Firm Social Networks, Trust, and Security Issuances
European Journal of Finance,
We observe that public firms are more likely to issue seasoned stocks rather than bonds when theirs boards are more socially-connected. These connected issuers experience better announcement-period stock returns and attract more institutional investors. This social-connection effect is stronger for firms with severe information asymmetry, higher risk of being undersubscribed, and more visible to investors. Our conjecture is this social-network effect is driven by trust in issuing firms. Given stocks are more sensitive to trust, these trusted firms are more likely to issue stocks than bonds. Trustworthiness plays an important role in firms’ security issuances in capital markets.
Robot Adoption at German Plants
IWH Discussion Papers,
Using a newly collected dataset of robot use at the plant level from 2014 to 2018, we provide the first microscopic portrait of robotisation in Germany and study the potential determinants of robot adoption. Our descriptive analysis uncovers five stylised facts concerning both extensive and, perhaps more importantly, intensive margin of plant-level robot use: (1) Robot use is relatively rare with only 1.55% German plants using robots in 2018. (2) The distribution of robots is highly skewed. (3) New robot adopters contribute substantially to the recent robotisation. (4) Robot users are exceptional along several dimensions of plant-level characteristics. (5) Heterogeneity in robot types matters. Our regression results further suggest plant size, low-skilled labour share, and exporter status to have strong and positive effect on future probability of robot adoption. Manufacturing plants impacted by the introduction of minimum wage in 2015 are also more likely to adopt robots. However, controlling for plant size, we find that plant-level productivity has no, if not negative, impact on robot adoption.
Crisis is Gradually being Overcome – Align Actions to Lower Growth In their autumn report, the leading German economic...
IWH Alumni The IWH would like to stay in contact with its former employees. We...
Age and High-Growth Entrepreneurship
American Economic Review: Insights,
Many observers, and many investors, believe that young people are especially likely to produce the most successful new firms. Integrating administrative data on firms, workers, and owners, we study start-ups systematically in the United States and find that successful entrepreneurs are middle-aged, not young. The mean age at founding for the 1-in-1,000 fastest growing new ventures is 45.0. The findings are similar when considering high-technology sectors, entrepreneurial hubs, and successful firm exits. Prior experience in the specific industry predicts much greater rates of entrepreneurial success. These findings strongly reject common hypotheses that emphasize youth as a key trait of successful entrepreneurs.
Labor Market Power and the Distorting Effects of International Trade
International Journal of Industrial Organization,
This article examines how final product trade with China shapes and interacts with labor market imperfections that create market power in labor markets and prevent an efficient market outcome. I develop a framework for measuring such labor market power distortions in monetary terms and document large degrees of these distortions in Germany's manufacturing sector. Import competition only exerts labor market disciplining effects if firms, rather than employees, possess labor market power. Otherwise, increasing export demand and import competition both fortify existing distortions, which decreases labor market efficiency. This widens the gap between potential and realized output and thus diminishes classical gains from trade.
02.10.2019 • 20/2019
Joint Economic Forecast Autumn 2019: Economy Cools Further – Industry in Recession
Berlin, October 2, 2019 – Germany’s leading economics research institutes have revised their economic forecast for Germany significantly downward. Whereas in the spring they still expected gross domestic product (GDP) to grow by 0.8% in 2019, they now expect GDP growth to be only 0.5%. Reasons for the poor performance are the falling worldwide demand for capital goods – in the exporting of which the Germany economy is specialised – as well as political uncertainty and structural changes in the automotive industry. By contrast, monetary policy is shoring up macroeconomic expansion. For the coming year, the economic researchers have also reduced their forecast of GDP growth to 1.1%, having predicted 1.8% in the spring.
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IWH FDI Micro Database
IWH FDI Micro Database The IWH FDI Micro Database (FDI = Foreign Direct...
Innovation and Top Income Inequality
The Review of Economic Studies,
In this article, we use cross-state panel and cross-U.S. commuting-zone data to look at the relationship between innovation, top income inequality and social mobility. We find positive correlations between measures of innovation and top income inequality. We also show that the correlations between innovation and broad measures of inequality are not significant. Next, using instrumental variable analysis, we argue that these correlations at least partly reflect a causality from innovation to top income shares. Finally, we show that innovation, particularly by new entrants, is positively associated with social mobility, but less so in local areas with more intense lobbying activities.