Using the World Bank Enterprise Survey (WBES) data from 2006-2017 on 130,000 firms in 130 countries across the globe, we document that women-led firms tend to underperform men-led firms. The main contribution of this work is to shed light on three mechanisms that help explain the underperformance: finance, technology, and labor. First, women-led firms are investing less in fixed assets and obtaining less credit from banks. Second, women-led firms are less likely to use information technology to manage their businesses. Third, women-led firms tend to employ more skilled and educated workers, and are more likely to provide workers with permanent contracts, hence incurring higher labor costs. Interestingly, in our data, women top managers do not perceive themselves facing more business obstacles than their male counterparts do.
{"title":"Gender and Firm Performance around the World: The Roles of Finance, Technology, and Labor","authors":"L. Allison, Yu Liu, S. Murtinu, Zuobao Wei","doi":"10.2139/ssrn.3764323","DOIUrl":"https://doi.org/10.2139/ssrn.3764323","url":null,"abstract":"Using the World Bank Enterprise Survey (WBES) data from 2006-2017 on 130,000 firms in 130 countries across the globe, we document that women-led firms tend to underperform men-led firms. The main contribution of this work is to shed light on three mechanisms that help explain the underperformance: finance, technology, and labor. First, women-led firms are investing less in fixed assets and obtaining less credit from banks. Second, women-led firms are less likely to use information technology to manage their businesses. Third, women-led firms tend to employ more skilled and educated workers, and are more likely to provide workers with permanent contracts, hence incurring higher labor costs. Interestingly, in our data, women top managers do not perceive themselves facing more business obstacles than their male counterparts do.","PeriodicalId":417524,"journal":{"name":"FEN: Other International Corporate Finance (Topic)","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-01-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129141361","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper studies whether foreign investment deregulation promotes firm innovation. A theoretical framework, in which the spillover and competition effects from more foreign firms induced by foreign investment deregulation, is built to guide the empirical evaluation. Exploiting the data on Chinese firm-level patents in a difference-in-differences setting, this paper finds a significantly positive impact of foreign investment deregulation on firm innovation. Moreover, this paper finds a robust heterogeneity that the impact is prominent in the firms with high productivity while being not significant in the firms with low productivity.
{"title":"Does Foreign Investment Raise Firm Innovation?","authors":"Ben Ferrett, B. Gao, Yunshu Gao, S. Yin","doi":"10.2139/ssrn.3733294","DOIUrl":"https://doi.org/10.2139/ssrn.3733294","url":null,"abstract":"This paper studies whether foreign investment deregulation promotes firm innovation. A theoretical framework, in which the spillover and competition effects from more foreign firms induced by foreign investment deregulation, is built to guide the empirical evaluation. Exploiting the data on Chinese firm-level patents in a difference-in-differences setting, this paper finds a significantly positive impact of foreign investment deregulation on firm innovation. Moreover, this paper finds a robust heterogeneity that the impact is prominent in the firms with high productivity while being not significant in the firms with low productivity.","PeriodicalId":417524,"journal":{"name":"FEN: Other International Corporate Finance (Topic)","volume":"307 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-11-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131427945","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The challenge for Islamic Finance institutions is to find solutions and develop programs helping to invest these funds in supporting projects, SMEs, and entrepreneurship. In this paper, a documental collection, revision, and analysis were performed to catch the best practices and experiences adopted by these institutions to maintain sustainable development and support SMEs and entrepreneurs. Among other things, the findings showed the adoption of a multitude of mechanisms and programs that not only fund entrepreneurs but also offer technical support to their projects and ideas. The research suggests that different Islamic financing institutions adopt the observed best practices and experiences throughout the world. It also highlights the importance of the collaboration between the financial institutions, the government, the private sector, and NGOs to maintain a climate encouraging entrepreneurs and facilitating entrepreneurship. Findings are supported by the development of a new model showing the keys guaranteeing the success of investment and entrepreneurship.
{"title":"Islamic Financing Initiatives Stimulating SMEs Creation in Muslim Countries","authors":"Chokri Kooli","doi":"10.2139/ssrn.3726578","DOIUrl":"https://doi.org/10.2139/ssrn.3726578","url":null,"abstract":"The challenge for Islamic Finance institutions is to find solutions and develop programs helping to invest these funds in supporting projects, SMEs, and entrepreneurship. In this paper, a documental collection, revision, and analysis were performed to catch the best practices and experiences adopted by these institutions to maintain sustainable development and support SMEs and entrepreneurs. Among other things, the findings showed the adoption of a multitude of mechanisms and programs that not only fund entrepreneurs but also offer technical support to their projects and ideas. The research suggests that different Islamic financing institutions adopt the observed best practices and experiences throughout the world. It also highlights the importance of the collaboration between the financial institutions, the government, the private sector, and NGOs to maintain a climate encouraging entrepreneurs and facilitating entrepreneurship. Findings are supported by the development of a new model showing the keys guaranteeing the success of investment and entrepreneurship.","PeriodicalId":417524,"journal":{"name":"FEN: Other International Corporate Finance (Topic)","volume":"25 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-11-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127807329","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We evaluate the association between government subsidy dependence and stock price crash risk for a large sample of Chinese non-financial listed firms from 2003 to 2018. The results show that firms with high dependence on government subsidies are associated with great stock price crash risk. The decomposition of government subsidies shows that fiscal subsidies are the driving force of stock price crashes. The decomposition of government subsidies shows that fiscal subsidies are the driving force of stock price crashes. The positive association is more pronounced in state-owned enterprises and firms with strong political connection and weak monitoring. Moreover, we identify financial restatement and valuation uncertainty as the two possible mechanisms through which government subsidy dependence increase crash risk. Our findings highlight the negative consequences of government subsidy on financial risk of firms and provide implications for regulatory agencies and investors.
{"title":"Government Subsidy Dependence and Stock Price Crash Risk","authors":"Xiaoxing Liu, Obaid ur Rehman, Kai Wu, Ziyan Zhu","doi":"10.2139/ssrn.3707986","DOIUrl":"https://doi.org/10.2139/ssrn.3707986","url":null,"abstract":"We evaluate the association between government subsidy dependence and stock price crash risk for a large sample of Chinese non-financial listed firms from 2003 to 2018. The results show that firms with high dependence on government subsidies are associated with great stock price crash risk. The decomposition of government subsidies shows that fiscal subsidies are the driving force of stock price crashes. The decomposition of government subsidies shows that fiscal subsidies are the driving force of stock price crashes. The positive association is more pronounced in state-owned enterprises and firms with strong political connection and weak monitoring. Moreover, we identify financial restatement and valuation uncertainty as the two possible mechanisms through which government subsidy dependence increase crash risk. Our findings highlight the negative consequences of government subsidy on financial risk of firms and provide implications for regulatory agencies and investors.","PeriodicalId":417524,"journal":{"name":"FEN: Other International Corporate Finance (Topic)","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-10-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124598376","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2020-07-01DOI: 10.5089/9781513550473.001
Jesus R. Gonzalez-Garcia, Yuanchen Yang
This paper examines the effect of international trade on corporate market power in emerging market economies and developing countries, with a special focus on sub-Saharan Africa. The analysis is based on a large firm-level dataset, tariff data by sector and agreggate indicators of international trade for the period 2000-17. Greater trade liberalization and trade integration are associated with significant declines in market power, with the effect being more pronounced for firms in the manufacturing and ICT sectors, private sector firms, and firms with higher initial markups. Firms in sub-Saharan Africa tend to experience signficantly lower markups after allowing greater trade integration. The effects of trade liberalization on market power materializes over time, and there are significant complementarities between trade reforms and real sector reforms.
{"title":"International Trade and Corporate Market Power","authors":"Jesus R. Gonzalez-Garcia, Yuanchen Yang","doi":"10.5089/9781513550473.001","DOIUrl":"https://doi.org/10.5089/9781513550473.001","url":null,"abstract":"This paper examines the effect of international trade on corporate market power in emerging market economies and developing countries, with a special focus on sub-Saharan Africa. The analysis is based on a large firm-level dataset, tariff data by sector and agreggate indicators of international trade for the period 2000-17. Greater trade liberalization and trade integration are associated with significant declines in market power, with the effect being more pronounced for firms in the manufacturing and ICT sectors, private sector firms, and firms with higher initial markups. Firms in sub-Saharan Africa tend to experience signficantly lower markups after allowing greater trade integration. The effects of trade liberalization on market power materializes over time, and there are significant complementarities between trade reforms and real sector reforms.","PeriodicalId":417524,"journal":{"name":"FEN: Other International Corporate Finance (Topic)","volume":"36 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127588522","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We find that the 2013 Chinese anti-corruption campaign remarkably reduced charitable donations from listed companies with strong political connections, and lessened government subsidies to these companies, implying a reciprocal relationship between companies and the government prior to the campaign. The campaign also improved the productivity of companies with strong connections. The results are consistent with a model in which favor exchanges between firms and the government divert resources away from production in a corrupt environment. These findings highlight a self-serving, and sometimes corrupt, motive of corporate donation, and imply that the centrally-led anti-corruption campaign is highly effective in curbing corrupt collusion between companies and government officials. Moreover, they give empirical support to the negative efficiency implications of corruption.
{"title":"Political Connection, Corporate Philanthropy and Efficiency: Evidence from China's Anti-Corruption Campaign","authors":"Yu Liu, Jinfan Zhang, Xiaoxue Zhao, Zhuoqun Hao","doi":"10.2139/ssrn.3312501","DOIUrl":"https://doi.org/10.2139/ssrn.3312501","url":null,"abstract":"We find that the 2013 Chinese anti-corruption campaign remarkably reduced charitable donations from listed companies with strong political connections, and lessened government subsidies to these companies, implying a reciprocal relationship between companies and the government prior to the campaign. The campaign also improved the productivity of companies with strong connections. The results are consistent with a model in which favor exchanges between firms and the government divert resources away from production in a corrupt environment. These findings highlight a self-serving, and sometimes corrupt, motive of corporate donation, and imply that the centrally-led anti-corruption campaign is highly effective in curbing corrupt collusion between companies and government officials. Moreover, they give empirical support to the negative efficiency implications of corruption.","PeriodicalId":417524,"journal":{"name":"FEN: Other International Corporate Finance (Topic)","volume":"63 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-03-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115942548","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The structure of a multinational firm, that is how its affiliates relate to one another, is critical for understanding where multinationals locate, how policy affects them, and their resilience to localized shocks. Here, we review the two main structures: horizontal investments which replicate activities across borders, and vertical investments which fragment activities across countries. In addition, we use data (primarily from the US) to examine which of these structures seems to dominate the data. This includes a novel use of measures of global value-chain positioning of a country's industries. In each case, the data suggests a dominant role for horizontal investment. We conclude with a discussion of the challenge that intangibles play in multinational data and point towards potentially fertile areas for future research.
{"title":"The Structure of Multinational Firms&Apos; International Activities","authors":"Ronald B. Davies, J. Markusen","doi":"10.3386/w26827","DOIUrl":"https://doi.org/10.3386/w26827","url":null,"abstract":"The structure of a multinational firm, that is how its affiliates relate to one another, is critical for understanding where multinationals locate, how policy affects them, and their resilience to localized shocks. Here, we review the two main structures: horizontal investments which replicate activities across borders, and vertical investments which fragment activities across countries. In addition, we use data (primarily from the US) to examine which of these structures seems to dominate the data. This includes a novel use of measures of global value-chain positioning of a country's industries. In each case, the data suggests a dominant role for horizontal investment. We conclude with a discussion of the challenge that intangibles play in multinational data and point towards potentially fertile areas for future research.","PeriodicalId":417524,"journal":{"name":"FEN: Other International Corporate Finance (Topic)","volume":"139 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116726904","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
New evidence from acquisition decisions suggests that antitakeover provisions (ATPs) may increase firm value when internal corporate governance is sufficiently strong. We document that, in Germany, firms with stronger ATPs, and particularly supermajority provisions, are better acquirers. Managers of high-ATP firms create value in acquisitions by making governance-improving deals. They are more likely to engage in acquisitions that reduce their own entrenchment level and less likely to invest in declining industries. The empirical evidence is consistent with a short-termist interpretation. Takeover threats can induce myopic investment decisions, which ATPs can mitigate. They lead managers to engage more often in value-creating long-term and innovative investing, and increase a firm's sensitivity to investment opportunities. Our findings contribute to a growing literature challenging conventional wisdom that the agency-increasing effect of ATPs empirically dominates the myopia-eliminating effect, suggesting that a more contextual view of the value implications of ATPs is necessary.
{"title":"Antitakeover Provisions and Firm Value: New Evidence from the M&A Market","authors":"W. Drobetz, Paul P. Momtaz","doi":"10.2139/ssrn.3315730","DOIUrl":"https://doi.org/10.2139/ssrn.3315730","url":null,"abstract":"New evidence from acquisition decisions suggests that antitakeover provisions (ATPs) may increase firm value when internal corporate governance is sufficiently strong. We document that, in Germany, firms with stronger ATPs, and particularly supermajority provisions, are better acquirers. Managers of high-ATP firms create value in acquisitions by making governance-improving deals. They are more likely to engage in acquisitions that reduce their own entrenchment level and less likely to invest in declining industries. The empirical evidence is consistent with a short-termist interpretation. Takeover threats can induce myopic investment decisions, which ATPs can mitigate. They lead managers to engage more often in value-creating long-term and innovative investing, and increase a firm's sensitivity to investment opportunities. Our findings contribute to a growing literature challenging conventional wisdom that the agency-increasing effect of ATPs empirically dominates the myopia-eliminating effect, suggesting that a more contextual view of the value implications of ATPs is necessary.","PeriodicalId":417524,"journal":{"name":"FEN: Other International Corporate Finance (Topic)","volume":"173 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-02-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114906855","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In 2009, Japan began to exempt dividends paid by Japanese-owned foreign sub- sidiaries to their parent firms from home-country taxation. This tax reform switched Japan's corporate tax system to a territorial tax system that exempts foreign income from home-country taxation. In this paper, I examine the impact of the territorial tax reform on the profit-shifting behavior of Japanese multinationals. I analyze the change in the sensitivity of the reported profits of Japanese-owned foreign subsidiaries to host countries' corporate income tax rates after the tax reform, using US-owned foreign subsidiaries as a comparison group. I find that, on average, the profits of US-owned foreign subsidiaries are more sensitive to host countries' tax rates than are those of Japanese-owned foreign subsidiaries over the whole study period from 2004 to 2016 and over the subperiod from 2004 to 2007, when both countries used the worldwide tax system. However, the sensitivity of the pre-tax profits of Japanese-owned foreign subsidiaries, particularly large subsidiaries, to host countries' corporate tax rates sig- nificantly increased in response to the announcement of the territorial tax regime in 2008, relative to that of the US-owned foreign subsidiaries. This suggests that the introduction of the territorial tax system facilitated profit shifting by Japanese multi- nationals.
{"title":"Territorial Tax Reform and Profit Shifting by US and Japanese Multinationals","authors":"M. Hasegawa","doi":"10.2139/ssrn.3498964","DOIUrl":"https://doi.org/10.2139/ssrn.3498964","url":null,"abstract":"In 2009, Japan began to exempt dividends paid by Japanese-owned foreign sub- sidiaries to their parent firms from home-country taxation. This tax reform switched Japan's corporate tax system to a territorial tax system that exempts foreign income from home-country taxation. In this paper, I examine the impact of the territorial tax reform on the profit-shifting behavior of Japanese multinationals. I analyze the change in the sensitivity of the reported profits of Japanese-owned foreign subsidiaries to host countries' corporate income tax rates after the tax reform, using US-owned foreign subsidiaries as a comparison group. I find that, on average, the profits of US-owned foreign subsidiaries are more sensitive to host countries' tax rates than are those of Japanese-owned foreign subsidiaries over the whole study period from 2004 to 2016 and over the subperiod from 2004 to 2007, when both countries used the worldwide tax system. However, the sensitivity of the pre-tax profits of Japanese-owned foreign subsidiaries, particularly large subsidiaries, to host countries' corporate tax rates sig- nificantly increased in response to the announcement of the territorial tax regime in 2008, relative to that of the US-owned foreign subsidiaries. This suggests that the introduction of the territorial tax system facilitated profit shifting by Japanese multi- nationals.","PeriodicalId":417524,"journal":{"name":"FEN: Other International Corporate Finance (Topic)","volume":"164 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-12-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128227389","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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