Corporate Governance Structures and Financial Constraints in Multinational Enterprises – An Analysis in Selected European Transition Economies on the Basis of the IWH FDI Micro Database 2013 –
Andrea Gauselmann, Felix Noth
IWH Discussion Papers,
No. 3,
2015
Abstract
In our analysis, we consider the distribution of decision power over financing and investment between MNEs’ headquarters and foreign subsidiaries and its influence on the foreign affiliates’ financial restrictions. Our research results show that headquarters of multinational enterprises have not (yet) moved much decision power to their foreign subsidiaries at all. We use data from the IWH FDI Micro Database which contains information on corporate governance structures and financial restrictions of 609 enterprises with a foreign investor in Hungary, Poland, the Czech Republic, Slovakia, Romania and East Germany. We match data from Bureau van Dijk’s AMADEUS database on financial characteristics. We find that a high concentration of decision power within the MNE’s headquarter implicates high financial restrictions within the subsidiary. Square term results show, however, that the effect of financial constraints within the subsidiary decreases and finally turns insignificant when decision power moves from headquarter to subsidiary. Thus, economic policy should encourage foreign investors in the case of foreign acquisition of local enterprises to leave decision power within the enterprise and in the case of Greenfield investment to provide the newly established subsidiaries with as much power over corporate governance structures as possible.
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Coordination between Municipalities and Local Non-Municipal Public Units (NMPUs) for Supporting Urban Economic Development: Theoretical Analysis and Empirical Evidence for the Example of Universities in Germany
Martin T. W. Rosenfeld, J. Hinz
Koordination raumwirksamer Politik: Mehr Effizienz und Wirksamkeit von Politik durch abgestimmte Arbeitsteilung,
2015
Abstract
In many European cities, policymakers are trying to change the local paths of economic development to head in new directions, e.g. by trying to become a location for Non-Municipal Public Units (NMPUs), like federal special agencies, state museums, military bases, universities or publicly funded research institutes. But as the competencies for such local NMPUs are allocated to higher levels of government, the municipal level has no direct formal institutional responsibilities for influencing their location. Once a NMPU has chosen a certain location, support from the municipality may, however, stabilize the NMPU. There are some categories of NMPUs that should have considerable interest in local conditions, as determined by the municipal level. This paper first theoretically categorizes NMPUs with regard to their importance for the urban economy, with regard to the importance of local conditions for the performance of NMPUs and with regard to their degree of fiscal autonomy. It is shown that universities are one example of NMPUs where the relevance of coordinating activities with the municipalities is fairly high. The benefits of universities for local economic development have often been discussed. From the point of view of universities, their capacity to attract human capital depends on factors which may be influenced by the municipalities. This means that there is a reciprocal relationship between municipalities and universities; coordination by cooperation between the partners could be useful for both – but in practice there is often a lack of cooperation. Information policy is one relevant field for coordination: the city should highlight publicly the advantages of local universities; the universities should highlight the advantages of their city. As information policy is a field for which empirical data is available, the empirical part of the paper presents results from an analysis based on the internet presentations of selected cities and universities. It is shown that in most cities the level of coordination in this field is so far quite low. One possible way to achieve a higher degree of coordination could be to introduce fiscal incentives for cities.
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Determinants of Knowledge Exchange Between Foreign and Domestic Enterprises in European Post-transition Economies
Andrea Gauselmann
Journal Economia e Politica Industriale (Journal of Industrial and Business Economics),
No. 4,
2014
Abstract
The aim of this paper is to contribute to the literature on internationalised research and development by investigating determinants of knowledge and technology transfer between foreign subsidiaries and the local economy in European post-transition economies. This inquiry leads to a better understanding of determinants that influence this knowledge and technology exchange. Applying a logit model, we find that, in particular, the foreign subsidiary’s corporate governance structure, its embeddedness in the multinational enterprise’s internal knowledge base, its own technological capacity, the growth of the regional knowledge stock and the regional sectoral diversification are all positively associated with the transfer of knowledge. Subsidiaries’ investment motives and the relative weight of the sector of investment in the region’s economy appear to be of less importance. The analysis focuses on European post-transition economies, using the example of five selected Central Eastern European countries and East Germany. We exploit a unique dataset, the IWH FDI Micro database, which contains information on one thousand two hundred forty-five foreign subsidiaries in this region.
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MNEs and Regional R&D Co-operation: Evidence from Post-Transition Economies
Andrea Gauselmann
Grincoh Working Papers,
2013
Abstract
The aim of this paper is to contribute to the literature by investigating the determinants of R&D co-operation between MNEs’ foreign subsidiaries and enterprises in the region of location, thereby leading to a better understanding which firm- and region-specific factors influence this co-operation behavior. Applying a logit model, this paper investigates which firm- and region-specific determinants influence technological cooperation between foreign subsidiaries and suppliers, customers, and research institutions in the region of location. Results suggest that especially the foreign subsidiary’s mandate in terms of R&D, its internal technological embeddedness, its technological capability but also the regional knowledge stock are positively associated with these co-operations. The analysis focuses on post-transition economies, using the example of five selected CEE countries and East Germany. We exploit a unique dataset - the IWH FDI Micro database - which holds information on 1,245 foreign subsidiaries in this region.
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Determinants of Illegal Mexican Immigration into the US Southern Border States
A. Buehn, Stefan Eichler
Eastern Economic Journal,
No. 4,
2013
Abstract
We model illegal immigration across the US-Mexico border into Arizona, California, and Texas as an unobservable variable applying a Multiple Indicators Multiple Causes model. Using state-level data from 1985 to 2004, we test the incentives and deterrents influencing illegal immigration. Better labor market conditions in a US state and worse in Mexico encourage illegal immigration while more intense border enforcement deters it. Estimating the state-specific inflow of illegal Mexican immigrants we find that the 1994/95 peso crisis in Mexico led to significant increases in illegal immigration. US border enforcement policies in the 1990s provided temporary relief while post-9/11 re-enforcement has reduced illegal immigration.
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Stock Market Firm-Level Information and Real Economic Activity
Filippo di Mauro, Fabio Fornari, Dario Mannucci
ECB Working Paper,
No. 1366,
2011
Abstract
We provide evidence that changes in the equity price and volatility of individual firms (measures that approximate the definition of 'granular shock' given in Gabaix, 2010) are key to improve the predictability of aggregate business cycle fluctuations in a number of countries. Specifically, adding the return and the volatility of firm-level equity prices to aggregate financial information leads to a significant improvement in forecasting business cycle developments in four economic areas, at various horizons. Importantly, not only domestic firms but also foreign firms improve business cycle predictability for a given economic area. This is not immediately visible when one takes an unconditional standpoint (i.e. an average across the sample). However, conditioning on the business cycle position of the domestic economy, the relative importance of the two sets of firms - foreign and domestic - exhibits noticeable swings across time. Analogously, the sectoral classification of the firms that in a given month retain the highest predictive power for future IP changes also varies significantly over time as a function of the business cycle position of the domestic economy. Limited to the United States, predictive ability is found to be related to selected balance sheet items, suggesting that structural features differentiate the firms that can anticipate aggregate fluctuations from those that do not help to this aim. Beyond the purely forecasting application, this finding may enhance our understanding of the underlying origins of aggregate fluctuations. We also propose to use the cross sectional stock market information to macro-prudential aims through an economic Value at Risk.
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IWH FDI Micro Database – Methodological Note – Survey 2009 in East Germany
Andrea Gauselmann, Gabriele Hardt, Björn Jindra, Philipp Marek
One-off Publications,
No. 3,
2009
Abstract
The paper is a methodological report on the IWH-FDI-Micro Database of the year 2009. It contains a motivation of the research questions and describes the availability of existing data sources on multinational affiliates in transition economies. In its core it describes the population, survey sampling and implementation, in depth information on the survey representativeness, and questionnaire design. The 2009 survey covers multinationals affiliates in manufacturing and selected services of Hungary, Czech Republic, Poland, Romania, Slovakia, and East Germany.
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IWH FDI Micro Database – Methodological Note – Survey 2010 in East Germany
Andrea Gauselmann, Gabriele Hardt, Björn Jindra, Philipp Marek
One-off Publications,
2010
Abstract
The paper is a methodological report on the IWH-FDI-Micro Database of the year 2010. It contains a motivation of the research questions and describes the availability of existing data sources on multinational affiliates in transition economies. In its core it describes the population, survey sampling and implementation, in depth information on the survey representativeness, and questionnaire design. The 2010 survey covers multinationals affiliates in manufacturing and selected services of East Germany.
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IWH FDI Micro Database – Methodological Note – Survey 2008 in East Germany
Andrea Gauselmann, Gabriele Hardt, Björn Jindra, Philipp Marek
One-off Publications,
No. 2,
2008
Abstract
The paper is a methodological report on the IWH-FDI-Micro Database of the year 2008. It contains a motivation of the research questions and describes the availability of existing data sources on multinational affiliates in transition economies. In its core it describes the population, survey sampling and implementation, in depth information on the survey representativeness, and questionnaire design. The 2008 survey covers multinationals affiliates in manufacturing and selected services of East Germany.
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