Firm Size (firm + size)

Distribution by Scientific Domains
Distribution within Business, Economics, Finance and Accounting

Selected Abstracts


Jinyoung Kim
It has long been recognized that worker wages and productivity are higher in large firms. Moreover, economists have been interested in the efficiency of large firms in R&D enterprises. This paper uses inventor panel data to examine the relationship between inventor productivity and firm size in the pharmaceutical and semiconductor industries. In both industries, we find that inventors' productivity increases with firm size even after controlling for inventors' experience, education and other firm characteristics. We find evidence in the pharmaceutical industry that this is partly accounted for by differences in the way in which large and small firms organize R&D activities. [source]


The South African motor vehicle industry has historically been considered a critical industry in the South African economy and the target of numerous government policies designed to protect it and/or increase its international competitiveness. This study examines the cost performance of firms in this industry according to their size, using data categorised by output level. The results are consistent with statistically significant economies of scale at the lowest output levels and a cost inefficiency averaging from about seven to nine per cent for all firms. The findings also suggest that all else equal, the smallest firms and the largest firms have lower unit costs than mid-sized firms. While this work suggests that policies that would give incentives for the smallest firms to increase their scale of operations might help to reduce their unit costs, further investigation needs to be done with respect to why firms in the mid-level size categories appear to be less efficient. [source]

Firm Size, Industry Mix and the Regional Transmission of Monetary Policy in Germany

Ivo J. M. Arnold
Monetary transmission; regional effects; industry effects; firm size Abstract. This paper estimates the impact of interest rate shocks on regional output in Germany over the period from 1970 to 2000. We use a vector autoregression (VAR) model to obtain impulse responses, which reveal differences in the output responses to monetary policy shocks across ten German provinces. Next, we investigate whether these differences can be related to structural features of the regional economies, such as industry mix, firm size, bank size and openness. An additional analysis of the volatility of real GDP growth for the period 1992,2000 includes the Eastern provinces. We also present evidence on the interrelationship between firm size and industry, and compare our measure of firm size with those used in previous studies. We conclude that the differential regional effects of monetary policy are related to industrial composition, but not to firm size or bank size. [source]

The Effect of Earnings Permanence, Growth, and Firm Size on the Usefulness of Cash Flows and Earnings in Explaining Security Returns: Empirical Evidence for the UK

Andreas Charitou
This paper examines the relative information content of earnings and cash flows for security returns using a methodology incorporating contextual factors which may affect earnings and cash flow response coefficients. For our UK dataset, we provide evidence that the earnings coefficient is related to earnings permanence, growth and firm size and that the cash flow coefficient may be related to growth. Although our results emphasise the value relevance of earnings, they also suggest that both contemporaneous and prior period cash flow are positively related to security returns and that market-to-book and market value of equity have predictive power for returns. [source]

The Weekend Effect, ,Reverse' Weekend Effect, and Firm Size

Jorge Brusa
In this paper, we find a ,reverse%rsquo; weekend effect , whereby returns for Monday are positive and significantly greater than returns for the preceding Friday , in recent data for major stock indexes. We also find that, while a weak weekend effect exists in portfolios of smaller firms, the effect begins to diminish and weak ,reverse' weekend effect begins to appear in medium size firms. The ,reverse' weekend effect becomes strong and statistically significant in portfolios of large firms. The detection of a ,reverse' weekend effect in portfolios of large firms is a new finding in the literature. [source]

The Structure of Wages by Firm Size: A Comparison of Canada and the USA

LABOUR, Issue 2 2009
Stéphanie Lluis
Cross-country comparisons of the skill premium between USA and Canada show differences in the returns to higher education between the two countries since the 1980s. This paper analyses whether such differences could be related to differences in skill distribution and worker sorting across firm size between the two countries. Estimation of the wage structure by size for male non-unionized workers in the private sector reveals that selectivity effects on wages are present and similar in both countries. There are significant and substantial cross-country differences in the returns to education among large firms, especially for younger workers. [source]

Monetary Transmission and Inventory: Evidence from Japanese Balance-Sheet Data by Firm Size

Kazuo Ogawa
I analyse the response of inventories and short-term debts to monetary policy using disaggregated data on Japanese manufacturing firms classified by firm size. I find that monetary contraction decreases the inventories of large firms; however, inventories of small and medium firms increase considerably for the first several quarters. This implies that in a subcontracting system small and medium subcontractors serve as a buffer and alleviate the monetary shocks felt by their large parent firms. Moreover, inventory build-ups are financed by increases in accounts payable. I also find that for small firms land asset is important in easing credit conditions and increasing inventories. JEL Classification Numbers: E22, E32, E44, E51. [source]

Capital Structure and Firm Efficiency

Dimitris Margaritis
Abstract:, This paper investigates the relationship between firm efficiency and leverage. We consider both the effect of leverage on firm performance as well as the reverse causality relationship. In particular, we address the following questions: Does higher leverage lead to better firm performance? Does efficiency exert a significant effect on leverage over and above that of traditional financial measures of capital structure? Is the effect of efficiency on leverage similar across different capital structures? What is the signalling role of efficiency to creditors or investors? Using a sample of 12,240 New Zealand firms we find evidence supporting the theoretical predictions of the Jensen and Meckling (1976) agency cost model. Efficiency measured as the distance from the industry's ,best practice' production frontier is positively related to leverage over the entire range of observed data. The frontier is constructed using the non-parametric Data Envelopment Analysis (DEA) method. Using quantile regression analysis we show that the reverse causality effect of efficiency on leverage is positive at low to mid-leverage levels and negative at high leverage ratios. Firm size also has a non-monotonic effect on leverage: negative at low debt ratios and positive at mid to high debt ratios. The effect of tangibles and profitability on leverage is positive while intangibles and other assets are negatively related to leverage. [source]

An Agency Theory Investigation of Supply Risk M anagement

George A. Zsidisin
SUMMARY Managing supply risk is an essential element of the overall supply management task. As the complexity of risk management has increased, responsiveness seems dominated by varying the level of inventory and using multiple supply sources as means of creating buffers. This research uses the framework of agency theory in managing supplier behaviors as a means to reduce supply risk and the impact of detrimental events. Empirical results indicate that purchasing organizations address various sources of supply risk by implementing management techniques that reduce the likelihood that detrimental events will occur. Firm size, purchases as a percentage of sales, and industry characteristics were also found to influence the manner in which supplier behaviors are managed. [source]

The Pennsylvania certified safety committee program: An evaluation of participation and effects on work injury rates

Hangsheng Liu PhD
Abstract Background Since 1994, Pennsylvania, like several other states, has provided a 5% discount on workers' compensation insurance premiums for firms with a certified joint labor management safety committee. This study explored the factors affecting program participation and evaluated the effect of this program on work injuries. Methods Using Pennsylvania unemployment insurance data (1996,2006), workers' compensation data (1998,2005), and the safety committee audit data (1999,2007), we conducted propensity score matching and regression analysis on the program's impact on injury rates. Results Larger firms, firms with higher injury rates, firms in high risk industries, and firms without labor unions were more likely to join the safety committee program and less likely to drop out of the program. The injury rates of participants did not decline more than the rates for non-participants; however, rates at participant firms with good compliance dropped more than the rates at participant firms with poor compliance. Conclusions Firm size and prior injury rates are key predictors of program participation. Firms that complied with the requirement to train their safety committee members did experience reductions in injuries, but non-compliance with that and other requirements was so widespread that no overall impact of the program could be detected. Am. J. Ind. Med. 53:780,791, 2010. © 2010 Wiley-Liss, Inc. [source]

Firm size, organizational visibility and corporate philanthropy: an empirical analysis

Stephen Brammer
First page of article [source]

Antecedents of Shareholder Activism in Target Firms: Evidence from a Multi-Country Study

William Q. Judge
ABSTRACT Manuscript Type: Empirical Research Question/Issue: This study seeks to better understand the antecedents of shareholder activism targeted at firms located in three common law countries (i.e., USA, UK, and Australia) and three civil law countries (Japan, Germany, and South Korea) during the 2003,07 time period. Research Findings/Insights: Our findings suggest that the antecedents of shareholder activism vary by the motivation of the activist. We demonstrate that activists target firms with two motives (a) to improve the financial performance, and (b) to improve the social performance of the firm. With respect to the target firm level antecedents, we find that firm size is unrelated to financial activism, but positively related to social activism; ownership concentration is negatively related to both financial and social activism; and prior profitability is negatively related to financial activism, but positively related to social activism. Further, these relationships in the case of financial activism are generally stronger in common law legal systems, whereas those in the case of social activism are generally stronger in environments with a greater level of income inequality. Theoretical/Academic Implications: Our findings suggest that future research should differentiate between the motivations of the activism event. Further, we find that while agency logic works well for financial activism, institutional theory provides stronger explanations for social activism. Overall, we demonstrate the complementary nature of these two theories in explaining shareholder activism. Practitioner/Policy Implications: We found that the "exposure" to shareholder activism varies by the motivation of the activist, and the nature of the firm and its national context. An understanding of these issues would help firms develop proper response strategies to activism events. [source]

Sample Splitting and Threshold Estimation

ECONOMETRICA, Issue 3 2000
Bruce E. Hansen
Threshold models have a wide variety of applications in economics. Direct applications include models of separating and multiple equilibria. Other applications include empirical sample splitting when the sample split is based on a continuously-distributed variable such as firm size. In addition, threshold models may be used as a parsimonious strategy for nonparametric function estimation. For example, the threshold autoregressive model (TAR) is popular in the nonlinear time series literature. Threshold models also emerge as special cases of more complex statistical frameworks, such as mixture models, switching models, Markov switching models, and smooth transition threshold models. It may be important to understand the statistical properties of threshold models as a preliminary step in the development of statistical tools to handle these more complicated structures. Despite the large number of potential applications, the statistical theory of threshold estimation is undeveloped. It is known that threshold estimates are super-consistent, but a distribution theory useful for testing and inference has yet to be provided. This paper develops a statistical theory for threshold estimation in the regression context. We allow for either cross-section or time series observations. Least squares estimation of the regression parameters is considered. An asymptotic distribution theory for the regression estimates (the threshold and the regression slopes) is developed. It is found that the distribution of the threshold estimate is nonstandard. A method to construct asymptotic confidence intervals is developed by inverting the likelihood ratio statistic. It is shown that this yields asymptotically conservative confidence regions. Monte Carlo simulations are presented to assess the accuracy of the asymptotic approximations. The empirical relevance of the theory is illustrated through an application to the multiple equilibria growth model of Durlauf and Johnson (1995). [source]

Genetically Engineered: Why Some Venture Capital Firms Are More Successful Than Others

Jennifer M. Walske
While venture capital has received a tremendous amount of attention, prior research has predominantly looked at venture capital firms (VCFs) post raising their first fund. In this paper, we move the point of analysis back further and ask what type of founding team experience best predicts VCF success, controlling for firm strategy, firm size, and the environment upon which the firm was born. Empirical results show that venture capital, senior management, and consulting experience aids VCF success, while entrepreneurial experience impedes it. None of the control variables affect a VCF's ability to raise subsequent funds. [source]

The Relationship Among Biases, Misperceptions, and the Introduction of Pioneering Products: Examining Differences in Venture Decision Contexts

Mark Simon
Although biases influence the decision to take entrepreneurial actions, studies have not differentiated among entrepreneurial decision environments. These environments vary greatly and affect which biases arise and their context-specific consequences. Focusing on the role of firm size, age, and type of product introduction, we propose that entrepreneurs in smaller, younger, firms, who are considering pioneering, are more likely to exhibit illusion of control, law of small numbers, and reasoning by analogy. These biases contribute to underestimating competition, overestimating demand, and overlooking requisite assets. We hope to spur researchers to examine information processing across different types of entrepreneurial firms and actions. [source]

Is CEO Pay Really Inefficient?

A Survey of New Optimal Contracting Theories
D2; D3; G34; J3 Abstract Bebchuk and Fried (2004) argue that executive compensation is set by CEOs themselves rather than boards on behalf of shareholders, since many features of observed pay packages may appear inconsistent with standard optimal contracting theories. However, it may be that simple models do not capture several complexities of real-life settings. This article surveys recent theories that extend traditional frameworks to incorporate these dimensions, and show that the above features can be fully consistent with efficiency. For example, optimal contracting theories can explain the recent rapid increase in pay, the low level of incentives and their negative scaling with firm size, pay-for-luck, the widespread use of options (as opposed to stock), severance pay and debt compensation, and the insensitivity of incentives to risk. [source]

Determinants of the Size and Composition of US Corporate Boards: 1935-2000

Kenneth M. Lehn
We examine the determinants of the size and composition of corporate boards for a sample of 82 US companies that survived during the period 1935-2000. Our hypotheses lead to predictions that firm size, growth opportunities, merger activity, and geographical expansion are important determinants of these board characteristics. We find empirical evidence that the four variables are significant determinants of the size and/or composition of boards. After controlling for these determinants of board characteristics, we find no robust relation between firm performance and either board size or composition. [source]

Using Expectations to Test Asset Pricing Models

Alon Brav
Asset pricing models generate predictions relating assets' expected rates of return and their risk attributes. Most tests of these models have employed realized rates of return as a proxy for expected return. We use analysts' expected rates of return to examine the relation between these expectations and firm attributes. By assuming that analysts' expectations are unbiased estimates of market-wide expected rates of return, we can circumvent the use of realized rates of return and provide evidence on the predictions emanating from traditional asset pricing models. We find a positive, robust relation between expected return and market beta and a negative relation between expected return and firm size, consistent with the notion that these are risk factors. We do not find that high book-to-market firms are expected to earn higher returns than low book-to-market firms, inconsistent with the notion that book-to-market is a risk factor. [source]

Corporate Governance, Board Diversity, and Firm Value

David A. Carter
This study examines the relationship between board diversity and firm value for Fortune 1000 firms. Board diversity is defined as the percentage of women, African Americans, Asians, and Hispanics on the board of directors. This research is important because it presents the first empirical evidence examining whether board diversity is associated with improved financial value. After controlling for size, industry, and other corporate governance measures, we find significant positive relationships between the fraction of women or minorities on the board and firm value. We also find that the proportion of women and minorities on boards increases with firm size and board size, but decreases as the number of insiders increases. [source]

Firm Size, Industry Mix and the Regional Transmission of Monetary Policy in Germany

Ivo J. M. Arnold
Monetary transmission; regional effects; industry effects; firm size Abstract. This paper estimates the impact of interest rate shocks on regional output in Germany over the period from 1970 to 2000. We use a vector autoregression (VAR) model to obtain impulse responses, which reveal differences in the output responses to monetary policy shocks across ten German provinces. Next, we investigate whether these differences can be related to structural features of the regional economies, such as industry mix, firm size, bank size and openness. An additional analysis of the volatility of real GDP growth for the period 1992,2000 includes the Eastern provinces. We also present evidence on the interrelationship between firm size and industry, and compare our measure of firm size with those used in previous studies. We conclude that the differential regional effects of monetary policy are related to industrial composition, but not to firm size or bank size. [source]

Goodwill impairment as a reflection of investment opportunities

Jayne M. Godfrey
M41; C21; D23 Abstract We exploit a unique opportunity to examine whether goodwill impairment write-offs reflect firms' investment opportunities during the first years of the US goodwill impairment accounting regime. We find that impairment write-offs are negatively associated with firms' underlying investment opportunities. We also find associations between goodwill impairment write-offs and traditionally applied leverage, firm size and return on assets variables, although the leverage and firm size results are less robust. The results support the International Accounting Standards Board and Financial Accounting Standards Board contention that an impairment test regime can reflect firms' underlying economic attributes, while simultaneously indicating that managers use discretion to reduce contracting costs. [source]

Do share prices matter?

Edward A. Dyl
This paper examines whether the cross sectional variation in Australian share prices is partially explained by measures of firm size and ownership characteristics in a manner that is consistent with firms behaving in accordance with Merton's (1987) model of capital market equilibrium with incomplete information. Based on a sample of firms whose shares were traded on the ASX during 1995, we show that firms largely owned by less wealthy shareholders tend to have low stock prices, although this relation is not linear. In addition, larger, better,known, firms tend to have higher stock prices. These findings are consistent with prior evidence from US markets, and suggest the existence of a shareholder clientele effect in Australia that is related to the share price of the underlying firm. [source]

When do high-level managers believe they can influence the stock price?

Antecedents of stock price expectancy cognitions
Abstract Stock based rewards are often used to motivate high-level managers to take actions to increase the stock price of the firm. However, numerous constraints may weaken the perceived link between individual effort and stock price appreciation for many recipients. This study introduces a new construct, stock price expectancy, which we define as individuals' perceptions of influence over their firm's stock price. We examined its antecedents in a sample of 349 high-level U.S. managers and found that employment at corporate headquarters, firm size, hierarchical level, and contact with investment analysts predicted stock price expectancy perceptions. © 2010 Wiley Periodicals, Inc. [source]

Voluntary Disclosure of Good and Bad Earnings News in a Low Litigation Setting,

Philip T. Sinnadurai
ABSTRACT This study uses a historical setting in which expected litigation costs were low (i.e., Australia, from 1993 to 1996) to investigate whether companies with good news were more likely to preempt annual earnings than their counterparts with bad news. Empirical tests compare the probability of preemption conditional on having good news with the probability of preemption conditional on having bad news. The models control for other potential determinants of disclosure policy that have been documented in the literature. The results do not support the research hypothesis that companies with good news were more likely to preempt annual earnings than companies with bad news. This finding suggests that there may be other factors driving disclosure of bad news, in addition to those acknowledged in the extant literature. The evidence also indicates that in Australia during the investigation period, the probability of preemption was positively associated with firm size and analyst following and differed as a function of industry membership. [source]

Information technology innovation diffusion: an information requirements paradigm

Nigel Melville
Abstract., Information technology (IT) innovation research examines the organizational and technological factors that determine IT adoption and diffusion, including firm size and scope, technological competency and expected benefits. We extend the literature by focusing on information requirements as a driver of IT innovation adoption and diffusion. Our framework of IT innovation diffusion incorporates three industry-level sources of information requirements: process complexity, clock speed and supply chain complexity. We apply the framework to US manufacturing industries using aggregate data of internet-based innovations and qualitative analysis of two industries: wood products and beverage manufacturing. Results show systematic patterns supporting the basic thesis of the information processing paradigm: higher IT innovation diffusion in industries with higher information processing requirements; the salience of downstream industry structure in the adoption of interorganizational systems; and the role of the location of information intensity in the supply chain in determining IT adoption and diffusion. Our study provides a new explanation for why certain industries were early and deep adopters of internet-based innovations while others were not: variation in information processing requirements. [source]

The Behavior and Performance of Foreign Investors in Emerging Equity Markets: Evidence from Taiwan

Anchor Y. Lin
This study investigates trading behavior and investment performance of foreign investors in 60 large-size firms listed on the Taiwan Stock Exchange. Strong evidence is found that foreign investors employ momentum strategies of buying past winners and selling past losers and favor large-size, high book-to-market, and high-tech stocks, while no evidence is found that foreign investors herd on market consensus. Findings show that foreign investors are short-term superior performers but long-term inferior performers. The short-term superior performance appears to be driven partially by price momentum of winners portfolios rather than by risk taking. After controlling for firm size, share turnover, and industry, foreigners' short-term performance in large-size, high-turnover, and high-tech stocks is better than it is in small-size, low-turnover, and non-high-tech stocks. [source]

Effect of Analysts' Optimism on Estimates of the Expected Rate of Return Implied by Earnings Forecasts

ABSTRACT Recent literature has used analysts' earnings forecasts, which are known to be optimistic, to estimate implied expected rates of return, yielding upwardly biased estimates. We estimate that the bias, computed as the difference between the estimates of the implied expected rate of return based on analysts' earnings forecasts and estimates based on current earnings realizations, is 2.84%. The importance of this bias is illustrated by the fact that several extant studies estimate an equity premium in the vicinity of 3%, which would be eliminated by the removal of the bias. We illustrate the point that cross-sample differences in the bias may lead to the erroneous conclusion that cost of capital differs across these samples by showing that analysts' optimism, and hence, bias in the implied estimates of the expected rate of return, differs with firm size and with analysts' recommendation. As an important aside, we show that the bias in a value-weighted estimate of the implied equity premium is 1.60% and that the unbiased value-weighted estimate of this premium is 4.43%. [source]

Structural Changes in Expected Stock Returns Relationships: Evidence from ASE

Evangelos Karanikas
Abstract:, This paper suggests a recursive application of Fama and MacBeth's (1973) testing procedure to assess the significance of macroeconomic factors and firm-specific effects priced in explaining the cross-sectional variation of expected stock returns over time. The paper applies the suggested testing procedure to investigate the source of risks of the Athens Stock Exchange (ASE). Among the variables examined, it finds out that the changes in the short term interest rates and firm size can explain a significant proportion of the variation of the ASE individual returns. The paper argues that the significance of interest rate changes can be associated with monetary policy changes introduced by the Greek authorities after the mid-nineties. These changes were focused on targeting interest rates, instead of monetary aggregates. [source]

CEO Stock Options and Equity Risk Incentives

Melissa A. Williams
Abstract: We test the hypothesis that the risk incentive effects of CEO stock option grants motivate managers to take on more risk than they would otherwise. Using a sample of mergers we document that the ratio of post- to pre-merger stock return variance is positively related to the risk incentive effect of CEO stock option compensation but this relationship is conditioned on firm size, with firm size having a moderating effect on the risk incentive effect of stock options. Using a broader time-series cross-sectional sample of firms we find a strong positive relationship between CEO risk incentive embedded in the stock options and subsequent equity return volatility. As in the case of the merger sample, this relationship is stronger for smaller firms. [source]

Trade Credit Terms Offered by Small Firms: Survey Evidence and Empirical Analysis

Nicholas Wilson
Trade credit has been shown to be an important source of short-term finance for smaller firms but small firms are also suppliers of trade credit. There is little empirical evidence on the credit granting decisions of small firms. Previous empirical work (Petersen and Rajan, 1997; and Ng, Smith and Smith, 1999) has focused on credit granting and investment in accounts receivable in larger firms. In this paper we look at the influences on credit granting for the smallest firms, using a sample of firms with an average of 10 employees. As in previous studies we find that product and demand characteristics influence credit terms. Moreover, we find evidence that firm size affects credit extension choices directly by setting limits on the possibilities for economies of scale, but it also impacts indirectly by affecting the firm's access to finance and its bargaining strength vis-à-vis suppliers. The dominant position of larger customers in bargaining with small suppliers constrains the impact of other factors on the firm's choice of credit terms. Small firms are also under pressure to conform to industry norms, although lack of resources can be a limiting factor. Constrained firms may make use of two-part terms in an attempt to improve their cashflow. [source]