Share Of Firms Research Articles

The Perception of Policy Uncertainty and the Labor Income Share of Firms: Empirical Research Based on Double Machine Learning

ABSTRACTBased on the double machine learning model, this study examines the impact of perception of policy uncertainty (PPU) on labor income share (LIS). We find that PPU negatively influences LIS. Mechanism test indicates that PPU not only results in a reduction in fixed asset investment, distorting human capital structure, but leads to a financing dilemma for firms, ultimately exerting a detrimental effect on LIS. Additionally, PPU primarily diminishes LIS of ordinary employees rather than executives. Furthermore, the inhibitory effect of PPU on LIS is significantly more pronounced in firms characterized by smaller union scales and those operating within monopolistic industries.

Downward Revision of Investment Decisions after Corporate Tax Hikes

This paper estimates the causal effect of corporate tax hikes on firm investment based on more than 1,400 local tax changes. By observing planned and realized investment volumes in a representative sample of German manufacturing firms, we can study how tax hikes induce firms to revise their investment decisions. On average, the share of firms that invest less than previously planned increases by 3 percentage points after a tax hike. This effect is twice as large during recessions. (JEL D22, E32, G31, H25, H32, H71, L60)

Tariffs, Growth and Non-Tariff Transport Costs

This paper examines the impact of unilateral tariff increases on the world growth rate using a two-country endogenous growth model when firms are internationally mobile, technical knowledge in research and development is an international public good, and iceberg transport costs are not subject to tariffs. In this paper, we find that a unilateral tariff increase in one country raises or lowers the world growth rate, depending on the degree of elasticity of substitution between any two differentiated goods and the share of firms owned by the country that raised tariffs.

Whither the Walking Dead? The Consequences of Artificial Intelligence for Zombie Firms

Abstract Zombie firms have been a prominent yet controversial subject of academic and policy debates in recent years. In this article, we first revisit the economic consequences and driving factors of zombie companies and then, based on this assessment, discuss the implications of artificial intelligence (AI) for zombie firms. We document that the share of zombie firms in advanced economies has risen considerably over the past three decades, and that this increase has been a significant drag on productivity growth. We further find that persistently low interest rates are a significant causal factor underlying the rise of zombie companies. Turning to AI, we argue that an AI-induced productivity boom may counteract the drag from zombie firms and improve firm performance, mitigating corporate zombification. Moreover, by leading to higher interest rates that force zombie firms to exit markets, AI may boost productivity further in the longer run – a so far overlooked channel in the debate on the economic implications of AI.

How unemployment benefit duration shapes startup motivation and growth

AbstractBusiness creation is economically important, and unemployment precedes the creation of a substantial share of new firms. Yet, most research has focused on analyzing the effects of unemployment insurance policies on re-employment outcomes, ignoring self-employment. In this paper, we analyze how the potential duration of unemployment benefits, a fundamental design choice of unemployment insurance systems, affects whether new firms are founded out of opportunity or necessity and their growth potential. To this end, we construct a comprehensive dataset on German firm founders that links administrative social insurance information with business survey data. Exploiting reform and age-related exogenous variation in the potential duration of unemployment benefits, we find that longer potential benefit duration implies longer actual unemployment and, as a consequence, more necessity entrepreneurship and worse startup outcomes in terms of sales and employment growth. We explain this overall effect of potential benefit duration through a mix of compositional and individual-level duration effects. Our findings underline that new firms started out of unemployment are a highly heterogeneous group and suggest that the (optimal) design of unemployment insurance systems has important externalities on whether innovation- and growth-oriented firms are started out of unemployment.

Firms’ location decisions, supply chain disruptions and government subsidies: A dynamic game

This paper develops a dynamic game to study the interaction between firms’ production location decisions and a government subsidy policy. On the one hand, firms consider the cost of shielding their production capacity from (potential) supply chain disruptions. On the other hand, the government is interested in curbing production offshoring to increase domestic tax revenues. The location decision of each firm is affected by the government subsidy policy and the location choices of other firms, while the share of firms producing domestically influences the government’s decision on whether and to what extent to provide subsidies to firms. We show that government subsidy policy must target a sufficiently large number of firms to encourage production reshoring and achieve the Pareto-efficient equilibrium. However, a subsidy policy providing a high number of low subsidies is likely to be ineffective in increasing domestic production, highlighting the importance of careful fine-tuning of the policy. Finally, in some scenarios, industrial policy becomes crucial to increase the resilience of domestic supply chains and foster reshoring.

Big data development and labor income share: Evidence from China's national big data comprehensive pilot zones

In the midst of the rapid development of the digital economy, data has emerged as a new core production factor. It not only creates value for producers but also benefits the majority of ordinary workers, playing a crucial role in optimizing income distribution and promoting common prosperity. Utilizing data from Chinese A-share listed companies from 2012 to 2021, this study evaluates the impact of big data development on the labor income share of enterprises, employing the establishment of China's national big data comprehensive pilot zones as a quasi-natural experiment. Additionally, it examines the heterogeneity of this impact across regional, industry, and firm levels. The findings reveal that big data development significantly increases the labor income share of firms, mainly through mitigating labor mismatch, improving innovation capability, and upgrading human capital. Heterogeneity analysis shows that big data development exerts a stronger effect on eastern and labor-rich regions, high-tech and non-labor-intensive industries, big-data industries and low-competition industries, as well as state-owned and mature enterprises. This study provides policy insights on fully harnessing the benefits of big data pilot policy to increase labor income share, with important implications for developing countries.

What you do (not) get when expanding the net-evidence from forced taxpayer registrations in South Africa

A significant share of firms in developing countries is not registered for income taxation. Expanding the tax net is a priority for many governments, but most formalization policies proved relatively ineffective in bringing firms into the tax net. Drawing on rich tax administrative data, we document that snapshot-synchronizations of the business tax and the commercial registry in South Africa led to a large-scale expansion of the South African business taxpayer net. While the targeted firms are a valuable segment within the non-formal sector, we show that their post-registration tax compliance is weak and few of them pay taxes. Owing to the large scope of the tax net expansion, the aggregate revenue gains are, nevertheless, non-negligible and the interventions are fiscally cost-effective. In additional analyses, we provide evidence for enforcement spillovers: In areas where many firms were drawn into the tax net, tax registration timing compliance significantly improved after the snapshot synchronizations. We find no indication of a drop in registration numbers at the commercial registry.

Broadband infrastructure expansion and labour income share: micro-evidence from Chinese industrial enterprises

ABSTRACT This study investigates the impact of broadband infrastructure on the labour share. We exploit the implementation of the ‘Broadband China Strategy’ (BCS) as an exogenous policy shock and use the staggered difference-in-differences framework with a panel dataset of Chinese industrial enterprises spanning 2011–2015. We find that the BCS leads to a significant reduction in the labour income share of firms in pilot cities compared with those in non-pilot cities, which remains robust after conducting various robustness checks. Rising market power and deepening capital are the two mechanisms underlying this effect. While our further analysis underscores significantly positive impact of broadband infrastructure on firm productivity and skilled labour structure, they do not highlight an elevated skill premium tied to broadband infrastructure. Heterogeneity analysis reveals that the effects are more pronounced among larger firms, industries with higher concentrations, and cities with higher innovation capacities. Overall, this study augments the existing literature on the firm-level determinants of labour share, providing a micro-level assessment of the labour market implications of broadband infrastructure.

The persistence of environmental and social strategies under emission permits

In this paper, we analyse the long-run industry configuration of an oligopoly where profit-seeking (PS) and environmentally socially responsible (ECSR) firms compete in quantities. We adopt an evolutionary setting to determine the firms’ endogenous choice of statute (PS or ECSR). Pollution is regulated through an Emission Trading System (ETS) scheme that allocates emissions rights to firms. Firms may also invest in emission abatement technology to reduce the cost of emission rights. Our findings show that the introduction of an ETS favours the persistence of the ECSR strategy by reducing the share of PS firms in the industry. In contrast, an increase in the stringency of the ETS policy makes the PS strategy more competitive.

Competition policy and labor income share: Evidence from the antitrust policy in China

This study examines the impact of increased market competition on labor income share. We use the enactment of China's Anti-Monopoly Law as a quasi-natural experiment. The results reveal that the Anti-Monopoly Law has a significant positive effect on the labor income share of firms with higher market power. This is because the rising market competition, effected by the Anti-Monopoly Law, inhibits market power and increases average labor wages. Our findings are relevant for firms in provinces with higher administrative monopolies, with less competition, and under industries with less competition.

Indirect Effects of Access to Finance

We created experimental variation across markets in China in the share of firms having access to a new loan product. Access to finance had a large positive direct effect on the performance of treated firms but a similar-sized negative indirect effect on that of firms with treated competitors, leading to nondetectable gains in producer surplus. Access to finance had a positive direct effect on business quality and consumer satisfaction and a negative effect on price, which were not offset by indirect effects, implying net gains in consumer surplus. We document other indirect effects and combine effects in a welfare evaluation. (JEL D22, G21, G32, L81, O16, P31, P34)

The Influence of Earning Per Share (EPS) and Price Earnings Ratio (PER) on Stock Prices in the Food and Beverage Sector on the Indonesian Stock Exchange (BEI) for the 2015-2019 Period

The objective of this study is to examine the impact of earnings per Share (EPS) and Price Earnings Ratio (PER) on the stock prices of companies in the food and beverage industry listed on the Indonesia Stock Exchange (BEI) from 2015 to 2019. EPS is utilized as a metric to gauge the profitability of each share, whereas PER characterizes the market's assessment of the earnings generated per share. The research employed a descriptive verification analysis method, utilizing a sample of seven prominent organizations within the researched sector.The data utilized is derived from the yearly financial reports of each company, specifically secondary data. The investigation employed multiple regression approaches to examine the hypothesis regarding the impact of EPS and PER on stock prices. The test utilizes the coefficient of determination to ascertain the extent to which the regression model can account for the fluctuations in stock prices.The research findings indicate a substantial correlation between EPS (Earnings Per Share), PER (Price Earnings Ratio), and firm share prices within the food and beverage industry on the IDX (Indonesia Stock Exchange). The R^2 value of 0.753 suggests that 75.3% of the changes in stock prices can be accounted for by the independent variables, EPS and PER. In this industry, share prices are primarily influenced by the profitability per share and market valuation.In addition, this study emphasizes that additional variables not investigated in this research can significantly impact stock prices, including macroeconomic conditions, market sentiment, government regulations, and other external factors. Stable macroeconomic conditions can lead to more favorable circumstances for increased stock values, whereas government policy or market sentiment alterations can profoundly influence a company's stock performance.The recommendations derived from this study are intended for investors and corporate executives operating in the food and beverage industry on the IDX. Investors are advised to consider the earnings per share (EPS) and price-to-earnings ratio (PER) components of their fundamental analysis to make better-informed investment choices. It is recommended that companies prioritize enhancing their financial performance and ensuring openness in their financial reporting to boost market trust and raise the value of their shares.Subsequent investigations might broaden the range by including supplementary variables like Dividend Yield or Return on Equity (ROE) while doing a more extensive analysis of qualitative elements that impact market perceptions of EPS and PER. This research contributes to understanding the factors that impact share prices in the Indonesian capital market, particularly within the food and beverage industry.

Cities’ labor administrative penalties and labor income share of enterprises

The labor administrative penalties of a city are enforced by the city's labor security administrative department for any breaches of labor security laws, regulations, or norms. The severity of labor administrative penalties differs across cities; thus, this study aims to determine how a city's penalties affect the labor income share of enterprises. We conduct a practical investigation to examine the influence of labor administrative penalties imposed by cities on the internal income distribution structure of firms. This study utilizes theoretical analysis and data on labor administrative penalties in Chinese cities, as well as samples of A-share listed businesses in Shanghai and Shenzhen. From the perspective of the internal income distribution structure, we examine the labor income share of firms and discover that labor administrative penalties in cities significantly raise the labor income share of these enterprises. The share of labor income of enterprises registered in the city increases by 0.9707 % for each additional unit of cities' labor administrative penalties (i.e., for a one-time labor administrative penalty per 10,000 people). The conclusion remains valid even after excluding the endogeneity and robustness tests. Regional labor administrative penalties can enhance the internal management of enterprise quality by promoting transparency and deterring non-compliance. This, in turn, mitigates credit risk for enterprises by fostering stable labor relations. Enhancing the quality of internal control and mitigating credit risk can lead to an increase in the labor income share of firms. An analysis of heterogeneity shows that the impact of labor administrative penalties in cities on increasing the percentage of labor income varies. The impact is more pronounced for state-owned firms and enterprises with low levels of investment.

Informality and aggregate productivity: The case of Mexico

This paper develops and estimates a quantitative model to analyze the aggregate productivity consequences of informality in Mexico. While informality is typically viewed as prevailing solely among small firms, we use rich census data to document a high and rising share of large informal firms between 1998 and 2013. The model is quantified using the observed size and productivity distributions of both informal and formal firms. We use the model to assess the role of changes in labor market regulations, entry costs and enforcement in contributing to the rise in informality and decline in TFP in Mexico from 1998 to 2013. We find that the factors most important for the decline in aggregate productivity were not important drivers of the increase in informality, and conversely, the factors most important for the increase in informality had little impact on aggregate productivity. Regulatory changes during the 2000s contributed to over a third of the observed rise in the informal employment share, but with small aggregate productivity consequences. In contrast, rising entry costs account for a third of the decline in TFP from 1998 to 2013, but had little impact on informality.

Gender board diversity across Europe throughout four decades

We present a Gender Board Diversity Dataset (GBDD), which provides a cross-country perspective on women in management and supervisory boards that spans between 1985 and 2020. The data covers 43 European countries and accounts for private companies in addition to the stock-listed ones. GBBD was created using firm-level Orbis data. Our measures are based on a sample of more than 28 million unique firms observed for nearly seven years on average and reporting data about nearly 59 million individuals on management and supervisory boards. We provide the measures at the level of industry, country and year (firm-level data is proprietary). We provide three measures. The first is the share of women among all board members in a given industry, country, and year. The second one is the average of the shares of women across firms in a given industry, country and year. We also provide a new measure: the share of firms in a given industry, country and year which report no single woman on their board(s).

How CSR Performance and Financial Report Quality Affect Corporate Share Prices? Case of Indonesia

Purpose: This research intends to investigate the impact of financial report quality and CSR performance on the firm share prices. Methodology/approach: The 78 firms-years observation of LQ-45 public listed companies in Indonesia from 2019 to 2020 is used in this study. The financial report quality is measured by the accrual-based model of earning management, while CSR performance is measured by the amount of CSR spending. The OLS regression is applied to test the hypotheses. Findings: The findings show that there is no effect of financial report quality on the share prices. On the other hand, CSR performance plays an important role in influencing a company’s share prices. CSR performance has a positive effect on share prices. The financial report failed to ensure that there is no existing information asymmetry within the organization. While CSR performance is a form of social-engaged activities in order to achieve social benefits and legitimation. Practical implications: In the context of legitimacy and agency theory, these findings provide fruitful insight into how the firm performance is valued by investors, which is not only based on financial performance but also based on non-financial performance. Originality/value: By providing a new measurement of CSR performance, this study is different to most existing CSR kinds of literature.

Effective cybersecurity risk management practices for small and medium-sized enterprises: A comprehensive review

Small-to-medium-sized enterprises (SMEs) make up a significant portion of the economies of many nations. However, research shows that many companies fall short when establishing cyber security, making them vulnerable to assaults. In addition, while accounting for a sizable share of firms, studies on cyber security focus on SMEs. This study reviews the latest evaluation on the cyber security of SMEs, emphasizing how well this experiment aligns with the well-known National Institute of Standards and Technology (NIST) and Cyber Security Framework (CSF). The report begins by underlining the crucial necessity of cybersecurity in the digital era and the particular issues that SMEs confront. It emphasizes the financial and reputational dangers associated with cyber events, emphasizing the importance of solid cybersecurity procedures. The review investigates several cybersecurity risk management approaches, strategies and frameworks, providing insights into their relevance and efficacy in the context of SMEs. We discovered that study in SME cyber security is sophisticated and specialized attention on the NIST and CSF recognize as well as defend tasks, with minimal effort spent on the other current activities. SMEs should be equipped to detect, react to, and recover from cybercrime. SMEs might not have appropriate information on responding to such occurrences if research in these areas is pathetic. In future studies in SMEs, there needs to be an excellent equilibrium in cyber security. Scholars ought to use firm, proven mathematical methods to improve and test their work, yet governments and academia are urged to invest in providing researchers with incentives to broaden their research horizons.

Bankruptcy social cost, government intervention and stock price crash risk

This paper examines the relationship between the social cost of bankruptcy and the risk of corporate stock price collapse through a study of China's A-share non-financial listed companies from 2012 to 2022. It is found that the higher a firm's social cost of bankruptcy is, the lower its firm share price crash risk is instead. In addition, the extent to which the social cost of insolvency affects the risk of firm share price collapse is enhanced in regions with less government intervention.

The Zomato dilemma: a realistic growth trajectory and share price fair valuation?

Learning outcomes This case study is related to start-up post-listing investment analysis. Through this case study, students will be able to perform the business analysis guided by the Venture Evaluation Metric tool, perform financial analysis using the discounted cash flow methods and perform investment analysis recommendation with justifications from the business and financial analysis performed above. Case overview/synopsis This case study sets out the study of a scalable start-up, Zomato, which is a successfully listed start-up firm in India. Despite the start-up development success in the pre-listing, the firm has exhibited a continuous unprofitable finance performance in the post-listing and has further experienced a volatile share price performance, both of which have puzzled existing and potential investors. In addition, some analysts are in the opinions that the firm share price valuation have been inflated with overvaluation since in the initial public offering stage and remain traded with overvaluation in the market. Notably, considering the negative indicators mentioned above, investors are concerned about long-term sustainability of the firm business and financial performance. In the context of post-listing investment, the following questions are material to investors: What is the realistic growth trajectory for Zomato in the medium term? What is Zomato’s share fair value in the medium term? Can one see opportunities or risks ahead of investing in Zomato’s shares? What will be the investment strategy for new investors? Complexity academic level This case study is suited to bachelor’s and master’s level in business schools studying entrepreneurial finance analysis. Supplementary material Teaching notes are available for educators only. Subject code CSS 1: Accounting and finance.