the birth of a new industry entry by start ups and the drivers of firm growth the case of encryption software the paper analyses the birth of the encryption software industry esi a new niche in the software industry using a chandlerian perspective this work reports the main facts about fir entry and growth with a particular focus on start up strategies and actions since scale economies do not play a major role in esi the paper investigates the different sources of fir competitive advantages this work shows that innovation and product differentiation along with investments in co specialised assets are variables strongly correlated to young fir probability to survive and grow in doing so we have collected highly detailed information on product introduction us patents granted worldwide alliances and biographical data of fir founders 2004 elsevier b v all rights reserved jel classificatio m13 l86 o32

the life duration of small firms born within a start up programme evidence from italy del monte a and scalera d 2001 the life duration of small firms born within a start up programme evidence from italy reg studies 35 11 21 we argue in this paper that the success of a subsidy programme should not be evaluated by comparing the survival rates of subsidized and non subsidized firms since the purpose of subsidies is to offset a gap with firms that do not need subsidies secondly we seek to identify the main factors avecting the death probability of small firms born within a start up programme to this end we conduct an empirical investigation of the firms supported by law 44 in italy between 1988 and 1997 finding that the amount of capital invested has a negative impact on life duration while the capital labour ratio and the amount of subsidy exert a positive influuence the main result is the unusual negative relationship between size and survival which we interpret in terms of the bias induced by subsidies in favour of larger and riskier firms del monte a et scalera d 200

persistence of initial debt in the long term employment dynamics of new firms this paper investigates whether a firm s future growth is independent of its initial debt structure the non parametric test consists of determining whether the conditional size distribution for firms surviving through early years of life depends upon debt to asset ratio at birth initially i test for initial size dependence in the growth process by applying pakes and ericson 1998 procedure i then test the hypothesis that initial debt to asset ratios are irrelevant to growth of ten year old manufacturing firms i reject the null of independence and find evidence of a non monotonic relationship between age ten conditional size and the initial debt to asset ratio ce texte examine la question a savoir si la croissance future d une firme depend de la structure initiale de sa dette le test non parametrique consiste a determine si la distribution conditionnelle de la taille des firmes qui survivent au cours des premieres annees depend du ratio dette actif a la naissance l auteur teste d abord l independance de la taille initiale et du processus de croissance a l aide de la procedure de pakes et ericson 1998 et ensuite l hypothese que le ratio initial dette actif n est pas pertinent pour expliquer la croissance de firmes manufacturieres qui ont survecu dix ans l hypothese nulle d independance est rejetee et on trouve trace d une relation non monotone entre la taille conditionnelle a dix ans et le ratio initial de la dette sur l actif

submarkets and the evolution of market structure we construct a model of industry evolution in which the central force for change is the creation and destruction of submarkets firms expand when they are able to exploit new opportunities that arrive in the form of submarkets they contract and ultimately exit when the submarkets in which they operate are destroyed this simple framework can transparently explain a wide range of well known regularities about industry dynamics most notably the subtle relationships between size age growth and survival data on the laser industry where submarkets are prominent further illustrate the ability of the model to explain distinctive patterns in the evolution of industries and firms

the impact of political majorities on firm value do electoral promises or friendship connections matter this paper simultaneously estimates the impact of political majorities on the values of firms that would benefit from the platforms of the two main candidates at the 2007 french presidential election segolene royal and nicolas sarkozy and of those that are ruled or owned by sarkozy s friends we use prediction market data to track each candidate s victory probability and investigate how this relates to firms abnormal returns our estimates suggest that the value of firms that would likely benefit from the platforms of royal and sarkozy changed by 1 and 2 respectively with the candidates victory probabilities and that firms connected to sarkozy out performed others by 3 due to his election

are policy platforms capitalized into equity prices evidence from the bush gore 2000 presidential election abstract this paper tests for the capitalization of policy platforms into equity prices using a sample of 70 firms favored under bush or gore platforms during the 2000 u s presidential election two sources of daily data during the six months leading up to the election are incorporated firm specific equity returns and the probability of a bush victory as implied by prices from the iowa electronic market for this group of politically sensitive firms the daily baseline estimates demonstrate that platforms are capitalized into equity prices under a bush administration relative to a counterfactual gore administration bush favored firms are worth 3 more and gore favored firms are worth 6 less implying a statistically significant differential return of 9 estimates based on weekly returns are even stronger suggesting a differential return of 16 the most sensitive sectors include tobacco worth 13 more under a favorable bush administration microsoft competitors worth 15 less under an unfavorable bush administration and alternative energy companies worth 16 less under an unfavorable bush administration a corresponding analysis of campaign contributions which allows for heterogeneity in the importance of policy platforms to the firms supports the baseline estimates

entrepreneurship human capital and labor demand a story of signaling and matching in contrast to employee qualifications there is no clear evidence that entrepreneurs qualifications positively affect their income in this study we propose that entrepreneurs can benefit from using their qualification as a signal during the process of recruiting employees this is assumed to follow a process of matching equals among equals we confirm a matching of qualification levels for highly skilled employees in denmark and an indication of this in germany partial support for matching among medium skilled employees was only found in germany with no consistent evidence of matching for low skilled employees in neither country this suggests that as skill levels of employees decrease their probabilities of working for different founders converge founders qualifications are the most reliable predictor of recruitment choices over time our findings are robust to numerous control variables as well as across industries and firm age

does entry size matter the impact of the life cycle and technology on firm survival a wave of empirical studies has recently emerged showing that smaller scale entry is confronted with a lower likelihood of survival than their larger counterparts the purpose of this paper is to examine whether the relationship between size of a firm when entering an industry and the likelihood of survival holds under different technological conditions and across the different stages of the industry life cycle the empirical evidence suggests that the relationship between firm size and the likelihood of survival is shaped by technology and the stage of the industry life cycle while the likelihood of survival confronting small entrants is generally less than that confronting their larger counterparts the relationship does not hold for mature stages of the product life cycle or in technologically intensive products in mature industries that are still technologically intensive entry may be less about radical innovation and possibly more about filling strategic niches thus negating the impact of entry size on the likelihood of survival

macroeconomic policy in a two party system as a repeated game this paper considers the interaction of two parties with different objectives concerning inflation and unemployment and rational and forward looking wage setters if discretionary policies are followed an economic cycle related to the political cycle results in equilibrium this cycle is significantly different from the traditional political business cycle reputational mechanisms due to the repeated interaction of the two parties and the public or commitments to a common policy rule can improve upon the discretionary outcome by reducing or eliminating the magnitude of the economic fluctuations

local economic gains from primary election spending this article asks how government and private consumption spending affect earnings in service sectors to do this we exploit the variation across states and time in the money spent while campaigning for a party s presidential primary nomination we create a novel data set combining the date each state held its primary from 1976 to 2008 the date in each election cycle in which only one candidate remained and quarterly state earnings by sector using an instrumental variable strategy we find that hosting a primary election increases earnings particularly in the retail and accommodation sectors these results remain consistent when using data on primary campaign expenditures across states in the 2004 and 2008 elections

employment growth determinants in new firms in eastern germany the unification of both germanies and the introduction of the market economy in eastern germany came as a shock to existing firms and led to an enormous boom in the establishment of new firms the first section of this paper shows that during the period under observation january 1991 june 1995 the number of firms nearly doubled and in 1995 nearly 50 of all jobs were to be found in firms established after 1991 shortly after unification a kind of start window existed during which the conditions for establishment growth and survival of firms were extraordinarily good the next section deals with the determinates of the growth of these newly founded firms most determinants have been selected on the basis of the most recent studies by bruderl preisendorfer and ziegler 1996 and storey 1994 the analysis included not only establishment characteristics but also strategic factors such as the technological status of the establishment the proportion of sales in interregional markets and a corporate competitive strategy indicator a comparison of these results with other studies shows that the determinants that affect employment growth in new firms in eastern german are apparently the same as in western germany and britain albeit to different extents

some models for estimating technical and scale inefficiencies in data envelopment analysis in management contexts mathematical programming is usually used to evaluate a collection of possible alternative courses of action en route to selecting one which is best in this capacity mathematical programming serves as a planning aid to management data envelopment analysis reverses this role and employs mathematical programming to obtain ex post facto evaluations of the relative efficiency of management accomplishments however they may have been planned or executed mathematical programming is thereby extended for use as a tool for control and evaluation of past accomplishments as well as a tool to aid in planning future activities the ccr ratio form introduced by charnes cooper and rhodes as part of their data envelopment analysis approach comprehends both technical and scale inefficiencies via the optimal value of the ratio form as obtained directly from the data without requiring a priori specification of weights and or explicit delineation of assumed functional forms of relations between inputs and outputs a separation into technical and scale efficiencies is accomplished by the methods developed in this paper without altering the latter conditions for use of dea directly on observational data technical inefficiencies are identified with failures to achieve best possible output levels and or usage of excessive amounts of inputs methods for identifying and correcting the magnitudes of these inefficiencies as supplied in prior work are illustrated in the present paper a new separate variable is introduced which makes it possible to determine whether operations were conducted in regions of increasing constant or decreasing returns to scale in multiple input and multiple output situations the results are discussed and related not only to classical single output economics but also to more modern versions of economics which are identified with contestable market theories

the structure of technical efficiency it is common practice to decompose measures of efficiency into component measures of technical and allocative efficiency in this paper we show how and why to decompose a general measure of technical efficiency into component measures of purely technical efficiency congestion and scale efficiency and we investigate the properties of each measure we do so for a multiple output technology which satisfies a weak axiom system that does not include either constant returns to scale or strong input disposability

did steve forbes scare the us municipal bond market abstract this paper investigates the relationship of the daily spread between taxable and municipal securities to a daily indicator of the likelihood of a tax reform that would eliminate the preference now accorded to municipal securities the flat tax the probability of tax reform is proxied by the market price of the shares of steve forbes a champion of the flat tax in the iowa electronic market we find evidence that the indicator of tax reform s prospects was correlated with a decline in the spread on five and ten year maturity bonds although not for 30 year maturity bonds the correlations do not however survive in first difference form suggesting either that forbes prospects did not immediately affect expectations of future tax policy that the correlations are coincidental rather than causal or that the decreased signal to noise ratio obscures a real but small causal relationship

the direct employment effects of new businesses in germany revisited an empirical investigation for 1976 2004 based on an improved and extended database the establishment history panel we extend the analysis of fritsch and weyh small business economics 27 2 245 260 2006 by investigating the development of employment in german start up cohorts for the period 1976 to 2004 we confirm the typical pattern found in start up cohorts an initial increasing number of employees that is soon followed by a decreasing number we also provide some of the first evidence for the liability of aging phenomena in germany older firms face a relatively high risk of exit we find that most entries with relatively large initial employment grow substantially in the first two decades however these businesses suffer from a considerable employment decline after 25 years

is success hereditary evidence on the performance of spawned ventures a common phenomenon in entrepreneurship is that employees turn away from employment to found their own businesses prior literature discusses the former employers characteristics that influence the creation of entrepreneurial ventures an investigation of whether these characteristics also affect the success of the spawned ventures is missing so far this paper contributes to the literature by showing that entrepreneurial ventures spawned by well performing firms are financially more successful than ventures stemming from poorly performing firms this suggests that spawned entrepreneurs are able to exploit valuable knowledge from their previous employers which impacts their ventures performance positively the analysis is based on a linked employee employer data set for the netherlands for the period 1999 2004

survival analysis of the spanish hotel industry abstract the main objective of this study is an analysis of survival in the spanish hotel industry we used a sample of 1033 hotels opened from 1997 to 2009 examining financial and non financial variables including size location type of hotel management economic and financial structure and the year they opened whether during an expansion or crisis period the methodology included an econometric analysis of survival using the non parametric kaplan meier estimator of constructed variables in order to detect the particular influence of each variable semi parametric regression was done with the cox proportional hazards model confirming which variables clearly influenced the survival of hotels and which signs existed for each analysed variables influence the survival of hotels depends on their size location management and launch in a time of prosperity however survival rates were not significantly tied to particular types of hotels or configurations of their economic and financial structures

one or more growth processes evidence from new italian firms the paper proposes a descriptive model of firm growth which assumes that learning processes are conditional on existing competencies of the firm and its founders we suggest the idea that firms who do not grow under all realizations of potentially profitable opportunities can be considered as zero learning in order to explain why some firms are zero learning and how these are different from growing ones we put forward and discuss the hypothesis that both start up size and founders pre entry history affect the firm s ability to adjust to market using a sample of 3 905 italian firms born in 1999 and 2000 we find that individual competencies influence start up size but not directly growth we also find a significant nonlinear relationship between start up size and growth implying that firms which were born smaller than a given size grow significantly less the results support the hypothesis that multiple and heterogeneous growth processes coexist and that the growth process of microfirms below a given organizational threshold may be structurally different in the long run from that of firms starting up above that threshold

the economic value of military connections in turkey can financial connections to the military provide economic value in democratic environments we address this question by studying whether firms in which the turkish military had a controlling financial interest earned abnormally high stock returns on the istanbul stock exchange our findings from event studies are that this is indeed the case we infer that militaries can retain substantial power to influence economic policy from behind the scenes even after formally transferring it to democratically elected leaders the paper contributes to the literature in public choice by demonstrating econometrically that the military can be a major rent seeking actor even in democratic environments

small business growth in the short run this paper examines the determinants of short run employment growth in very small firms in the services sector the study shows evidence of non linearities in the growth size relationship and it is argued that these non linearities reflect the short run constraints that small firms face in adjusting to demand shocks the paper also suggests that there are other systematic influences on growth apart from size the paper draws on survey evidence from the northern region of the united kingdom

company bankruptcies and births matter this paper constructs a simple supply orientated model of the economy in which company bankruptcies which lead to a loss of capital and births have impacts on macroeconomic variables bankruptcies will reduce output increase unemployment worsen the balance of payments and also impact upon inflation empirical work based on data from both the usa and the uk finds a significant granger causality relationship between bankruptcies and births and these four macroeconomic variables the standard granger causality regression is supplemented by non linear granger causality tests

credibility and policy convergence in a two party system with rational voters the traditional approach to modeling political parties behavior based upon the contribution of anthony downs 1957 assumes that the parties unique objective is to win elections thus they maximize their popularity the crucial implication of this assumption for a two party system is that if the two parties have the same information about voters preferences full convergence of policies results from electoral competition this is the crucial implication of the median voter theorem more generally it may be argued that different parties are motivated differently because they represent different constituencies parties may not care only about winning elections per se but also about the quality of the policies resulting from an election in this case the candidates of the two parties view winning an election not only as a goal per se but also as a means of implementing a better policy for their respective constituencies this paper shows that electoral competitions imply dynamic inconsistency if the voters are modeled as rational and forwardlooking agents and parties do not care exclusively about being elected but also about which policy to implement once elected the dynamic inconsistency arises as follows the parties have an incentive to announce convergent platforms to increase their chances of election however if the elected party is not committed to its electoral platform it has an incentive to follow its most preferred policy rather than the policy announced in its platform if voters are rational they account for this incentive thus in general in a one shot electoral game the only timeconsistent equilibrium is one in which no convergence is possible the two parties follow their most preferred policies and the voters rationally expect this outcome full convergence of parties platforms results only as a limiting case when the parties are completely indifferent with respect to the quality of the policies resulting from the election thus these results differ from the existing literature on ideologically motivated politicians for instance donald wittman 1977 1983 randall calvert 1985 which implicitly assumes the possibility of binding commitments to electoral platforms complete or partial policy convergence can be the outcome of political competition if the interaction between the parties and the voters is modeled as an infinitely repeated game in fact if the candidates have concave objective functions the welfare maximizing policy rule implies a complete convergence of parties policies however this cooperative and agreed upon policy may or may not be sustainable as a subgame perfect equilibrium depending on parameter values in particular it depends on the discount rates of the two parties the degree of polarization of their preferences and the relative popu graduate school of industrial administration carnegie mellon university pittsburgh pa 15213 and national bureau of economic research cambridge ma 02138 this paper is based upon a chapter of my unpublished doctoral dissertation at harvard university i am greatly indebted to jeffrey sachs for directing my attention toward these issues and for many conversations i also wish to thank andrew abel dilip abreu olivier blanchard ramon caminal andrew caplin alex cukierman morris fiorina benjamin friedman herschel grossman howard rosenthal and the referees for very useful comments the responsibilitv af anv n mtnkieis af calrirp nfnlv mine the result of policy convergence in a two party system is more general than the median voter theorem for discussions of convergence results not at the median see john ledyard 1984 peter coughlin 1984 coughlin and shmuel nitzan 1981 melvin hinich 1977 for earlier work on spatial competition see richard mckelvey 1975 hinich ledyard and peter ordeshook 1972 1973 and the references quoted therein the present paper focuses on the result of convergence rather than on the median voter theorem per se

accounting for endogeneity when assessing strategy performance does entry mode choice affect fdi survival firms choose strategies based on their attributes and industry conditions therefore strategy choice is endogenous and self selected empirical models that do not account for this and regress performance measures on strategy choice variables are potentially misspecified and their conclusions incorrect i highlight how self selection on hard to measure or unobservable characteristics can bias strategy performance estimates and recommend an econometric technique that has been developed to account for this effect although this concern applies to a wide range of strategy questions to demonstrate its effect i empirically examine if entry mode choice acquisition versus greenfield influences foreign direct investment survival in specifications that do not account for self selection i find that greenfield entries have survival advantages compared to acquisitions this confirms previous findings however the significance of this effect disappears once i account for self selection of entry mode in the empirical estimates the results confirm that estimates from models that do not account for self selection of strategy choice can lead to incorrect or misleading conclusions

social networking websites who survives abstractthis article studies the relationship between the characteristics of social networking sites snss and their probability of survival the data sample includes 224 snss launched throughout the world from 1995 to 2015 and that can be described by focus strategy business financing methods and interactions with external companies such as partnerships mergers and acquisitions three factors are systematically associated with closure hazard rates first compared with snss that address a specialized audience generalist snss have a three times higher probability of closing second being the target of a merger or acquisition more than doubles the probability of closure third new entrants have higher probability to survive if compared with snss with experience in the industry

firm foundations and the role of financing constraints improving the economic conditions for small and medium sized firms as well as start ups is high on the agenda of policy makers in this paper we discuss some policy options for fostering the creation of new enterprises the discussion focuses on measures which aim at helping start ups to overcome liquidity constraints in order to provide the background for this discussion the paper provides some new empirical results on the determinants of firm foundations as well as some stylised facts on the occurence of liquidity constraints in west germany we analyse the regional distribution of start up intensity and offer several hypotheses to explain this distribution to a large extent the regional distribution of start ups can be explained by the existing industry structure regional human capital as well as the regional public traffic infrastructure moreover we show that liquidity constraints occur more often in small and young firms

understanding the theoretical and empirical content of critiques of u s job creation research although the hypothesis that small firms create the majority of net new jobs is widely believed a number of researchers have attacked this using empirical data since these attacks have been presented as corrections of past methodological errors their authors may influence policy makers this paper argues that the substance of these attacks is a difference in theoretical perspectives even though the researchers claim to focus on methodological differences this paper explains the two underlying economic theories and then reviews the job creation research to demonstrate the relationship between theory and methodology

the role of linkages in firm performance evidence from southern italy abstract this paper estimates the probability of success of post entry performance of new firms using survey data from a group of southern italian small firms several factors involving inter firm linkages contribute to success especially production for order and subcontracting the empirical investigation supports hirschman s idea on the industrialization process and positive assessments of the downsizing phenomenon in italy

what characterizes a fast growing firm this paper seeks to empirically identify factors that influence the probability of being a fast growing firm in eastern and western germany descriptive analyses have shown that most firms experience only small positive or negative employment growth or stagnate over time the job generation mechanism rests with a handful of firms that increase their employment significantly over time the empirical analysis shows that the probability of being a fast growing firm depends on different factors when separating eastern and western germany as well as using different definitions of fast growing firms moreover the analysis shows that technology intensive manufacturing branches and knowledge based business related services do not generate the majority of fast growing firms

examining political connections to study institutional change evidence from two unexpected election outcomes in south korea we argue that the analysis of multiple political connections in an event study framework can improve the study of institutional change based on a unique data set of multiple political relationships of 4 936 south korean board of director members we show that the large business conglomerates the chaebol did not benefit from the unexpected conservative election victories in the 2012 south korean parliamentary and presidential elections personal connections to the presidential candidates and to the opposition party were relevant for the stock returns of small firms our findings suggest that korea s political economy has evolved into a hybrid regime in which the political power of large multinational corporations is limited but political connections still matter for smaller firms the corruption scandal that led to the impeachment of president park in 2017 and the long term development of market capitalisation appear to be congruent with the results of our study

how does corporate political activity allowed by citizens united v federal election commission affect shareholder wealth abstractthe us supreme court case citizens united v federal election commission significantly altered the regulatory landscape for corporate political activity by permitting unlimited corporate expenditures by independent politically active groups this paper uses that event to determine the impact of corporate political activity on the stock prices of those firms that are most likely to utilize these new opportunities for political engagement our findings show that corporate political activity enhances shareholder wealth particularly in firms that are small to medium sized firms that spend relatively less on lobbying and firms operating in more heavily regulated industries

the death of firms exploring the effects of environment and birth cohort on firm survival in sweden this paper investigates the death of firms and seizes a long term perspective it investigates the life spans of nearly 2 200 firms in seven birth cohorts of swedish joint stock companies founded during seven separate years between 1899 and 1950 research has traditionally emphasized individual and micro oriented factors in explaining post entry performance or has often focused on the influence of firm specific structural factors firm age and size a less attended field recognizes environmental forces this paper focuses on the interaction between the micro and macro levels and combines structural and environmental factors employing a cohort approach it relates firm survival to firm age and size as well as to the effect of cohort affiliation and environmental change over time period effects during macroeconomic expansion the risk of death decreases cohort effects are also evident firms founded during times of economic crisis exhibit lower survival rates consequently cohort affiliation and environmental forces i e period effects can explain differences in death rates in different firm populations

capitalization of capital gains taxes evidence from stock price reactions to the 1997 rate reduction abstract we empirically document that stock prices moved inversely with dividend yields during the may 1997 week when the white house and congress agreed on a budget accord that included a reduction in the capital gains tax rate the findings are consistent with equity prices capitalizing expected capital gains taxes two scenarios are possible first to the extent returns are expected to be taxed as capital gains a reduction in the expected capital gains tax rate enhances market value second to the extent individuals hold a stock a reduction in the expected personal capital gains tax rate increases market value

us presidential elections and implied volatility the role of political uncertainty abstract this paper focuses on the effects of political uncertainty and the political process on implied stock market volatility during us presidential election cycles using monthly iowa electronic markets data over five elections we document that stock market uncertainty as measured by the vix volatility index increases along with positive changes in the probability of success of the eventual winner the association between implied volatility and the election probability of the eventual winner is positive even after controlling for changes in overall election uncertainty these findings indicate that the presidential election process engenders market anxiety as investors form and revise their expectations regarding future macroeconomic policy

suckers are born but markets are made individual rationality arbitrage and market efficiency on an electronic futures market the iowa electronic markets are specially designed futures markets that appear to aggregate information efficiently to predict events such as election outcomes yet in theory perfect information aggregation is impossible further the markets are populated by a nonrepresentative sample of mistake prone and biased traders that is traders are prone to the behavioral anomalies predicted by behavioral finance how can this be reconciled with market efficiency here we take a first step by analyzing the behavior of two self selected types of traders dramatic differences in mistake rates across traders can help us answer the question market making traders who set prices are less mistake prone and appear to be more rational than price taking traders this highlights an important feature of markets marginal in this case market making not average traders set prices this can drive the efficiency of market prices in spite of large numbers of traders who display patently suboptimal behavior

campaign contributions as investments the u s house of representatives 1980 1986 this paper treats the market for special interest campaign contributions and political favors as a simple asset market the model yields a simple equilibrium relationship among three variables the total amount of investor contributions a candidate receives the monetary value of the favors he has promised and his probability of winning using data on open seat races for the u s house of representatives i confront the model with a series of tests despite the starkness of the model the results of these tests are highly supportive

firm spin offs in denmark 1981 2000 patterns of entry and exit abstract this paper adds large sample evidence on the extent to which the likelihood of business failure or success is related to relationships between parent firms and their off spring for this purpose we make use of an exhaustive matched employer employee data set covering the entire danish private sector in years 1981 to 2000 to study firm entry and exit special focus is on spin offs a particular group of small entrants which are founded by groups of persons originating from the same former workplace we estimate a multinomial logit model in order to examine which characteristics of the founders and the parent firms increase the probability of spinning off next we carry out a duration analysis of the subsequent transitions of the spin offs and compare their exit risks with those of other entrant firms which have less strong parent progeny relationships in terms of worker flows

how much does violence tax trade abstract we investigate the empirical effect of violence as compared to other trade impediments on trade flows our analysis is based on a panel data set with annual observations on 177 countries from 1968 to 1999 which brings together information from the rose data set the iterate data set for terrorist events and data sets of external and internal conflict we explore these data with traditional and theoretical gravity models we calculate that for a given country year the presence of terrorism together with internal and external conflict is equivalent to as much as a 30 tariff on trade this is larger than estimated tariff equivalent costs of border and language barriers and tariff equivalent reduction through generalized systems of preference and wto participation

start up size and post entry performance the case of tourism services in italy a large and comprehensive longitudinal database is used to identify the start up of new firms in the italian tourist industry and their subsequent post entry performance analysed in particular is the link between the survival of hotels restaurants and catering firms in each italian region and their start up size by using logit estimation it is found that for eighteen out of twenty regions the relationship has the expected sign although only for twelve regions and the country as a whole did it turn out to be statistically significant

the jeffords effect abstract in may 2001 senator james jeffords left the republican party and tipped control of the u s senate to the democrats this paper uses the surprise event to demonstrate what i term the jeffords effect changes in the political landscape have large effects on the market value of firms i use a firm s soft money donations to the national parties as the measure of how the firm aligns itself politically in this event study a firm lost 8 percent of market capitalization the week of jeffords s switch for every 250 000 it gave to the republicans in the previous election cycle on the basis of the point estimates the stock price gain associated with democratic donations is smaller than the loss associated with republican donations but the estimates are consistent with the effects being equal and opposite the results withstand several robustness checks and the effects appear to persist over time

employment stability in newly founded firms a matching approach using linked employer employee data from germany using a linked employer employee dataset and taking the perspective of individuals rather than firms this paper analyzes some effects of joining startups we show that entrants in new firms differ from those joining incumbent firms and we use a matching approach to compare a group of employees joining new firms in 1995 1996 with a control group entering incumbent firms our results indicate that individuals employment stability was higher in incumbent than in newly founded firms while their risk of becoming unemployed was lower in particular in eastern germany joining firms that were older than 6 years improved individuals employment prospects

establishment exits in germany the role of size and age using comprehensive data for west germany this paper investigates the determinants of establishment exit we find that between 1975 and 2006 the average exit rate has risen considerably in order to test various liabilities of establishment survival identified in the literature we analyzed the impact of establishment size and put a special focus on differences between young and mature establishments our empirical analysis shows that the mortality risk falls with establishment size which confirms the liability of smallness the probability of exit is substantially higher for young establishments which are not more than 5 years old thus confirming the liability of newness there also exists a liability of aging since exit rates first decline over time reaching a minimum at ages 15 18 and then rise again somewhat the determinants of exit differ substantially between young and mature establishments suggesting that young establishments are more vulnerable in a number of ways

inverted u relationship between r d intensity and survival evidence on scale and complementarity effects in uk data existing evidence on the relationship between rd ii rd and iii creative destruction as proxied by median r d intensity in the industry and the premium on business lending have negative effects on firm survival other findings concerning age size productivity relative growth pavitt technology classes and the macroeconomic environment are in line with the existing literature the results are strongly or moderately robust to different samples stepwise estimations and controls for frailty and left truncation

why is there so little money in u s politics in this paper we argue that campaign contributions are not a form of policy buying but are rather a form of political participation and consumption we summarize the data on campaign spending and show through our descriptive statistics and our econometric analysis that individuals not special interests are the main source of campaign contributions moreover we demonstrate that campaign giving is a normal good dependent upon income and campaign contributions as a percent of gdp have not risen appreciably in over 100 years if anything they have probably fallen we then show that only one in four studies from the previous literature support the popular notion that contributions buy legislators votes finally we illustrate that when one controls for unobserved constituent and legislator effects there is little relationship between money and legislator votes thus the question is not why there is so little money politics but rather why organized interests give at all we conclude by offering potential answers to this question this abstract was borrowed from another version of this item

selection and firm survival evidence from the shipbuilding industry 1825 1914 several theories of firm performance can explain the well known observation that survival is positively related to age however a more mundane explanation selection bias driven by variations in firm quality may also underlie the phenomenon this paper employs a 90 year plant level panel data set on the u s iron and steel shipbuilding industry of the nineteenth and early twentieth centuries to discriminate between the explanations the shipbuilding industry exhibits the usual joint dependence of survival on age and size but this dependence is eliminated after controlling for heterogeneity by using preentry experience as a proxy for firm quality the evidence points to a dominant role for selection bias in creating the age dependence of survival at the same time preentry experience is found to have a large and extremely persistent effect on survival and this finding is inconsistent with standard explanations for the role of preentry experience on firm performance

do political factors affect stock returns during presidential elections abstract this study investigates whether or not political factors such as government policy and political connections affected stock returns during the 2008 taiwanese presidential election we find that firms that benefitted from were threatened by the proposed three links policy of the winning party experienced positive negative stock returns during the election we use the sensitivities of firms returns to bilateral trade flows between taiwan and china to measure the government policy effect our results show that the effects of political connections weakly exist but they become more significant when the support ratio of the winning party increased in polling data we also find that only the government policy effect holds for different crash risk and corporate governance levels finally investment strategies based on both political factors can generate positive abnormal returns with respect to the fama french three factor model

another look at the evidence for rational partisan cycles in presenting evidence in favor of rational partisan cycles where electoral victories by leftist parties are expected to create temporary expansions and electoral victories by rightist parties are expected to create temporary recessions alesina cohen and roubini 1999 rely upon autoregressive time series intervention regressions these regressions however are not consistent with their model in this paper a model is derived which is consistent with the intervention approach in its reduced form the differences between the models are highlighted and new empirical estimates are presented on a panel of seven oecd nations which generally does not support the rational partisan cycle implications

measuring productivity growth under factor non substitution an application to us steam electric power generation utilities a theoretical framework is developed for decomposing partial factor productivity and measuring technical inefficiency when the underlying technology is characterized by factor non substitution with farrell s 1957 radial index of technical inefficiency being inappropriate in this case russell non radial indices are adapted to measure technical inefficiency in a leontief type model a system of factor demand equations with a regime specific technical inefficiency term is proposed and estimated allowing for dependence across inputs using a copula approach then the paper presents a complete decomposition of partial factor productivity changes using a dataset of us steam power electric generation utilities

the survival and growth of new establishments in sweden 1987 1995 the aim of the study is to examine the survival of new establishments and to identify factors affecting their survival probability and their employment growth this study uses a unique data set on all new establishments that were created in sweden 1987 and 1988 with the exception of the construction industry the results show among others that i new establishments face a high risk of closing down ii the probability of establishment survival increases with the age and size of the establishment iii variables that are assumed to measure access to resources being a part of a multi unit firm and being new due to merger or dispersal have a positive effect on survival iv the number of employees at the start up year has a negative effect on the employment growth and v demographic and educational factors are important in explaining survival and growth

wishes expectations and actions a survey on price formation in election stock markets abstract with error prone and biased individual traders can markets aggregate trader information and produce efficient outcomes we review election stock market evidence that suggests this does happen individual traders appear biased and error prone consistently yet these markets prove quite efficient in predicting election outcomes we also review work which documents comparable but substantially different phenomena in related laboratory markets in addition we report the results from a new laboratory session which shows how we can create particular biases that mirror those in election stock markets finally we discuss how combined laboratory and field experiments can help us understand trader market interactions

the effects of media slant on firm behavior abstract the media can impose reputational costs on firms because of its important role as an information intermediary and its ability to negatively slant coverage we exploit a quasi natural experiment that holds constant the information event across firms but varies the availability of a major news outlet in local markets we find that firms subject to the threat of slanted coverage suppress the release of negative information before the event and release it subsequently our results are consistent with theory on the active role firms can play in managing their reputational capital through anticipatory actions to avoid negative media coverage

collateral damage trade disruption and the economic impact of war abstract conventional wisdom in economic history suggests that conflict between countries can be enormously disruptive of economic activity especially international trade we study the effects of war on bilateral trade with available data extending back to 1870 using the gravity model we estimate the contemporaneous and lagged effects of wars on the trade of belligerent nations and neutrals controlling for other determinants of trade as well as the possible effects of reverse causality we find large and persistent impacts of wars on trade national income and global economic welfare we also conduct a general equilibrium comparative statics exercise that indicates costs associated with lost trade might be at least as large as the conventionally measured direct costs of war such as lost human capital as illustrated by case studies of world wars i and ii

do epa defendants prefer republicans evidence from the 2000 election i introduction there is an extensive body of literature documenting the effects of political interference in bureaucratic agencies much of this deals with the enforcement of antitrust disputes as mediated by the federal trade commission a corresponding literature on the political control of the environmental bureaucracy does not exist however there is a perception that the aggressiveness of environmental protection agency epa enforcement could vary from one administration to the next 1 the present article aims to subject these anecdotal impressions to empirical tests it uses the change in the price of publicly quoted companies that have civil judicial litigation outstanding with the epa when a political event takes place such as a presidential election to assess the market s reaction to this event ii literature review the biggest problem in doing empirical studies of the effect of political and legislative changes on stock market valuations is the fact that these changes happen slowly over a period of months or years given the assumption of efficient markets stock markets should immediately reflect all available information including the possibility of political changes this is the reason why studies of the effect of legislation and political change on market valuations have generally found insignificant results as in binder 1985 cutler 1988 downs and tehranian 1988 and graddy et al 1992 2 this article uses a better measure of the probability of a political event the measure of the probability of the outcome of an election is obtained from the iowa electronic market iem only herron et al 1999 and knight forthcoming have used this data source for similar purpose before 3 the iem is a set of continuous double auction markets operated by the university of iowa henry b tippie school of business most of the existing literature in this field has used opinion poll data such as brander 1991 the disadvantages of this are well known they are usually conducted over several days and so do not represent the probability of the election of a candidate on a single day they do not represent probabilities of election but rather expected vote shares they are not usually released daily and finally they have wide margins of error especially long before an election when many people have not yet made up their minds who to support herron et al 1999 pp 58 59 these are also some of the reasons that economists are generally skeptical of surveys preferring to rely instead on revealed preferences the only other possibility is the use of bookmaker s odds as used by roberts 1990b this still has the disadvantage that odds are not quoted daily and so must be interpolated also the present study attempts to measure the importance of political control of the environmental bureaucracy the existing literature focused on a variety of other federal agencies and industries iii data and empirical model data the dependent variable used here is the abnormal daily returns to the stock market price of a company that has environmental litigation outstanding on the day of an election the idea is that if the market considers the company to be politically sensitive then the returns to the company s shares should respond to changes in the probability of a political event as reported by the iem the stock market data comes from the center for research in security prices cr sp 4 the article uses individual company returns as opposed to the construction of portfolios of stocks that are then combined with data on returns to the portfolio as used by roberts 1990b and herron et al 1999 the present paper uses interaction terms between the likelihood of political events and individual characteristics of the companies such as the industry that they are in and the number of times they have been sued before this is not possible when aggregate portfolio returns are used because that would not allow the isolation of disaggregated individual company effects

do newly founded firms pay lower wages first evidence from germany using a linked employer employee data set for germany this paper analyses wage setting in a cohort of newly founded and other establishments from 1997 to 2001 while theory provides alternative explanations for higher or lower wages in newly founded firms we show empirically that start ups tend to pay lower wages ceteris paribus on average wages in newly founded establishments are 8 lower than in similar incumbent firms this negative wage differential is substantially smaller in eastern than in western germany the wage differ ential is shown to decline over time as the newly founded firms become more mature

trading and voting complete financial markets transform the political choice between candidates with different redistribution policies if redistribution policies do not affect aggregate wealth then financial trade implies that wealth considerations have no effect on voting and so do not affect who wins however an election in which one candidate would redistribute results in redistribution and redistribution is the same whether or not he wins furthermore he proposes and if elected carries out more redistribution than he prefers if redistribution policies do affect aggregate wealth then everybody expects more wealth if the candidate with the higher aggregate wealth policy wins

determinants of firm start up size an application of quantile regression for ireland in this paper we provide empirical evidence on the determinants of firm start up size using data for the manufacturing sector in ireland and compare our results with recent findings for portuguese manufacturing industries mata and machado 1996 to allow for firm heterogeneity between firm entrants we use quantile regression techniques for our empirical estimation we find that the determinants of start up size differ in their importance for small and large scale entrants in particular industry size and industry growth seem to affect large scale entrants only

can we insure against political uncertainty evidence from the u s stock market i show that shares currently traded on u s stock markets can be used to hedge political uncertainty focusing on the 2000 u s presidential election i construct two presidential portfolios composed of selected stocks anticipated to fare differently under a bush versus a gore presidency to construct these portfolios i use data on campaign contributions by publicly traded corporations and identify the major contributors on each side using daily observations for the six months before the election took place i show that the excess returns of these portfolios with respect to overall market movements are significantly related to changes in electoral polls

the life history of cohorts of exits from german manufacturing an investigation of the life history of three cohorts of exits based on longitudinal data covering the population of all manufacturing firms in a german federal state reveals three empirical regularities 1 although the probability of exit tends to decline with age ceteris paribus only about a quarter of all exits is from the group of young firms aged five years or less 2 only a minor fraction of exits lived through a period of continous decline of employment for five years or more before closing down 3 the impact effect of job loss due to exits can differ sharply from the long run effect

is subsidizing entry an optimal policy public subsidies in support of new firm foundation are among the most frequently used instruments of industrial policy in the euro zone this paper analyses their effectiveness and efficiency vis a vis some features of the overall process of industry dynamics in italian manufacturing to this end the survival and growth patterns of new small firms are investigated using a unique dataset on electrical and electronic engineering in italy as regards survival our results confirm the findings of other studies namely that the hazard rates are particularly high in the early stages of firm s life cycle as far as growth is concerned the study s main finding is that gibrat s law fails to hold in the years immediately following start up when smaller firms must rush in order to achieve a size large enough to enhance their likelihood of survival conversely in later stages of firm s life cycle the law cannot be rejected these results radically question the use of subsidies as an optimal policy for the support of new entries since the subsidy brings about a major bias in the process of market selection including substitution and deadweight effects and hampers the post entry scale adjustment of newborn firms

partisan impacts on the economy evidence from prediction markets and close elections analyses of the effects of election outcomes on the economy have been hampered by the problem that economic outcomes also influence elections we sidestep these problems by analyzing movements in economic indicators caused by clearly exogenous changes in expectations about the likely winner during election day analyzing high frequency financial fluctuations following the release of flawed exit poll data on election day 2004 and then during the vote count we find that markets anticipated higher equity prices interest rates and oil prices and a stronger dollar under a george w bush presidency than under john kerry a similar republican democrat differential was also observed for the 2000 bush gore contest prediction market based analyses of all presidential elections since 1880 also reveal a similar pattern of partisan impacts suggesting that electing a republican president raises equity valuations by 2 3 percent and that since ronald reagan republican presidents have tended to raise bond yields

electoral competition and special interest politics have fixed positions on some issues but vary their positions on others in order to attract votes and campaign contributions in this context we examine whether special interest groups are governed by an electoral motive or an influence in their campaign giving and how their contributions affect the equilibrium platforms we show that each party is induced to behave as if it were maximizing a weighted sum of the aggregate welfares of informed voters and members of special interest groups the party that is expected to win a majority of seats caters more to the special interests

the information content of elections and varieties of the partisan political business cycle this event study uses economic forecasts and opinion polls to measure the response of expectations to election surprise use of forecast data complements older work on partisan cycles by allowing a tighter link between election and response thereby mitigating concerns of endogeneity and omitted variables i find that forecasters respond swiftly and significantly to election surprise i further argue that the response ought to vary across countries with different institutional foundations in support i find that there exist three distinct patterns in forecasters responses to partisan surprise corresponding to hall and soskice s three varieties of capitalism

causes and effects of financing constraints at the firm level this paper focuses on the empirical assessment of determinants and effects of financing constraints at the firm level using a standard model of credit rationing based on asymmetric information firm age and size are found to be factors which should influence the probability of financing constraints improving business conditions strengthen the degree of informational asymmetry a unique panel of firm data for germany including direct information on financing constraints is used for the econometric analysis firms size and improving business conditions are found to have a significant effect furthermore a significant impact on investment and r d expenditures cannot be rejected

semi radial technical efficiency measurement semi radial efficiency measurement combines technical efficiency as captured by the classical farrell measure with an economically meaningful mix efficiency component the semi radial evaluation we propose proceeds in two steps first we build on the price interpretation of the generally accepted koopmans efficiency notion to characterize appropriate benchmarks next we present both a quantity based distance measure and its dual price based equivalent to evaluate the mix efficiency factor the type of measures we propose may e g be used to provide a price rationale for the zieschang technical efficiency evaluation procedure

the post entry performance of new small firms in german manufacturing industries while recent years have witnessed a growing interest in research on market entry by new firms evidence regarding their postentry performance is scarce this paper uses longitudinal data for small firms that entered german manufacturing industries between 1979 and 1982 and monitors their performance until 1990 entrants face a high risk of failure hazard rates tend to increase during the first years and to decrease afterwards decline of employment in a cohort due to exits and shrinking firms is compensated by growing survivors no clear cut nexus between start up size and probability of survival shows up copyright 1994 by blackwell publishing ltd

product mixes as objects of choice in non parametric efficiency measurement abstract non radial measures of technical efficiency essentially differ from their radial counterparts in that the product mix of the efficient reference is allowed to be different from the product mix of the evaluated observation whereas existing non radial measures are still based on the product mix of the evaluated i e possibly inefficient observation we change the perspective and propose a measure based on the mix properties of the efficient reference the resulting inverse measure can be considered as complementary to the fare lovell or russell efficiency measure

historical presidential betting markets this paper analyzes the large and often well organized markets for betting on u s presidential elections that operated between 1868 and 1940 four main points are addressed first we show that the market did a remarkable job forecasting elections in an era before scientific polling second the market was fairly efficient despite the limited information of participants and active attempts to manipulate the odds third we argue political betting markets disappeared largely because of the rise of scientific polls and the increasing availability of other forms of gambling finally we discuss lessons this experience provides for the present

an analysis of new firm survival using a hazard function a unique data set is used to provide a detailed examination of the survival of newly established manufacturing firms in north east england using data on 781 firms established between 1973 and 2001 log logistic hazard models are estimated separately for i micro enterprises and ii small and medium establishments smes both micro enterprises and smes show clear evidence of positive duration dependence followed by negative duration dependence we find the two firm types are differentially affected by firm specific and macro economic variables increases in initial plant size impact negatively on micro enterprise survival and positively on sme survival

elections and political risk new evidence from the 2008 taiwanese presidential election abstract we examine the effects of party platforms on the economic opportunities of firms using a unique data set from a political prediction market in taiwan a country with two dominant parties whose political cleavage derives mainly from a single issue the one china principle we find that during the 2008 presidential campaign the share price of taiwanese firms with investments in the mainland responded strongly and positively to a positive electoral outlook for the kmt the party which advocates lifting caps on cross strait investment in mainland china the response is strongest for those firms who have already hit their caps

the impact of initial financial state on firm duration across entry cohorts recent theories of industry dynamics emphasize the role of financial frictions in determining post entry performance of firms testing these theories has been dicult because of the lack of financial data on the small young and private firms using a unique data set this paper considers the survival of new firm in canadian manufacturing from a financial perspective duration analysis quantifies the eects of firm

measures of technical efficiency abstract fare and lovell j econom theory 19 1978 150 162 suggest four properties that a measure of technical efficiency should satisfy the commonly employed debreu farrell measure fails three of them necessary and sufficient conditions for a measure to satisfy the four conditions are provided and recently proposed measures are analyzed in the light of this result also it is argued that the debreu farrell measure has several desirable properties when one takes account of 1 perhaps unknown market prices and the relationship between technical and economic efficiency and 2 its characterization as a measure of economic efficiency using the shadow prices implicit in the production technology

us based ngos in international development financial and economic determinants of survival summary the accountability of non governmental organizations ngos has various dimensions from an economic perspective official financiers private donors as well as aid recipients could expect more charitable output from ngos if less efficient organizations were squeezed out of international development activities we consider administrative overheads as an important aspect of ngo efficiency our empirical analysis focuses on the effects of administrative overheads public funding and the interrelations between these two factors on the probability of market exit for almost 900 us based ngos with overseas aid activities since the mid 1980s we find that larger administrative overheads increase the probability of exit for ngos receiving any public funding however this effect weakens with increasing shares of public funding of ngos

lending competition and credit availability for new firms empirical study with the price cost margin in regional loan markets abstract in this paper i present statistical evidence of the impact of lending competition on credit availability for new firms a discrete time duration analysis with respect to the years from the start up to the first loan approval by a commercial bank or a cooperative bank which is collected from survey data in japan shows that the higher price cost margin pcm of banks which reflects the existence of a quasi rent for a bank improves the credit availability for younger firms additional analysis to detect the regional determinants of the pcm of banks shows that the share of larger banks in each local credit market has a negative and significant impact on the pcm in light of the existing empirical finding that smaller banks are more likely to provide relationship banking these findings provide indirect evidence for the hypothesis that the intensity of relationship banking in each local credit market increases the pcm and this encourages banks to extend a loan to new firms so that they can pre empt the opportunity to establish lending relationships that are expected to yield such quasi rents

event studies in economics and finance the event study is an important research tool in economics and finance the goal of an event study is to measure the effects of an economic event on the value of firms event study methods exploit the fact that given rationality in the marketplace the effects of an event will be reflected immediately in security prices thus the impact can be measured by examining security prices surrounding the event in this paper event study methods are described including some of the potential complications an example is included to illustrate the approach

the determinants of smes market share in 1991 taiwan manufacturers small and medium sized enterprises smes have become increasingly popular in recent decades having caused concern among scholars of various areas our line of research focuses on the determinants of smes market share this study explores the topic base on taiwan s manufacturers data collected in 1991 our empirical results indicate that taiwan has witnessed smes becoming prosperous in manufacturing industries with higher relative labor productivity low entry barriers prosperous subcontracting activities and young ages our results indicate that in the transitory process of industrial development taiwan s smes no longer can afford high wage payments when at the same time the quality of labor does not increase accordingly as taiwan approaches the status of a developed economy the beneficiaries of export activities have changed unlike 1986 in 1991 there was a smaller share of smes in taiwan s export oriented industries furthermore smes benefited from their efforts to increase their automation status the emphasis on issues concerning environmental protection proved to be another source of entry barrier that kept smes from prospering certain similarities arise when comparing our conclusions with those of the u s canada germany and japan all of whom represent industrialized countries we can conclude that as taiwan matures in her industrial development process smes also struggle to a certain maturity in theirs

does gibrat s law hold evidence from canadian retail and manufacturing firms this paper investigates the validity of gibrat s law holding for firms in manufacturing and retail trade sectors the object is to expand our knowledge of gibrat s law to include non manufacturing firms a unique longitudinal firm level database which contains information on canadian incorporated establishments enables the inter industry comparison the findings of the analysis are that gibrat s law is violated in both manufacturing and retail sectors violations of gibrat s law for both sectors include i growth rates that depend on firm size ii growth variability that depends on firm size and iii a negative persistence of firm growth finally age effects or selection effects are not the causes of these violations