Executive compensation and gender: S&;P 1500 listed firms

We examine if a gender gap persists in executive compensation and if the composition and the determinants of executive compensation for men versus women are the same for the S&P1500 listed firms during the period from 1992 to 2004. This analysis is also extended to high tech firms, where high scholarship is required both for male and female executives. The results reveal that the gender gap in executive compensation is reducing essentially after the year 2000. Also, the factors that explain the variation in executive compensation are not all the same for men and women. However, firms continue to pay women, who are considered more risk averse than men, a similar proportion of risky compensation components, such as stock options and restricted stocks, than they pay to men. In terms of technology firms, we find that the gender differences in total compensation are not statistically significant. Our study offers insight into recent data for executive compensation. The finding that the gender gap diminishes is a sign of a better functioning market for executives. Our findings could be potentially useful for compensation committees in order to develop compensation packages that take into consideration the degree of risk aversion in order to enhance performance. Compensation adjusted for risk aversion can produce a higher level of satisfaction for the employees and can lead to better performances. Future research should focus on international comparison of various dimensions of executive compensation.     

Highways and productivity in manufacturing firms

Using a geo-coded micro-level panel dataset for Spanish manufacturing firms, I estimate the effect of access to highways on firm-level productivity. To identify the causal effect of highways, I have relied on different fixed-effects specifications, instrumental variables and controls for geography, geology and history. Since highways also attract economic activity, leading to local density increases, which in turn could affect productivity through agglomeration benefits, I also present estimations that control for local employment densities. The results show that highways raise firm-level productivity directly and beyond the effect of density. Additional results show that highway benefits are unevenly distributed across sectors and space.     

The relationship between R&D,innovation and productivity in emerging economies: CDM model and alternatives

CDM (Crépon, Duguet and Mairesse, 1988) is a workhorse model in the economics of innovation, which explains productivity in a three-stage procedure driven initially by R&D and leads to patents and then to productivity improvements. Based on the logic of this model, an increasing number of papers applies it to emerging economies but modifies the original model without being explicit about the nature and implications of this modification. We argue in this paper that, in its original form, CDM does not capture stylized facts of the determinants of productivity in emerging economies and that we need alternative models. Accordingly, we are critical of papers that try to maintain the validity of the model but actually change it. For that purpose, we test the original CDM model and its two alternatives: investment and production capability–driven models. Our research is based on a large sample of firms in Central and Eastern Europe, former Soviet republics and Turkey, and we show that the alternative models are much closer to the stylized facts of innovation activities and technology upgrading in these and other emerging economies. Our conclusions have important policy implications, which we discuss.     

A note on the relationship between the total factor productivity and the network of firms

In this paper we study the robustness of the results found recently by Guzzini and Palestrini (J Econ Interact Coord 11:35–55, 2016). Since the original analysis was carried out in a static setting, we perform a dynamic panel analysis by using the same dataset. The inclusion of the lagged value of the endogenous variable, missing in the original paper, could be justified for several reasons. Firstly, the statistical relationship may have itself a dynamical nature; secondly the inclusion of lagged-endogenous variable is a way to mitigate the possibility of an omitted variable problem. We find that the results are only qualitatively the same, and we discuss the quantitative differences.

     

The effectiveness of price-stabilizing share buybacks: Evidence from listed firms in Vietnam

The majority of share buybacks in Vietnam involve the sole stated purpose of price stabilization. Using a sample of repurchases announced in 2008–2016 and control firms based on propensity score matching, we find the Vietnamese repurchases to be effective in stabilizing prices and enhancing liquidity. Utilizing the special disclosure features in Vietnam that allow clearly-defined sub-windows of pre-trading, trading, and post-trading, we further examine the different mechanisms of market reactions and actual firm buyback transactions in the buyback process. We document significantly higher abnormal returns over the pre-trading window driven by market reactions, and improved liquidity and reduced volatility over the firm’s actual transaction window for the buyback firms. We also report a significant moderating effect of target shares announced and actual shares repurchased depending on the sub-window under examination. We do not find any evidence of effectiveness in the post-trading window or over a longer-term beyond the buyback period.     

Technological spillovers and productivity in Italian manufacturing firms

We study whether a firm’s total factor productivity dynamics is positively influenced by its own R&D activity and by the technological spillovers generated at the intra- and inter-sectorial level. Our approach corrects simultaneously for the endogeneity and the selectivity biases introduced by the use of a firm’s own R&D as a regressor. The evidence suggests that a firm’s involvement in R&D activities accounts for significant productivity gains. Firms also benefit from spillovers originating from their own industries, as well as from innovative upstream sectors.     

R&D Competition when firms Choose Variance

I consider an infinite-period race where players choose between low- and high-variance motion technologies. I provide sufficient conditions under which, in equilibrium, the leader chooses a safe technology and the laggard a risky one, thus formalizing the sports intuition that the laggard has nothing to lose. Various examples and empirical implications are presented.     

Growth in total factor productivity and links among firms

In this paper we study the relevance of links among firms in explaining the mean and the auto-correlation property of the aggregate total factor productivity rate of growth (Solow residual). Our approach relies on the interaction between idiosyncratic shocks of firms and the network structure of firms. We analytically study this phenomenon using the adjacency matrix of a complete network and we present a simulation with more general random adjacency matrices. We also check empirically, using Italian data, the relationship between the network structure and the Solow residual. In particular, in the empirical part, we find two main results: firstly, the relationship between the Solow residual and the measure of connectivity of firms is positive, in accordance with the analytical results. Secondly, we find that the measure of connectivity is pro-cyclical with the annual growth rate of industrial production.     

Production functions and productivity of family firms: Evidence from the S&P 500

This paper examines whether the higher profitability and valuation of family firms is related to differences in production technologies and production efficiency. Using data on S&P 500 manufacturing firms, we find that family firms are more productive than comparable non-family firms. Furthermore, our results show that the production technologies of family and non-family firms do not differ per se, thereby suggesting that the differences in the level of production output are caused by higher production efficiency of family firms. These findings indicate that the superior performance of family firms is related to their more efficient use of labor and capital resources.     

Corporate financial distress: The case of publicly listed firms in an emerging market economy

Occurrences of financial distress (FD) are not readily obvious yet can span several periods. This paper examines episodes of FD using industry‐relative (IR) firm‐/ accounting‐, market‐ and macro‐level information. Mixed logit regressions reveal that firm‐ and market‐based measures, as well as macro‐level variables explain the likelihood of FD in 263 publicly listed non‐banking firms in the Philippines during the period 1995 to 2018. Rates of identification of firms in financial distressed states of close to 69 percent are obtained at a cutoff probability of 0.30 in the model with time‐varying intercept and slope. This study shows the importance of recognizing heterogeneous firm behavior. The ability to more accurately predict the probability of FD and to determine the financial health of firms can help financial institutions in allocating funds and policy makers in predicting crises episodes.     

Measuring the impact of R&;D on Productivity from a Econometric Time Series Perspective

In this paper we argue that the standard sequential reduction approach to modelling dynamic relationships may be sub-optimal when long lag lengths are required and especially when the intermediate lags may be less important. A flexible model search approach is adopted using the insights of Bayesian Model probabilities, and new information criteria based on forecasting performance. This approach is facilitated by exploiting Genetic Algorithms. Using data on U.K. and U.S. agriculture the bivariate time series relationship between R&D expenditure and productivity is analysed. Long lags are found in the relationship between R&D expenditures and productivity in the U.K. and in the U.S. which remain undiscovered when using the orthodox approach. This finding is of particular importance in the debate on the optimal level of public R&D funding.JEL Classification: C22, C51, Q16     

Corporate governance and firm efficiency: evidence from China's publicly listed firms

This paper applies a two‐stage, double bootstrapping data envelope analysis approach to investigate whether and to what extent various distinctive corporate governance practices affect productive efficiency in a sample of 461 publicly listed manufacturing firms in China between 1999 and 2002. We find that firm efficiency is negatively related to state ownership while positively related to public and employee share ownership. In addition, the relationship between ownership concentration and firm efficiency is U‐shaped, indicating the presence of tunneling activities by the largest shareholder. Among three types of controlling shareholder, state exerts the most negative impact on firm efficiency, followed by state‐owned legal entities. These results provide strong evidence that political interferences have reduced firm efficiency. It shows that the proportion of outside directors and the number of board meetings are positively associated with firm efficiency, suggesting that board of directors can be an effective internal governance mechanism. Furthermore, provincial market development, a proxy for the strength of external governance mechanism, is positively related to firm efficiency. Overall, our findings illustrate that restructuring state‐owned enterprises via improvements in corporate governance has enhanced firm efficiency, but partial privatization without transfer of ownership and control from the state to the public remains a major source of inefficiency in corporate China. Copyright © 2008 John Wiley & Sons, Ltd.     

The relationship between discretionary slack and growth in small firms

International Entrepreneurship and Management Journal - Discretionary slack, along with entrepreneurial orientation (EO), are vital to the growth and long-term survival of small firms. This...     

Spatiotemporal analysis of Korean ginseng farm productivity

Journal of Productivity Analysis - The past two decades has seen new methodological debates on the identification of production function. Olley and Pakes (J Polit Econ 101(6):1149–1164,...     

Cooperative and noncooperative R&D with spillovers: The case of labor-managed firms

This research focuses on the behavior of not-for-profit enterprises. In particular, using a familiar model of cost-reducing R&D with spillovers, we examine strategic interactions between labor-managed firms in a duopoly. Research spillovers have not been previously considered in the context of labor-managed firms. Among four market scenarios involving (i) competition in research and production; (ii) cooperation in research and production; (iii and iv) competition or cooperation in research and the reverse in production, our results show that research is greatest under full cooperation, while output is greatest under full competition. Output and R&D are the lowest in the case when firms compete in research, but form a production cartel. The degree of research spillovers has a crucial bearing upon these rankings. Some of these results differ from those for profit-maximizing firms. The effects of changes in research spillovers on employment (output) are shown to depend upon the nature of the underlying production technology. Policy implications are discussed.     

Effect of non‐IFRS earnings reporting guidelines on underlying earnings reporting quality: The case of Australian listed firms

This study investigates Australian Securities Exchange (ASX) 200 firms in the post–Australian Securities and Investments Commission (ASIC) period (2011–2014) to examine how listed firms follow the non–International Financial Reporting Standards (IFRS) earnings reporting guidelines issued by ASIC to communicate underlying earnings reporting quality. We find that firms that do not comply with the ASIC guidelines have lower underlying earnings reporting quality than do firms that comply with these guidelines. Firms that do not follow the ASIC guidelines are found to exclude income‐increasing underlying earnings adjustments to make underlying earnings appear more profitable than IFRS earnings when they miss earnings targets or make current losses, and that they report underlying earnings opportunistically by excluding recurring expenses that persist into future operating earnings. Unlike ASIC non‐compliance firms, ASIC compliance firms attempt to act as responsible reporters by reporting underlying earnings in a responsible manner to demonstrate a judicious use of discretion in informing shareholders. Further, we find that underlying earnings reported by non‐compliance firms are less value‐relevant than underlying earnings reported by compliance firms.     

R&D subsidies and productivity in eastern European countries

This paper shows that R&D subsidy policies at the European Union (EU) and national levels stimulated labor productivity in Central and Eastern European countries (CEEC) in the years after their entry to the EU. However, the average impact of national funding on labor productivity was higher for countries in the Western control group than in the CEEC sample. EU R&D subsidies compensated the CEEC in part for the greater innovation impact of Western economies. Although they crowded out some R&D subsidies by local governments at the country level, the EU subsidies crowded in many national and local subsidies at the firm level. Local/regional state innovation aid to enterprises encouraged no increase in labor productivity in all but one of the sample CEEC countries. These impacts are assessed in a sequential structural econometric model estimated using Eurostat’s collection of Community Innovation Surveys covering the years 2006–2014.     

R&D and regional competitiveness: a study of global entrepreneurial firms

We quantify, using data from the World Bank’s Enterprise Surveys and the World Economic Forum’s Global Competitiveness Index, the empirical relationship between global competitiveness and R&D investment activity as well as the independent relationship between global competitiveness and R&D investments across geographic regions of economic development. We also explore alternative measures of the effectiveness of R&D investments. Our findings suggest that R&D investments are a possible policy target variable in high-income regions for policy makers to consider for increasing firms’ global competitiveness.

     

The Peter Pan syndrome for small and medium-sized enterprises: Evidence from Korean manufacturing firms

This study examines whether government support for small and medium-sized enterprises (SMEs), aimed at stimulating their growth, achieves its intended goal. We argue that government subsidies create the incentive for SMEs to remain small in order to keep receiving such support and thus SMEs are reluctant to grow. We call this phenomenon the Peter Pan syndrome. Using a dataset of Korean manufacturing firms during the period of 2010–2012, we find that the Peter Pan syndrome indeed exists and that the likelihood of the Peter Pan syndrome is conditioned by factors that influence their incentive to remain as SMEs.     

Financial distress and bankruptcy prediction: An appropriate model for listed firms in Vietnam

This paper aims to develop a comprehensive model, the first of its kind in Vietnam, for the purpose of predicting financial distress and bankruptcy at Vietnamese listed firms. The period 2003–2016 is used to study the likelihood of financial distress in different scenarios. Various factors are utilized, including (1) accounting factors in the emerging market score model; (2) market factors in the distance-to-default model; and (3) macroeconomic indicators. The area under the receiver operating characteristics (AUC) curve is used to compare the usefulness of various models that predict financial distress and bankruptcy. Empirical findings from this study show that accounting and market factors, together with macroeconomic fundamental factors, both affect financial distress when they are considered in isolation. However, in a comprehensive model, the effects from accounting factors appear to be more significant than those from market-based factors. The default prediction model, which includes accounting factors with macroeconomic indicators, appears to perform much better than the model comprising market-based factors with macroeconomic fundamentals.