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Firm Heterogeneity (firm + heterogeneity)
Selected AbstractsUnderstanding the Endogeneity Between Firm Value and Shareholder RightsFINANCIAL MANAGEMENT, Issue 4 2005Jianxin (Daniel) Chi I explore the relation between firm value and the shareholder rights-based Governance Index "G," which has become a popular measure of governance quality among researchers and investors. I show that the relation is not spuriously driven by unobservable firm heterogeneity or an assortment of observable firm characteristics, such as firm growth potential and profitability. The causality seems to run from G to firm value, rather than from firm value to G. My results suggest that granting more rights to shareholders could be an effective way to reduce agency costs and enhance firm value. [source] Equilibrium Search Models and the Transition From School To WorkINTERNATIONAL ECONOMIC REVIEW, Issue 2 2001Audra J. Bowlus This paper applies the Burdett,Mortensen (1998) equilibrium search model to study the school to work transitions of U.S. high school graduates. We consider the case of discrete firm heterogeneity and provide a computational method to obtain the MLE. Our results show that unemployed blacks receive fewer offers than whites and employed blacks are more likely to lose their jobs. Importantly, employed blacks and whites receive job offers at the same rate. Assigning the whites' search parameters to the blacks and re-solving reveals that 75 percent of the observed wage differential is explained by the job destruction rate differences. [source] Strategic Quality Decisions under Heterogeneous Resource EndowmentsJOURNAL OF ECONOMICS & MANAGEMENT STRATEGY, Issue 2 2001Byong-Duk Rhee The literature on product competition advocates a differentiation strategy assuming firm homogeneity in resources. However, firm heterogeneity in resource endowments has long been recognized in economics. Merging these two perspectives, we show that the increase in consumer preference for quality leads to firms' aggressive price competition instead of quality differentiation. As consumers look for higher quality, the cost advantage arising from superior resources increases and makes head-to-head competition more profitable than accommodating a less efficient rival. When consumers are highly concerned about quality, even a small resource difference leads a more efficient firm to initiate cutthroat price competition for market dominance. [source] Testing Agency Theory with Entrepreneur Effort and WealthTHE JOURNAL OF FINANCE, Issue 2 2005MARIANNE P. BITLER ABSTRACT We develop a principal-agent model in an entrepreneurial setting and test the model's predictions using unique data on entrepreneurial effort and wealth in privately held firms. Accounting for unobserved firm heterogeneity using instrumental-variables techniques, we find that entrepreneurial ownership shares increase with outside wealth and decrease with firm risk; effort increases with ownership; and effort increases firm performance. The magnitude of the effects in the cross-section of firms suggests that agency costs may help explain why entrepreneurs concentrate large fractions of their wealth in firm equity. [source] THE ROLE OF SUNK COSTS IN THE DECISION TO INVEST IN R&D,THE JOURNAL OF INDUSTRIAL ECONOMICS, Issue 4 2009JUAN A. MÁÑEZ We present a dynamic empirical model of a firm's R&D decisions that is consistent with the existence of sunk R&D costs, taking into account that these costs may differ between small and large firms, and among different technological regimes. We estimate a multivariate dynamic discrete choice model using firm-level data of Spanish manufacturing for 1990,2000. Conditional on firm heterogeneity and serially correlated unobservable factors, we find that R&D history matters. This true state dependence allows inferring the existence of sunk R&D costs associated with performing R&D. Sunk R&D costs are found to be higher for large, high-tech firms. [source] ASYMMETRIC MULTIPRODUCT FIRMS, PROFITABILITY AND WELFAREBULLETIN OF ECONOMIC RESEARCH, Issue 2 2009George Symeonidis L13; D43 ABSTRACT In a differentiated multiproduct Cournot duopoly with linear demand, industry profit usually falls (even though concentration rises) when the distribution of products across firms becomes more asymmetric, if the products are not very differentiated or the total number of products is large. Consumer surplus and overall welfare always fall as the degree of asymmetry increases. These results contrast with the conventional wisdom on the effects of firm heterogeneity and the links between concentration and industry profits. [source] | |||||||||||||||||||