Offshoring and firm performance: self-selection,effects on performance,or both?

This paper uses unique new data for German manufacturing enterprises from matched regular surveys and a special purpose survey to investigate the causal effect of relocation of activities to a foreign country on firm performance. Compared to non-offshoring firms, firms that relocated activities were larger and more productive, and had a higher share of exports in total sales. These differences existed the year before some firms started to relocate, and this points to self-selection of “better” firms into offshoring. To investigate the causal effects of offshoring, six different variants of a matching approach are used. Contrary to what is often argued we find no evidence for a large negative causal effect of offshoring on employment in Germany.     

International Differences in Conditional Conservatism – The Role of Unconditional Conservatism and Income Smoothing

Abstract

Prior research documents that conditional conservatism, measured as the asymmetric timeliness of earnings reflecting bad vs. good news, varies with cross-country differences in institutional regimes. In this paper, we examine the determinants of conditional conservatism and related earnings attributes internationally. First, using panel data, we investigate whether competing earnings attributes such as unconditional conservatism and income smoothing affect conditional conservatism and its international differences. We find that these attributes are predictably correlated with conditional conservatism. Second, we address the question whether income smoothing and conditional conservatism are two fundamentally different earnings attributes. We show theoretically that both attributes yield different earnings distributions and that the motivations for producing earnings which possess these attributes differ. To test these predictions empirically, we calculate firm-specific time-series measures of asymmetric timeliness, using a novel trigonometric measure based on the standard Basu (1997)-type regression. Using this cross-sectional data, we test whether conditional conservatism and income smoothing are different and find them to be only weakly correlated for a broad international sample. Also, we demonstrate that income smoothing explains international differences in conditional conservatism. Finally, we estimate simple determinant models of conditional conservatism and income smoothing, showing that both earnings attributes are driven by different explanatory firm-level factors: Conditional conservatism increases with the importance of debt financing, while income smoothing increases with the importance of dividends. Despite some important limitations, we believe our results to be meaningful because they show that cross-country differences in conditional conservatism are influenced by the effects of other accounting properties, predominantly income smoothing. Especially, legal regime appears to drive income smoothing while losing its explanatory power for conditional conservatism when firm-specific factors are controlled for.     

Regain control of your international prices

Companies that strive too long for internationally differentiated pricing run the risk that prices erode. Price harmonization therefore has to be given top priority. By professionally performing the three steps described below, companies can systematically align their prices according to their customers’ purchasing behavior and thus regain control of the international pricing system.     

Driving forces of chemical risks for the European biodiversity

In the framework of the EU-funded research project ALARM (Assessing LArge-scale environmental Risks with tested Methods), an original method combining the DPSIR (driving forces–pressures–state–impacts–responses) framework and an analysis based on the distinction between the four spheres of sustainability (environmental, economic, social and political) has been developed. This paper presents the application of this method, called “the tetrahedral DPSIR” for the identification and analysis of driving forces of environmental chemicals risks for biodiversity, in Europe. The purpose of this methodology is to help reduce the pressures on biodiversity through modifying the driving forces behind them by offering scientific advice to policy makers. We frame our analysis in the context of the current policy, namely the implementation of REACH (Regulation on the Registration, Evaluation, and Authorization of CHemicals).     

The Post-entry Performance of Cohorts of Export Starters in German Manufacturing Industries☆

This paper investigates four cohorts of firms from German manufacturing industries that started to export between 1998 and 2002, and follows them for five years after the start. Export starters are a rare species and small in Germany. Around 30–40% of those starters studied became continuous exporters. The share of total exports contributed by export starters of a cohort is tiny in the start year, and it remains so over the years that follow. Contrary to the market selection hypothesis, there is no evidence that productivity in the start year is systematically related to survival in the export market. There is no evidence of a negative impact of a smaller firm size in the start year on the chance of surviving in the export market. Starting with a higher share of exports in total sales, however, tends to increase the probability of continuing to export.     

MRO parts service in the machine tool industry

This article examines the post purchase Parts servicing of Machine Tools. Survey results outline the policies and criteria that influence the degree to which replacement parts will be provided for old machines. The survey indicates that the policies of some American manufacturers leave service gaps that can be exploited by foreign as well as domestic competitors.     

Export Entry,Export Exit and Productivity in German Manufacturing Industries

This paper contributes to the flourishing literature on exports and productivity by using a unique newly available panel of exporting establishments from the manufacturing sector of Germany from 1995 to 2004 to test three hypotheses motivated by a theoretical model by Hopenhayn (Econometrica 1992): (H1) Firms that stop exporting in year t were in t?1 less productive than firms that continue to export in t. (H2) Firms that start to export in year t are less productive than firms that export both in year t?1 and in year t. (H3) Firms from a cohort of export starters that still export in the last year of the panel were more productive in the start year than firms from the same cohort that stopped exporting in between. While results for West Germany support all three hypotheses, this is only the case for (H1) and (H2) in East Germany.     

Imputed Rent and Income Inequality: A Decomposition Analysis for Great Britain, West Germany and the U.S.

This article deals with income advantages derived from owner-occupied housing and their impact on the personal income distribution. Using micro-data from the British Household Panel Study (BHPS), the German Socio-Economic Panel (SOEP), and the U.S. Panel Study of Income Dynamics (PSID) we find distinct cross-national differences in terms of the prevalence and extent of imputed rent. Results from inequality decomposition analyses show this overall impact to be the net effect of two conflicting changes: On the one hand there is increasing income inequality between the groups of owneroccupiers and renters, respectively, and, on the other hand, we find inequality to be decreasing within the group of those owner-occupiers who own outright. When focussing on imputed rent as a means of old-age provision, our results for all three countries show an income advantage for, as well as a poverty reducing effect among the elderly. The empirical findings support the claim for the need of an improved harmonization of this non-cash income component especially for the purpose of cross-national comparative research.