Cross-shareholding network and corporate bond financing cost in China

This study examines the effect of cross-shareholding network centrality on the cost of corporate bond financing. Based on a sample of Chinese A-share listed firms that issued general corporate bonds from 2007 to 2018, we adopt a social network analysis method and use three indicators (Degree, Betweenness, and Eigenvector) and the principal factor (Composite) extracted from them to measure the firms’ centrality in the cross-shareholding network. We find that bondholders’ demand lowers bond yield spreads for firms with higher cross-shareholding network centrality. In further analyses, we explore the impact mechanisms using mediator models and find that such centrality promotes resource accessing, information disclosure, and corporate governance, thus decreasing corporate bond financing cost. In addition, we incorporate the moderate effect of geographical location and find that the relationship between cross-shareholding network centrality and corporate bond financing cost is more significant in firms located in remote places.     

A Firm-Specific Analysis of the Exchange-Rate Exposure of Dutch Firms

We examine the relationship between exchange‐rate changes and stock returns for a sample of Dutch firms over 1994–1998. We find that over 50 per cent of the firms are significantly exposed to exchange‐rate risk. Furthermore, all firms with significant exchange‐rate exposure benefit from a depreciation of the Dutch guilder relative to a trade‐weighted currency index. This result confirms that firms in open economies, such as the Netherlands, exhibit significant exchange‐rate exposure. We collect unique information on the most relevant individual currencies for each firm with respect to their influence on firm value. Our results indicate that the use of a trade‐weighted currency index and the use of individual exchange rates are complements. We also measure the determinants of exchange‐rate exposure. As expected, we find that firm size and the foreign sales ratio are significantly and positively related to exchange‐rate exposure. In contrast with our hypothesis, off‐balance hedging using derivatives has no significant effects. Finally, in line with theory, we find that exposure is significantly reduced through on‐balance sheet hedging, i.e., through foreign loans and by producing in factories abroad.     

Health human capital and economic growth in Sub-Saharan African and OECD countries

This paper investigates the effects of health human capital on the growth rate of per capita income in Sub-Saharan African and OECD countries. Using an expanded Solow growth model, panel data, and a dynamic panel estimator, we find that the growth rate of per capita income is strongly and positively influenced by the stock of, and investment in, health human capital after controlling for other variables. The stock of health human capital affects the growth rate of per capita income in a quadratic way: the growth impact of health human capital decreases at relatively large endowments of health stock. Our estimates suggest that 22% and 30% of the transition growth rate of per capita income in Sub-Saharan African and OECD countries respectively, can be attributed to health. The structure of the relationship between health human capital and the growth rate of income in Sub-Saharan African countries is similar to the structure of the relationship in OECD countries. This implies that increased stocks of health human capital leads to higher steady state income. Our results have interesting policy implications.     

Following in Partners’ Footsteps: An Uncertainty‐Reduction Perspective on Firms’ Choice of New Markets

In this paper, we develop a new perspective on what determines firms’ choice of new markets for entry. First, drawing on the open‐system theoretical tradition and literature on inter‐organizational networks, we advance and empirically test the proposition that firms tend to enter new markets to which they are connected by partnership ties. We then show that this network influence is filtered through the structure of firms’ network connections to new markets and firms’ experience. Specifically, we find that multiplicity of connections to new markets, as well as the extensiveness of firms’ experience and its relevance to new markets weaken the effect of network ties on firms’ choice of new markets. The results of this study indicate that firms’ choice of new markets for entry is a nuanced process that is affected by the interplay of firms’ collaborative ties, the structure of their network, and firms’ internal capabilities. We test our hypotheses in the empirical context of the U.S. venture capital (VC) industry using panel data over a 23‐year period and find broad support for them.     

The Solow residual,Domar aggregation,and inefficiency: a synthesis of TFP measures

We consolidate and interrelate the four main approaches to the measurement and decomposition of total factor productivity growth, namely Solow’s residual analysis, the index number approach, Data Envelopment Analysis, and Domar aggregation. Two new results link the general technology TFP growth measure to the industry Solow residuals and inefficiency.     

Neoclassical Growth Accounting and Frontier Analysis: A Synthesis

The standard measure of productivity growth is the Solow residual. Its evaluation requires data on factor input shares or prices. Since these prices are presumed to match factor productivities, the standard procedure amounts to accepting at face value what is supposed to be measured. In this paper we estimate total factor productivity growth without recourse to data on factor input prices. Factor productivities are defined as Lagrange multipliers to the program that maximizes the level of domestic final demand. The consequent measure of total factor productivity is shown to encompass not only the Solow residual, but also the efficiency change of frontier analysis and the hitherto slippery terms-of-trade effect. Using input-output tables from 1962 to 1991 we show that the source of Canadian productivity growth has shifted from technical change to terms-of-trade effects.     

Growth and social capital: an evolutionary model

In this paper, we analyze the role of cooperation between firms through a model of growth and social capital. In a growth model à la Solow we incorporate the set of resources that a relational network has at its disposals, as a distinct production factor, and thus examine its dissemination through evolutionary type processes in firm interactions. Dynamic analysis of the model demonstrates that cooperation is able to increase the productivity of factors, fostering a higher rate of growth in the long term. The most significant result is that scarcity of social capital can produce a general collapse of the economic system in areas in which long term growth is usually sustained by the learning by doing and spillover of knowledge phenomena. This conclusion leads to reconsider the role of local development economic policies that should concentrate on activities that promote repeated interaction between firms proven to be cooperative or that encourage the formation of technological consortia.     

How does a firm's life cycle influence the relationship between carbon performance and financial debt?

In a progressively more stringent regulatory context concerning greenhouse gas emissions derived from a growing awareness of how economic activity affects our environment, this study analyzes how the firm's life cycle affects the relationship between carbon performance and financial debt. Using panel data on a sample of European listed firms during the 2005–2018 period, we find evidence suggesting that firms with better carbon performance have greater access to external financing during their growth stages and lesser access during maturity, although it has no effect during the shake-out stage. Furthermore, carbon performance has a strong positive effect during growth, maturity, and shake-out when firms need to finance additional tangible investments. We also find that the negative relationship between liquidity and debt is reversed during innovative stages for firms with better carbon performance. Our results are robust to the use of alternative measures of life cycle stages and to the consideration of industrial, legal, and cultural contexts.     

Inequality and Growth in European Regions: Towards a Place-based Approach

Abstract

Does agglomeration matter for growth? This paper addresses this question by evaluating the impact that intra-regional income distribution has on regional growth in Europe. By using a spatially augmented Solow growth model, we investigate the convergence process among 188 EU regions between 1991 and 2004 and extend the traditional growth models to account for the impact of regional inequality on growth, as well as the effects of interaction among regions. Our assumption is that existing levels of inequality between sub-regional territorial units could positively contribute to regional economic growth in Europe, through the positive effects generated by the emergence of agglomeration economies. Our results show that while we cannot find any overall significant relationship in Europe between agglomeration and growth, once we distinguish between Objective 1 and Non-objective 1 regions we are able to find that agglomeration positively impacts subsequent growth, but only in the less developed regions.     

Value Relevance of Multinationality: Evidence from Korean Firms

The purpose of this study is to examine the valuation effects of multinationality in Korean firms and to identify the role of multinationality in internalization theory. We hypothesize that the market positively values the multinational activities of Korean firms, which are operating in a small open economy in which firms have strong motivations for internationalization. We use Ohlson's (1995, Contemporary Accounting Research, 11, 661) value model and document the positive effect for multinational firms compared to domestic firms, as well as the positive effect of multinationality on firm value. These results are robust across studies, as indicated by Tobin's q measure, as well as across years. We also hypothesize that multinationality mediates or moderates the relationship between intangibility and firm value that is proposed in internalization theory. We do not find supporting evidence for a mediated influence of intangibility through multinationality on firm value nor for a moderated influence of intangibility on firm value. We find that multinationality and intangibility directly and independently influence firm value, without any interference from each other. These results are also robust across studies, as indicated by Tobin's q measure. Finally, we find that multinationality in Korean firms has never lost its importance, even during the global financial crisis in the year 2008.     

Patterns of business creation,survival and growth: Evidence from Africa

We study firm dynamics using a novel database of all formally registered firms in Cote d'Ivoire from 1977 to 1997, which account for about 60% of GDP. First, we examine entry and exit patterns and the role of new and exiting firms versus incumbents in job creation and destruction. We find that while the rate of job creation at new firms is quiet high – at 8% on average – the numbers of jobs added by new firms is small in absolute terms. Next, we examine survival rates and find that the probability of survival increases monotonically with firm size, but that manufacturing and foreign-owned firms face higher likelihoods of exit compared to service oriented and domestically-owned firms. We find that higher GDP growth increases the probability of firm survival, but this is a broad impact with no firm size disproportionately affected. In robustness checks we find that post-1987, size is no longer a significant determinant of firm survival for new entrants, suggesting that the operating environment for firms changed. Finally, we find that trade and fiscal reform episodes raised the probability of firm exit and attenuated the survival disadvantages faced by smaller firms, but exchange rate revaluation and pro-private sector reforms did not significantly lower the likelihood of exit.     

Determinants of the medium of payment used to acquire privately-held targets

Since private firms have a unique ownership structure, the method of payment decision when acquiring private firms is influenced by a different set of factors than the method of payment decision when acquiring public firms. We find that bidders are more likely to pay for private targets with stock when the capital gain tax rate is relatively high. This relationship is attributed to greater tax benefits to private owners who receive stock in periods when the capital gains tax is high. Bidders are more likely to use stock in takeovers when the targets are high-tech firms, which we attribute to protection against overpayment by using a contingent pricing method. Bidders are more likely to use cash in takeovers since the Sarbanes-Oxley Act, which we attribute to the higher level of due diligence by bidder managers and board members, and therefore a reduced need for contingent pricing methods like stock. Overall, the results suggest the likelihood of using stock to acquire private targets is positively related to the information asymmetry between the parties, while the likelihood of using cash is greater when conditions (such as SOX) reduce the information asymmetry.     

Knowledge Spillovers,Competition and Innovation Success

We study the relationship between a patent-based measure of knowledge spillovers that calculates technological proximity based on technologically relevant firms and innovation success. We find – for a representative sample of Swiss firms – that knowledge spillovers have a positive and significant association with the commercial success of innovative products. The paper shows the importance of market conditions for the relationship of spillovers with innovation performance: It is only positive and significant in markets with a medium number of competitors in the main product market, but not in monopolistic or polypolistic market structures.     

How do technological innovations affect corporate investment and hiring?

In this paper, we study the relation between technological advancement, and corporate investment and hiring. We build a corporate investment model with dynamic technology conditions, and we find the optimal investment and labor inputs increase in response to technological innovation shocks. Consistent with the model predictions, we empirically show that corporate investment and hiring increase following technological advancements, using various measures of technological innovation. Further, we find the effect is stronger for firms in more innovative industry, firms with higher capital intensity and firms with higher market-to-book ratio. Our findings provide evidence for the endogenous growth theory, i.e., firms with successful innovations tend to expand in capital investment and employment, suggesting technological innovations are, to some extent, Hicks-neutral.     

全要素生产率中的加成定价与规模报酬效应

研究目标：考察经典方法估计全要素生产率时是否因加成定价或规模报酬效应而出现估计偏差。研究方法：基于放松完全竞争和规模报酬不变假设的增长核算框架估计全要素生产率,并在分别估计加成定价率和规模报酬率基础上对古典索洛余值进行分解。研究发现：加成定价效应是造成古典索洛余值与全要素生产率偏差的重要原因;富有弹性的劳动力市场可以降低全要素生产率受到经济冲击的影响。研究创新：基于扩展后的增长核算框架估计了中国、韩国、日本和美国的全要素生产率,分析古典索洛余值是否存在估计偏差以及偏差的主要来源。研究价值：分离新古典索洛余值中的加成定价和规模效应,可以有效降低经验研究中全要素生产率的估计偏差。     

The Relationship between Slack Resources and the Performance of Entrepreneurial Firms: The Role of Venture Capital and Angel Investors

In this study, we seek to further delineate factors that condition the relationship between slack resources and firm performance. To do so, we develop and test a model that establishes the role of venture capital (VC) and angel investors as powerful external stakeholders who positively moderate the slack–performance relationship. In addition, we provide more insight into this relationship by examining differences between these two types of private investors and by examining the role of their ownership stakes. We test our hypotheses using a sample of 1215 private firms, including VC‐backed firms, angel‐backed firms, and similar firms without such investors. We find that the presence of VC investors positively moderates the relationship between both financial and human slack resources and firm performance, while angel investors only positively moderate the effect of human resource slack. Further, VC investors are only marginally better at helping entrepreneurs to extract value from human resource slack than angel investors and they are no better when it comes to financial slack. Finally, we find that the impact of financial and human resource slack on firm performance is more positive in VC‐backed firms when investors hold high ownership stakes, an effect which is significantly stronger than when angel investors hold high ownership stakes.     

中美两国经济实力与潜力的比较分析

改革开放以来,经过30多年的发展,中国已重新成为全球经济大国之一。本文利用C-D生产函数和索洛增长模型对中国中长期经济发展进行预测,在国内外研究成果的基础上对美国中长期经济发展进行预测,探讨了在不同情况下中美两国经济的对比分析和追及问题。本文预测结果表明,中国经济只要保持平稳增长,将在2030年前实现多个目标：一是GDP总量超过美国;二是人均GDP超过1.7万美元;三是人均国民总收入接近高收入国家行列;四是商品零售额、商品进口额等宏观指标赶上美国。     

General Equilibrium Analysis of International TFP Growth Rates

The paper presents a study of the total factor productivity (TFP) performance among developed countries between 1985 and 1990. The analysis includes the three large economies: the US, Japan and Europe. A general equilibrium model of these economies is used to estimate TFP growth at the sectoral and at the aggregate levels. The model is based on the fundamentals of the economies and employs only data on input-output flows, factor inputs across sectors, consumption and trade patterns and endowments. Prices are endogenous in the model. They are obtained as shadow prices from the model's linear program and then used to measure TFP growth and decompose it in a technical change effect, a demand effect and a terms-of-trade effect. The technical change effect is highly correlated with the conventional Solow residual measure. This result lends support to the standard measure of technological change.     

Financial development and dynamic investment behavior: Evidence from panel VAR

We apply vector autoregression (VAR) to firm-level panel data from 36 countries to study the dynamic relationship between firms’ financial conditions and investment. By using orthogonalized impulse-response functions we are able to separate the ‘fundamental factors’ (such as marginal profitability of investment) from the ‘financial factors’ (such as availability of internal finance) that influence the level of investment. We find that the impact of financial factors on investment, which indicates the severity of financing constraints, is significantly larger in countries with less developed financial systems. Our finding emphasizes the role of financial development in improving capital allocation and growth.     

The R&;D and productivity relationship of Korean listed firms

This study analyzes the relationship between R&D investment and the productivity of Korean R&D-engaged firms. An interdependent chain of equations including the propensity to invest, R&D investment and productivity are estimated in a multi-step procedure accounting for selectivity and simultaneity biases. Using Korean firm level panel data of listed firms from 1986 to 2002, we find four main empirical results. First, there is a two-way causal relationship between R&D investment and productivity for Korean listed firms. Second, Chaebol firms were associated with lower R&D growth as well as lower labor productivity growth in comparison to non-Chaebol firms. Third, there was a substantial reduction in growth rates both in R&D investment and labor productivity in 1997-1998, immediately following the Asian financial crisis. Fourth, considering the positive feedback effect from productivity growth to R&D growth, a decrease in R&D investment growth after the Asian financial crisis should have been harmful by further decreasing productivity growth.