Firm Costs Research Articles

The inferiors imitate the superiors: the government’s low-carbon concerns and the renewable energy technology of firms

AbstractExisting research has focused mainly on the technological effects of rigid constraints such as low-carbon policies, but there has been little exploration of flexible constraints such as the government’s low-carbon concerns. To explore the role of flexible low-carbon constraints and effective paths for achieving low-carbon development, this paper theoretically and empirically investigates the influence of the government’s low-carbon concerns on local firms’ innovation in renewable energy technology and the underlying mechanism. Benchmark analysis shows that the government’s low-carbon concerns can improve renewable energy technology among firms in an area. Mechanism analysis reveals that low-carbon concerns promote firms’ renewable energy technology adoption by increasing the amount of research and development (R&D) investment and government subsidies and energy use costs of firms in the area. Heterogeneity analysis reveals that heterogeneity exists across technologies, firms, industries and locations in terms of the incentive impact of the government’s low-carbon concerns on the level of renewable energy technology innovation. Extensive analysis indicates that the government’s low-carbon concerns have a long-term incentive impact on the renewable energy technology of local firms and a positive demonstration impact on the renewable energy technology of neighboring firms. This study is helpful in that it explores the major driving factors behind the creation of a low-carbon economy and the achievement of climate targets.

Role of artificial intelligence in carbon cost reduction of firms

The primary investor for global warming and climate change is carbon dioxide (CO2), which accounts for the largest portion of greenhouse gases in and around firms. Artificial intelligence (AI) can have a big impact on reducing the carbon costs of firms. With AI, companies can monitor energy usage across different processes, identify inefficiencies and suggest ways to reduce them. This helps companies improve resource efficiency and costs while minimizing carbon emissions. The study aims to explore the impact of artificial intelligence (AI) on the carbon cost reduction of firms. This study investigates how businesses can leverage Artificial Intelligence (AI) for the reduction of carbon costs. Specifically, the research explores the impact of AI-based predictions, decision-making, recommendations, and renewable energy optimization on firms' carbon cost reduction. This research employs a quantitative research design and demonstrates that AI use in decision-making and optimizing renewable energy is highly correlated with carbon cost reduction. The outcomes of the research have significant practical implications for policymakers, and industry professionals in their development of sustainable business practices. Additionally, the research contributes to the literature surrounding AI and sustainability by offering an empirical perspective on how AI can be used to support environmental sustainability efforts, enhance corporate social responsibility, and promote long-term economic gains for firms. The statistical analysis shows that there is a significant impact of AI-based predictions on the reduction of carbon costs in firms. Furthermore, it demonstrates that AI-based decision-making impacts reducing carbon costs for firms. These results highlight the importance of incorporating AI technology into business practices to effectively address sustainability concerns and reduce carbon costs, ultimately promoting long-term economic sustainability and corporate social responsibility.

Disclosure, Materiality Thresholds, and the Cost of Capital: Evidence from Federal Open Market Committee Announcements

We examine how managers’ disclosure decisions vary in response to monetary policy shocks. Specifically, we examine the extent to which firms issue Forms 8-K, press releases, and management forecasts following unexpected changes to the target federal funds rate. We find consistent evidence that unexpected decreases (increases) in the Federal Open Market Committee target rate lead to larger increases (decreases) in disclosure by firms that are more sensitive to monetary policy shocks. Furthermore, the disclosure response to target rate surprises is concentrated in Form 8-K items that require a materiality-based decision and hold when we examine a sample of M&A-participating firms. Extended tests show that our results are not attributable to changes in the cost of capital leading to increased disclosure because firms are simultaneously raising capital or hyping their stock. Overall, our results are consistent with arguments raised in recent research papers that changes in cost of capital influence firms’ materiality thresholds, which can affect their decision to disclose. This paper was accepted by Suraj Srinivasan, accounting. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2021.01896 .

Operating costs and profitability to company value

Increasing economic growth makes competition tighter in the business world, especially in the food and beverage business. This study investigates the interaction between operational costs, profitability, and company value in Indonesia's food and beverage sector. The aim is to gain insight into how these factors interact and affect the overall value of companies in the Indonesian region. This analysis uses quantitative methods based on financial data and relevant metrics for a sample of Food and Beverages companies operating in Indonesia, as many as 24 companies, with purposive sampling techniques of 17 companies sampled for 2020 – 2022. This study examines the relationship between firm cost, profitability, and value through statistical analysis and linear regression modelling techniques with SPSS version 26. The results showed that operational expenses had a significant effect on the value of the company. Profitability has a substantial impact on the value of the company. Then, operating costs and profitability have a considerable effect on the value of the company. The findings contribute to the existing literature on company valuations by providing empirical evidence specific to Indonesia's Food and Beverages sector. The research has implications for policymakers, investors, and managers, as it offers valuable insights into the factors that drive corporate value in the industry, helping stakeholders make decisions and strategies to improve performance and competitiveness. Provide benefits in the context of financial management.

The impact of market-incentive environmental regulation policies on corporate environmental costs: Evidence from China's carbon trading policy.

As the world's largest emitter of carbon, China has implemented a series of environmental regulatory policies to reduce emissions. However, most of these environmental regulations have been at the expense of increased corporate environmental costs. Therefore, research on how to efficiently control these costs is of significant practical importance. This paper uses the China's carbon trading policy (CTP) implemented in 2013 as a quasi-natural experiment, utilizing data from Chinese listed manufacturing firms between 2008 and 2020. Employing a difference-in-differences (DID) model, the study investigates the impact of market-incentive environmental regulatory policies (ERP) on environmental costs. The findings reveal that CTP significantly reduced the environmental costs of firms, confirming the positive and vital role market-incentive ERP can play in environmental protection and cost control. These conclusions remain robust after a series of stability tests. Mechanism analysis suggests that the cost reductions brought by market-incentive ERP are primarily achieved through increasing green innovation. Heterogeneity analysis shows that non-state-owned enterprises (non-SOEs), key polluting firms, firms with lower financial constraints, and firms with lower total production efficiency benefit more from market-incentive environmental regulatory policies. This study provides new empirical evidence for government policy-making aimed at achieving long-term sustainable development.

Analysing firm-level impacts of high-speed railways on reducing business costs: evidence from China

ABSTRACT Numerous studies have revealed that high-speed railways (HSRs) can efficiently reduce transportation costs for firms and therefore bring more business capacities to firms in regions with HSR services. This paper aims to adopt the difference-in-difference (DID) and PSM (propensity score matching) DID methods to examine the HSR’s causal effects on business costs. The author finds that business costs are significantly reduced due to the operation of HSR lines. Besides, private firms and firms in the secondary and tertiary sectors would experience more reductions of business costs encouraged by the HSR than state-owned and agricultural firms. The placebo test and parallel trend test have proved the feasibility of this study. Finally, this paper provides policy suggestions that the construction of HSR lines needs to be encouraged in order to promote the higher efficiency of business operations for firms and more-balanced spatial business developments in China.

Idea engines: Unifying innovation & obsolescence from markets & genetic evolution to science

Innovation and obsolescence describe dynamics of ever-churning and adapting social and biological systems, concepts that encompass field-specific formulations. We formalize the connection with a reduced model of the dynamics of the "space of the possible" (e.g., technologies, mutations, theories) to which agents (e.g., firms, organisms, scientists) couple as they grow, die, and replicate. We predict three regimes: The space is finite, ever growing, or a Schumpeterian dystopia in which obsolescence drives the system to collapse. We reveal a critical boundary at which the space of the possible fluctuates dramatically in size, displaying recurrent periods of minimal and of veritable diversity. When the space is finite, corresponding to physically realizable systems, we find surprising structure. This structure predicts a taxonomy for the density of agents near and away from the innovative frontier that we compare with distributions of firm productivity, COVID diversity, and citation rates for scientific publications. Our minimal model derived from first principles aligns with empirical examples, implying a follow-the-leader dynamic in firm cost efficiency and biological evolution, whereas scientific progress reflects consensus that waits on old ideas to go obsolete. Our theory introduces a fresh and empirically testable framework for unifying innovation and obsolescence across fields.

Agroeconomic Indexes and Big Data: Digital Marketing Analytics Implications for Enhanced Decision Making with Artificial Intelligence-Based Modeling

Agriculture firms face an array of struggles, most of which are financial; thus, the role of decision making is discerned as highly important. The agroeconomic indexes (AEIs) of Agriculture Employment Rate (AER), Chemical Product Price Index (CPPI), Farm Product Price Index (FPPI), and Machinery Equipment Price Index (MEPI) were selected as the basis of this study. This research aims to examine the connection between digital marketing analytics and the selected agroeconomic indexes while providing valuable insights into their decision-making process, with the utilization of AI (artificial intelligence) models. Thus, a dataset of website analytics was collected from five well-established agriculture firms, apart from the values of the referred indexes. By performing regression and correlation analyses, the index relationships with the agriculture firms’ digital marketing analytics were extracted and used for the deployment of the fuzzy cognitive mapping (FCM) and hybrid modeling (HM) processes, assisted by using artificial neural network (ANN) models. Through the above process, there is a strong connection between the agroeconomic indexes of AER, CPPI, FPPR, and MEPI and the metrics of branded traffic, social and search traffic sources, and paid and organic costs of agriculture firms. It is highlighted that agriculture firms, to better understand their sector’s employment rate and the volatility of farming, chemicals, and machine equipment prices for future investment strategies and better decision-making processes, should try to increase their investment in the preferred digital marketing analytics and AI applications.

Сценарная оценка макроэкономических эффектов прогрессивного налогообложения в России

The purpose of the study is to assess the impact of alternative options of progressive taxation on Russia’s macroeconomic performance. For quantitative assessments, a neoclassical general equilibrium model with heterogeneous households subject to idiosyncratic income shocks was used. Three groups of scenarios were analyzed, setting a threshold progressive tax scale with thresholds of 30, 50, and 70 thousand rubles, under which state income tax revenues (1) grow, (2) remain unchanged, and (3) decline. The maximum personal income tax rate in the analyzed scenarios was 25%. Steady states and transitions were calculated for the scenarios. According to the quantitative estimates, the first reform leads to a loss of 0.3% to 1.3% of GDP in the long run, depending on the assumed rates and threshold. Despite the increase in lump-sum transfers, aggregate household consumption decreases by 0.5–1.7% in all cases. The second reform leads to a loss of 0.2% to 0.6% of GDP in the long run. The third reform leads to insignificant fluctuations of GDP within 0.1%: GDP increases at the threshold of 30 thousand rubles and decreases at other thresholds. The scale of inequality reduction, as measured by the Gini coefficient, increases with an increase in the top tax rate. However, as the threshold increases, the depth of the Gini index reduction first increases and then decreases. In the short run, there is upward pressure on wages and prices. This is because a decrease in labor supply with unchanged capital in the short run leads to an increase in wage rates (a shift along the labor demand curve), and an increase in wage rates means an increase in marginal costs for firms, leading to higher prices.

Boardroom Alchemy: Unravelling the Debt and Agency Costs in Manufacturing Sector of Pakistan

The current study aims to investigate boardroom diversity and its varying characteristics by using agency theory to examine the effect of debt and agency costs in the manufacturing sector of Pakistan. Precisely, it seeks to examine how board size, independence, and gender diversity affect the financial matrices of a firm’s profitability. Therefore, the study utilized an imbalanced panel of 105 manufacturing companies that were listed on the Pakistan Stock Exchange (PSX) 2003 to 2022. Furthermore, the study utilized static and dynamic panel models to examine and evaluate the proposed hypotheses. The findings of this study indicated that there is a positive relationship between board size, gender diversity, and debt and agency costs for manufacturing enterprises in Pakistan. Conversely, it was observed that board independence has a negative impact on the debt and agency costs of firms. Future research can use experimental or longitudinal approaches, including varied businesses, to investigate qualitative research for deeper insights. Cross-cultural comparisons would support the findings. Consequently, this study highlighted the importance of exercising caution when evaluating the influence of board composition on debt and agency costs. The results of the study also prompted inquiries regarding the financial ramifications of initiatives aimed at promoting gender diversity.

Blockchain i upravljanje ljudskim resursima

Previous research has shown that implementing blockchain technology in businesses can lead to more secure and efficient processes in various organizational areas, including human resource management. This review paper examines the use of blockchain in human resources departments from the perspective of transaction cost economics theory, which identifies several fundamental variables that increase transaction costs for firms. These variables include bounded rationality, the pervasive possibility of opportunistic behavior, and uncertainty. The paper explores how blockchain implementation, including blockchain-enabled smart contracts, can mitigate these challenges. The paper also identifies some limitations to using blockchain and smart contracts that may increase transaction costs and thus reduce transaction cost savings.

Carbon taxation in Singapore's semiconductor sector: a mini-review on GHG emission metrics and reporting

The threat of climate change has catalyzed global endeavors to curb greenhouse gas emissions, with carbon taxation emerging as a pivotal policy instrument. Singapore, akin to Taiwan, has embraced this tool, and its ramifications on their semiconductor industry are both profound and multifaceted. At the outset, the imposition of carbon taxes inevitably escalates production costs for semiconductor firms, compelling them to offset their carbon footprint financially. This escalation, in turn, poses a risk of eroding the industry's competitive edge, nudging firms to contemplate the prospect of migrating to locales with more lenient carbon taxation regimes. However, in juxtaposition to these challenges, carbon taxation unveils a silver lining. It instigates semiconductor entities to recalibrate their operations, infusing energy-efficient technologies and pivoting towards renewable energy avenues. Such transitions not only attenuate their carbon emissions but also curtail their financial burden arising from carbon taxation. This manuscript elucidates a panoramic landscape of both policy innovations and technological strides specific to Singapore's semiconductor arena. It aims to be an instrumental compass for stakeholders, delineating pathways for achieving optimal eco-financial equilibrium in the sector.Graphical

Fractional calculus applied to the Cournot-type adjustment model

In this contribution, we propose the incorporation of memory in a Cournot-type model for the process of adjusting the production of firms in a duopoly market, through the calculation of fractional order. Under the simplifying assumption that the inverse demand and costs of firms are affine functions of the quantities produced, we show numerically some conditions on memory (fractional derivative order) and on the speed of the adjustment process, so that the model proposed converges to Cournot's generalized stationary points. Under these assumptions, we show that the firm that has more memory obtains greater profit.

Pollution charges and firms’ energy efficiency: evidence from a quasi-natural experiment in China

ABSTRACT Pollution charges are an important way to improve energy efficiency. Using the relevant data of Chinese industrial firms from 2003 to 2010, we take China’s Pollution Levy Standard Reform (PLSR) implemented in 2007 as a quasi-natural experiment, and use the staggered difference-in-differences method to empirically test the impact of pollution charges on green total factor energy efficiency (GTFEE) of firms. We find that pollution charges significantly increase firms’ GTFEE. This result is still valid under a series of robustness tests. The potential mechanism is that although pollution charges increase the cost of firms, they also promote technological innovation of firms, and ultimately in the overall effect pollution charges improve the GTFEE of firms. In addition, the positive effect of pollution charges on GTFEE is greater for non-state owned enterprises, non-exporting enterprises and enterprises in heavily polluting industries.

Does an effective bankruptcy reform impact the selling cost behavior of firms? Evidence from India

This study examined whether strengthening of creditors' rights impacts the selling cost behavior of firms or not? To investigate this question, the author exploited implementation of the Insolvency and Bankruptcy Code (IBC) in 2016 in India as an exogenous policy shock. The author found that selling cost of firms in India in the pre‐implementation period were not “sticky”. Further, implementation of the IBC produced no impact on the selling cost behavior of Indian firms in the post‐implementation period. Nonetheless, legislation of the IBC was found to have lowered financial resources that firms devoted to their selling activities. In addition, firms that faced a higher risk of bankruptcy because of more leverage in the pre‐IBC period demonstrated greater response to promulgation of the IBC. Thus, it can be inferred that an effective bankruptcy reform has little impact on the selling cost behavior of firms but incentivizes them to devote lesser financial resources to their selling activities in order to lower their bankruptcy risk.

Tax Compliance Costs for SMEs: A Survey of Tax Professionals in Ghana on External Cost of Compliance

The study sought to ascertain the magnitude of the external tax compliance costs incurred by SMEs in Ghana from the perspective of the tax professionals who provide the service. Tax professional firms were selected from the Institute of Chartered Accountants and the Chartered Institute of Taxation for the study. The study distinguished between the average annual costs for small, medium and larger firms to compute and file returns, deal with tax authorities, implement changes in tax laws, and maintain records for tax purposes on behalf of their clients. The cost was found to be regressive in nature, indicating that the burden was relatively higher for small businesses.

Role of Fintech adoption in the impact of sustainable policy intervention on enterprise transformation in resource-based cities: Evidence from China

The National Plan for Sustainable Development of Resource-based Cities (2013–2020) (NPSDRC) is a pivotal initiative of the Chinese government to promote the transformation of resource-based cities. Meanwhile, rapid Fintech development provides a vital opportunity for the transformation of such cities. Exploiting the implementation of NPSDRC as an exogenous shock and employing the difference-in-differences approach to investigate how NPSDRC affects the transformation of enterprises in resource-based cities and the role of Fintech adoption in this transformation. The result indicates that NPSDRC hinders enterprises' total factor productivity (TFP) in resource-based cities. The mechanism analysis reveals that NPSDRC hampers enterprise transformation via incentivizing firms to apply end-of-pipe treatments. Specifically, in the short term, this policy has prompted firms in resource-based cities to employ measures aimed at reducing the amount of pollutants during the post-production and pre-emission stages, which leads to an increase in firm costs, and thus reduces their TFP. Moreover, we observe that Fintech development weakens the negative impact of NPSDRC on firms' TFP. The heterogeneity results imply that this negative impact is more prevalent for state-owned enterprises and heavily polluting enterprises. This policy notably hinders the transformation of enterprises in regions with rigorous environmental law enforcement. We provide empirical evidence for formulating sustainable development policies for resource-based cities in other countries.

Direct Tax Burden, Financing Constraints, and Innovation-Based Output

Tax and fee reductions serve as pivotal instruments in the deepening of structural reforms on the supply side and constitute a significant element of China’s proactive fiscal policy. Although China’s tax regime encompasses both direct and indirect tax burdens, the direct tax burden directly impacts the operational costs of firms and remains non-transferable. As such, it holds significant influence over corporate growth trajectories. A decrease in the direct tax burden alleviates financing constraints for firms, subsequently reducing their exposure to business risks. Focusing on the innovative output capabilities of firms, this study analyzes A-share-listed companies on the Shanghai and Shenzhen stock exchanges from 2010 to 2021. It aims to ascertain the influence of direct tax burden reductions on innovation output within the tax and fee reduction framework. The findings indicate that lessening the direct tax burden ameliorates financing constraints, thereby enhancing a firm’s innovative output capabilities. A deeper analysis reveals that non-state-owned enterprises benefit more significantly from this dynamic than their state-owned counterparts, underscoring the potential for targeted tax and fee reduction policies to bolster enterprise innovation. Furthermore, the government should recognize enterprise differentiation and drive broader economic growth through tailored strategies. Notably, the positive impact of mitigating financing constraints on innovation is more pronounced in firms with suboptimal corporate governance structures. While this mechanism notably influences non-invention patent applications, its effect on invention patent applications is comparatively muted. Post-outbreak, the interplay between tax burdens and innovative outputs has intensified, becoming more pronounced than in pre-outbreak times.

Agency Frictions and Procurement: New Evidence from U.S. Electricity Restructuring*

This article presents new quantitative evidence of the sources of efficiency benefits from deregulation. We estimate the heterogeneous effects of plant divestitures on fuel procurement costs during the restructuring of the U.S. electricity industry. Guided by economic theory, we focus on three mechanisms and find that restructuring reduced fuel procurement costs for firms that (i) were not subject to earlier incentive‐regulation programs, (ii) had relatively strong bargaining power as coal purchasers after restructuring, and (iii) were locked in with disadvantaged coal contracts prior to restructuring.

Does supply chain network centrality affect firm cost stickiness?

This study constructs a supply chain network for Chinese listed firms from 2009 to 2021 and investigates the influence of the firm’s supply chain network position on cost stickiness. Our findings reveal that the supply chain network centrality exacerbates cost stickiness by increasing adjustment costs and agency problems, this effect applies to firms in both industrial and services sectors, and remains valid whether before and after the COVID-19 pandemic. Furthermore, high-quality internal controls and external audits can mitigate the effect of supply chain network centrality on cost stickiness. This study enriches the determinants of cost stickiness literature by providing evidence at the supply chain network level.