instances to characterize the technology of firms. We present here a general method to recover the first derivatives of the production function of a profit maximizing firm. The method is systematic and applies even when the optimization problem of the firm is subject to additional constraints. It allows researcher to recover returns to scale and technological progress in complex situations.

A response to the critiques of DEA by Dmitruk and Koshevoy, and Bol

We here critique the articles by Dmitruk & Koshevoy (1991, J Econ Theory 55:121–144) and by Bol (1986, J Econ Theory 38:380–385) by showing how to solve the examples they erected to show the non-existence of functions for evaluating performance efficiencies in DEA. We also show that functions satisfying these criteria—and other important criteria as well—were already available prior to the publications of D&K and by Bol and have since been greatly extended to increase the power and scope of DEA.

Target and technical efficiency in DEA: controlling for environmental characteristics

In this paper we propose a target efficiency DEA model that allows for the inclusion of environmental variables in a one stage model while maintaining a high degree of discrimination power. The model estimates the impact of managerial and environmental factors on efficiency simultaneously. A decomposition of the overall technical efficiency into two components, target efficiency and environmental efficiency, is derived. Estimation of target efficiency scores requires the solution of a single large non-linear optimization problem and provides both a joint estimation of target efficiency scores from all DMUs and an estimation of a common scalar expressing the environmental impact on efficiency for each environmental factor. We argue that if the indices on environmental conditions are constructed as the percentage of output with certain attributes present, then it is reasonable to let all reference DMUs characterized by a composed fraction lower than the fraction of output possessing the attribute of the evaluated DMU enter as potential dominators. It is shown that this requirement transforms the cone-ratio constraints on intensity variables in the BM-model (Banker and Morey 1986) into endogenous handicap functions on outputs. Furthermore, a priori information or general agreements on allowable handicap values can be incorporated into the model along the same lines as specifications of assurance regions in standard DEA.

How useful are signals? A micro-structure analysis

We analyze how the market processes a signaling event by studying a sample of self-tender offers, events often viewed as signals of firm value. By examining changes in the degree of informed trading, we find asymmetric information costs fall at announcement, remain low throughout the event, and increase at offer expiration. By 1 month following expiration, informed trading returns to a level not significantly different from that prior to the offer. Higher risk firms have significantly larger declines in information asymmetry during the offer. Increases in information asymmetry persist 1 month following expiration for firms with lower pre-offer informed trading.

Regional variation in productivity: a study of the Danish economy

We develop a model of labor productivity as a combination of capital-labour ratio, vintage of capital stock, regional externalities, and total factor productivity (TFP). The skewness of TFP distribution is related to different growth theories. While negative skewness is consistent with the neo-Schumpeterian idea of catching up with leaders, zero skewness supports the neoclassical view that deviations from the frontier reflect only idiosyncratic productivity shocks. We argue that positive skewness is consistent with an economy where exogenous technology is combined with non-transferable knowledge accumulated in specific sectors and regions. This argument provides the framework for an empirical model based on stochastic frontier analysis. The model is used to analyse regional and sectoral inequalities in Denmark.

The cost implications of waste reduction: factor demand, competitiveness and policy implications

Manufacturing produces both good and “bad” outputs, such as waste, which have negative environmental effects. Economic (e.g., tax) and non-economic (e.g., reputation) incentives encourage firms to reduce waste. However, such practices are costly because decreases in output produced or increases in inputs used may accompany waste reduction. We employ a cost function approach to evaluate patterns of output and waste production and capital, labor, and materials use, for UK manufacturing plants. We find that costs of waste reduction generally imply increasing materials use and capital and labor input saving, but vary by county, region, and industry.

A longitudinal study of the characteristics, business creation process and outcome differences of Canadian female vs. male nascent entrepreneurs

This paper concerns a longitudinal study, of a random sample of nascent entrepreneurs in Canada (based on an initial screening sample of 49,763 households). We study gender differences, including number and type of gestational activities, the characteristics of the business created, and the status of the start-up effort after the 4th year of data collection. Logistic regression is used to predict the creation of an operating business from gender and other variables. Four of nine gender difference hypotheses were supported. Findings show that women who are members of a start-up team are six times more likely to achieve an operating business.

A Model for Predicting Outcomes of Sexual Harassment Complaints by Race and Gender

Organizational scholars have studied the impact of sex on sexual harassment outcomes but left unexplored the influences of race. Thus, we use social identity theory to explore the role of race stereotypes and their influences on sexual harassment outcomes. We posit that stereotypes of African-American women tend to be much more negative than those of white women and this serves to marginalize their position both as victims of sexual harassment as well as complainants.

Convertibles and milestones in staged financing

This paper investigates a popular financing strategy whereby the manager of a firm uses convertibles in staged financing. Staged financing is particularly popular in corporate finance, even although it has potential incentive and risk problems. This paper identifies many interesting properties of convertibles in staged financing, including the fact that staged financing using convertibles can almost achieve the first best. We also find that risks can reduce agency costs by putting pressure on the manager to perform. These results may explain why convertibles are a popular instrument in staged financing in reality.

Incorporating correlation regimes in an integrated stressed risk modeling process

The practice of using stress tests to complement Value at Risk (VaR) estimates suffers from some limitations such as the lack of coherence between a statistical risk measure and a subjective one. On the other hand there is a wide consensus that using the same correlation matrix to design various stress tests is not likely to provide an accurate representation of relationship amongst risk factors in periods of market stress. In this paper we introduce a solution to these problems by explicitly considering different correlation regimes and incorporating the result of the stress test to the traditional market risk measurement models.

Is skill more important than luck in explaining fish catches?

The study of productive efficiency has not been a traditional field of research in fisheries economics. However, recent papers have dealt with testing what it is known as “the good captain hypothesis”, according to which differences in catches among vessels can be explained in terms of skipper skill (efficiency). These papers introduce an interesting research issue: the distinction between luck and efficiency. In this paper, we try to shed more light on this topic using a panel data set on the hake fishery in Northern Spain. In particular, we are interested in separating efficiency not only from luck but also from other time invariant variables, such as vessel characteristics, which sometimes are confounded with efficiency. In contrast to the other papers that deal with this topic, we find that luck is more important than technical efficiency in explaining catches. We argue this can be explained by the fact that other papers use data at a higher level of temporal aggregation. Over longer periods of time, skill persists while luck averages away.

U.S. productivity in agriculture and R&D

This paper examines the impact of R&D on multifactor productivity in the U.S. agricultural sector over the 1910–1990 period. We use the Bennet–Bowley indicator to measure agricultural productivity based on a multiple output-multiple input technology. We demonstrate the relationship between the price dependent Bennet–Bowley indicator and the Luenberger productivity indicator which is constructed from directional distance functions without requiring price information. These performance measures are dual to the profit function which arguably makes them especially useful in the agricultural setting. We employ time-series techniques to investigate the effect of R&D on the pattern of productivity growth. We find that we cannot reject the presence of a cointegrating relationship between the two series and that productivity growth in the U.S. agriculture responds positively to R&D expenditure with a lag of between four and ten periods.

An examination of the performance and prospects for the future of internet-primary banks

We study Internet-primary banks for differences in performance versus newly chartered traditional banks from 1996 through 2003. Internet-primary banks are larger, with lower net interest margins and loan losses, and higher wage and physical capital rates than newly chartered traditional banks. Univariate ROE is lower, but profit efficiency is significantly higher on average for Internet-primary banks compared to all newly chartered banks as well as those that survive through the sample period. In multivariate models, Internet-primary banks continue to have significantly higher average profit efficiency, and particularly so when of sufficient size.

Inter-industry differences in layoff announcement effects for financial institutions

This study expands the examination of workforce layoffs by banks to include non-bank financial institutions and explores inter-industry differences in market reactions to layoff announcements. In examining inter-industry differences, we control for variables that influence the market’s reaction to a layoff announcement, such as firm size, the size of the layoff, the reason given for the layoff, and the governance structure of the firm. We provide evidence of inter-industry differences in market reaction to layoff announcements by financial institutions, with banks experiencing more favorable stock-price reactions than other types of regulated firms. These results provide evidence that bank regulation reduces asymmetric information surrounding managerial announcements to a greater degree than the regulation of other types of financial institutions.