The impact of health information technology on hospital productivity

Health information technology (IT) has been championed as a tool that can transform health care delivery. We estimate the parameters of a value‐added hospital production function correcting for endogenous input choices to assess the private returns hospitals earn from health IT. Despite high marginal products, the total benefits from expanded IT adoption are modest. Over the span of our data, health IT inputs increased by more than 210% and contributed about 6% to the increase in value‐added. Not‐for‐profits invested more heavily and differently in IT. Finally, we find no compelling evidence of labor complementarities or network externalities from competitors' IT investment.     

The effects of corporate spin-offs on productivity

Using a unique sample of plant level data from the Longitudinal Research Database of the U.S. Census Bureau, which enables us to correctly identify the parent and spun-off entities prior to spin-offs, we establish that efficiency improves following spin-offs. A spin-off refers to the separation of the management of some assets of a firm into a separate entity (which we term as the spun-off entity or subsidiary). We investigate the underlying mechanisms and the real effects of spin-offs after correcting for potential endogenous selection using treatment effect estimators and propensity score matching in our analysis. We identify how (the precise channel and mechanism), where (parent or subsidiary), and when (the dynamic pattern) efficiency improvements arise following spin-offs. We show that spin-offs increase total factor productivity (TFP) and that such productivity improvements are long-lived. This post spin-off productivity improvement can be attributed to cost savings but not to higher sales. Further, such improvements arise primarily in plants remaining with the parent. However, contrary to speculation in the previous literature, we show that plants that are spun-off do not underperform parent plants prior to the spin-off. We identify acquisitions following spin-offs and find that while productivity improvements occur immediately after the spin-off in non-acquired plants, they start only after being taken over by another firm in acquired plants. Finally, we show that unrelated spun-off entities show greater improvements in productivity compared to related spun-off entities.     

Family ownership and productivity: the role of owner-management

This article analyses the relationship between family ownership and productivity, with special focus on the role of owner-management. The results show that family-owned firms are less productive than non-family-owned firms. This productivity gap is, however, explained by differences in management regime. Family-owned firms managed by a person hired outside the owner family are equally productive as non-family-owned firms, while family-owned firms managed by a person from the owner family are significantly less productive. This finding is sustained after controlling for endogeneity of management regime.     

The effects of ownership and stock liquidity on the timing of repurchase transactions

We analyze detailed monthly data on U.S. open market stock repurchases (OMRs) that recently became available following stricter disclosure requirements. We find evidence that OMRs are timed to benefit non-selling shareholders. We present evidence that the profits to companies from timing repurchases are significantly related to ownership structure. Institutional ownership reduces companies' opportunities to repurchase stock at bargain prices. At low levels, insider ownership increases timing profits and at high levels it reduces them. Stock liquidity increases profits from timing OMRs.     

The effects of institutional ownership on the value and risk of diversified firms

We study the link between institutional ownership and firms' diversification strategy, value and risk. Our sample includes US-listed firms with segment data from 1998 to 2012. We find that not all kinds of diversification are value-destroying; unlike industrially-diversified firms, global single-segment firms are trading at a premium relative to their imputed value. The presence of institutional investors and the stability of their shareholdings positively influence the likelihood that a firm is diversified. The proportion (volatility) of institutional ownership is higher (lower) among diversified firms compared to domestic single-segment firms. More importantly, the higher the proportions of institutional shareholdings, the higher the excess value of the diversified firm and the lower the firm idiosyncratic risk. Institutional ownership volatility, on the other hand, is inversely related to a firm excess value but positively related to its idiosyncratic risk. Thus, the presence of long-term stable institutional investors enhances the value of diversified firms. Our findings remain robust to various model specifications and estimation techniques.     

Managerial ownership and firm performance: A re-examination using productivity measurement

The role of productivity in firm performance is of fundamental importance to the US economy. Consistent with the corporate finance approach, this paper uses the ownership stake of a firm's managers as an argument in estimating the firm's production function. Accordingly, this paper brings together the corporate finance and productivity literature. Using a large sample of randomly selected manufacturing firms that does not suffer from any survivorship or large firm size biases, we find that managerial ownership changes are positively related to changes in productivity. We also find a higher sensitivity of changes in managerial ownership to changes in productivity for firms who experience greater than the median change in managerial ownership. These results are robust to including lagged estimates of production inputs, year dummies and separate dummies for each firm to control for unobservable firm characteristics. In addition, we find that the stock market rewards firms with increases in firm value when these firms increase their level of productivity.     

How hospital ownership affects access to care for the uninsured

This article addresses the effect of hospital ownership on the delivery of service to uninsured patients. It compares the volume of uninsured patients treated in for-profit and nonprofit hospitals by regarding hospital ownership and service as endogenous. Instrumental variable estimates are used to predict the percentage of patients who are uninsured, controlling for hospital ownership and service. The study shows that when for-profit and nonprofit hospitals are located in the same area, they serve an equivalent number of uninsured patients, but for-profit hospitals indirectly avoid the uninsured by locating more often in better-insured areas.     

The productivity effects of privatization: The case of Polish cooperatives

This paper evaluates the productivity effects associated with privatization of producer cooperatives. The results, based on a sample of 2164 Polish cooperatives, indicate that privatized cooperatives have: (1) 1% lower total factor productivity (TFP) the year prior to privatization and 3-20% higher TFP in the year of privatization and three years post-privatization, (2) 9-36% higher labor productivity, (3) capital productivity effects of − 16-6%. The evidence is consistent with governance and incentive mechanisms of cooperatives being more effective outside of state interference, and with competition and hard budget constraints leading to pressure to restructure and adopt practices that improve productivity.     

Incentive and entrenchment effects in European ownership

In a large sample of European firms we analyze the value discount associated with disproportional ownership structures first documented by Claessens et al. (2002). Consistent with a theoretical model of incentive and entrenchment effects, we find higher value discount in family firms, in firms with low cash flow concentration, and in industries with higher amenity value. Furthermore, the discount is higher in countries with good investor protection and higher for dual class shares than for pyramids. We find no impact on operating performance, likelihood of bankruptcy, dividend policy, or growth. Finally, we discuss policy implications of these findings.     

The ownership of ratings

We identify the optimal contract between a rating agency and a firm and the circumstances under which simple ownership contracts implement this optimal solution. We assume that the decision to obtain a rating is endogenous and the price of a rating is a strategic variable. Clients hiding their ratings can be an equilibrium only if they are ex ante uncertain of their quality and if the hiring decision is not observable. For some distribution functions, a competitive rating market is necessary for this result to obtain. In this context, competition between rating intermediaries will lead to less information in equilibrium.     

The impact of government ownership on bank risk

We use cross-country data on a sample of large European banks to evaluate the impact of government ownership on bank risk. We distinguish between default risk (likelihood of creditors’ losses) and operating risk (likelihood of negative equity). Our analysis is based on the joint use of issuer ratings, a synthetic measure of a bank’s probability of default, and individual ratings, which omit the influence of any external support and focus on a bank’s operating risk. We report two main results. First, government-owned banks (GOBs) have lower default risk but higher operating risk than private banks, indicating the presence of governmental protection that induces higher risk taking. Second, GOBs’ operating risk and governmental protection tend to increase in election years. These results are consistent with the idea that GOBs pursue political goals and have important policy implications for recently nationalized European banks.     

The new math of ownership

In 1994, when the software maker Knowledge Adventure decided to spin out a new venture--Worlds, Incorporated--founder Bill Gross expected the worst. He had argued with the board that it was in KA's best interests to maintain a controlling ownership stake in Worlds, whose powerful new software technology had enormous revenue potential. But the board prevailed, and KA took only a 20% ownership in the new company, giving the rest to Worlds' employees. Within a year, the company's performance had surpassed all expectations, and instead of owning 80% of a $5 million business, KA owned 20% of a $77 million business. The arithmetic may have been counterintuitive, but the lesson was clear. When KA let go of Worlds and gave its employees near total ownership, the company unleashed a new level of employee performance. That, in turn, led to the creation of economic value that more than made up for the equity KA had surrendered. So compelling was this "new math of ownership" that Gross founded a new company, Idealab, on this principle. The company, which develops ideas for Internet-based businesses and seeds the most promising ones, takes no more than a 49% equity stake in the new ventures and gives at least 1% of ownership to each employee. For Gross, this radical approach to ownership is the key to inspiring stellar performances. In part, employee-owners are motivated by their potential to earn great financial reward. But the drama of ownership, he argues, is even more important. In that drama, employees become personally involved in the struggle to outdo the competition and emerge victorious.     

The effects of ownership structure on dividend policy: Evidence from seasoned equity offerings (SEOs)

This paper examines the effects of ownership structure on dividend policy, specifically the role of controlling shareholders in shaping dividend policy in a sample of firms that pay dividends and issue new equity simultaneously. The results show that managers in weakly governed firms are more likely to initiate customized dividends to meet outside large shareholders' needs while simultaneously using costly external capital to finance new investment projects. This paper contributes to the existing literature on agency problems by explaining why firms engage in this suboptimal dividend policy: it allows large shareholders to extract private benefits.     

The impact of institutional ownership on corporate operating performance

This paper examines the relation between institutional investor involvement in and the operating performance of large firms. We find a significant relation between a firm’s operating cash flow returns and both the percent of institutional stock ownership and the number of institutional stockholders. However, this relation is found only for a subset of institutional investors: those less likely to have a business relationship with the firm. These results suggest that institutional investors with potential business relations with the firms in which they invest are compromised as monitors of the firm.     

Single Market effects on productivity in the German insurance industry

The Single Market project of the European Commission was supposed to foster productivity growth in the financial service industry. We assess its consequences on productivity development in the German insurance industry, one of the largest insurance markets within the European Union, by applying Data Envelopment Analysis to a panel of German insurance companies. We estimate standard and bootstrapped efficiency scores for the years 1991 through 2006 and apply a test on scale efficiency based on bootstrapped statistics. Furthermore, we compute a Malmquist index and test for different types of productivity convergence across firms.     

The influence of the degree of state ownership and the ownership concentration on the performance of listed Chinese companies

This study investigates the influence of the degree of state ownership and ownership concentration on firm performance using annual data for 1034 companies listed on China's two exchanges for the period from 2000 to 2004. We find that, on average, the firms’ performance is negatively influenced by the state ownership. However, such a negative relationship is significant only at high levels of government ownership. Moreover, we find that a balanced ownership structure enhances the firm performance and there are indications of detrimental effects of block ownership.     

Sources of Corporate Financing and Operating Performance: The effects of strategic ownership and financial restatements

Using a sample from European markets this study documents that changes in external financing, both in the form of equity and debt, can predict future operating performance (profitability and cash flows). In terms of future profitability, increases in equity (debt) financing particularly benefit large-size growth firms (large-size value firms). It is notable that a firm environment of low information quality, indicated by the presence of accounting restatements, intensifies the association between external financing and operating performance, due to the heightened scrutiny investors/lenders apply to firms that have recently restated their financials. In addition, strategic ownership in the firm has no significant effect on the financing – operating profitability association but may amplify the positive effects of equity financing on future operating cash flows. Moreover, financial analysts' forecasts of operating profitability and operating cash flows reflect the impact of external financing changes on future operating performance but exhibit a financing-related systematic inefficiency particularly for firms that have recently announced a material restatement of their prior financial results. Finally, controlling for information contained in analyst forecast surprises, the market is efficient overall and incorporates the effects of equity and debt financing changes into stock prices.     

The effects of ownership structure,sub-optimal cash holdings and investment inefficiency on dividend policy: evidence from Indonesia

Review of Quantitative Finance and Accounting - We investigate how a firm’s decision to hold excessive cash or to overinvest could influence its dividend payout policy in Indonesia....     

The impact of government ownership on dividend policy in China

We investigate the impact of State ownership on Chinese corporate dividend policy. We find that Chinese firms' dividend payout rates respond fairly quickly to earnings changes, and the average actual payout ratio for Chinese firms falls between the payout ratios for emerging-market and developed firms. These results are consistent with the dividend policies of developing economies in general. We also find that dividend payouts among dividend-paying firms, and the likelihood that a firm will pay a dividend, are increasing in State ownership. Our findings are consistent with the State's need for cash flow as a partial motivation for continued State ownership of a significant portion of the corporate economy, and support the agency and tax clientele explanations for dividend policy.     

The impact of firm's ownership advantages and economic status of destination country on the wealth effects of international joint ventures

Prior studies provide inconclusive evidence on the wealth effects of international joint ventures (IJVs) on the firm's market value. While some studies document that IJVs benefit shareholders of firms that engage in such activities, others reveal conflicting results. This study provides additional evidence on this issue. On average, shareholders of U.S. multinationals that engage in IJVs benefit from such activities. Specifically, shareholders benefit more from IJVs when their firms possess a higher degree of ownership advantages. This study also finds that higher returns are associated with IJVs with developed countries than with developing countries by U.S. multinationals.