Do Politicians Affect Firm Outcomes? Evidence from Connections to the German Federal Parliament
André Diegmann, Laura Pohlan, Andrea Weber
IWH Discussion Papers,
No. 15,
2024
Abstract
We study how connections to German federal parliamentarians affect firm dynamics by constructing a novel dataset to measure connections between politicians and the universe of firms. To identify the causal effect of access to political power, we exploit (i) new appointments to the company leadership team and (ii) discontinuities around the marginal seat of party election lists. Our results reveal that connections lead to reductions in firm exits, gradual increases in employment growth without improvements in productivity. The economic effects are mediated by better credit ratings while access to subsidies or procurement contracts are documented to be of lower importance.
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Does IFRS Information on Tax Loss Carryforwards and Negative Performance Improve Predictions of Earnings and Cash Flows?
Sandra Dreher, Sebastian Eichfelder, Felix Noth
Journal of Business Economics,
January
2024
Abstract
We analyze the usefulness of accounting information on tax loss carryforwards and negative performance to predict earnings and cash flows. We use hand-collected information on tax loss carryforwards and corresponding deferred taxes from the International Financial Reporting Standards tax footnotes for listed firms from Germany. Our out-of-sample tests show that considering accounting information on tax loss carryforwards does not enhance performance forecasts and typically even worsens predictions. The most likely explanation is model overfitting. Besides, common forecasting approaches that deal with negative performance are prone to prediction errors. We provide a simple empirical specification to account for that problem.
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Searching where Ideas Are Harder to Find – The Productivity Slowdown as a Result of Firms Hindering Disruptive Innovation
Richard Bräuer
IWH Discussion Papers,
No. 22,
2023
Abstract
This paper proposes to explain the productivity growth slowdown with the poaching of disruptive inventors by firms these inventors threaten with their research. I build an endogenous growth model with incremental and disruptive innovation and an inventor labor market where this defensive poaching takes place. Incremental firms poach more as they grow, which lowers the probability of disruption and makes large incremental firms even more prevalent. I perform an event study around disruptive innovations to confirm the main features of the model: Disruptions increase future research productivity, hurt incumbent inventors and raise the probability of future disruption. Without disruption, technology classes slowly trend even further towards incrementalism. I calibrate the model to the global patent landscape in 1990 and show that the model predicts 52% of the decline of disruptive innovation until 2010.
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Department Profiles
Research Profiles of the IWH Departments All doctoral students are allocated to one of the four research departments (Financial Markets – Laws, Regulations and Factor Markets –…
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Homepage
IWH Summer Forecast The German economy is still on the defensive, but signs of an end to the downturn are increasing. Production expands only modestly during summer. From the…
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Charts
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East Germany
The Nasty Gap 30 years after unification: Why East Germany is still 20% poorer than the West Dossier In a nutshell The East German economic convergence process is hardly…
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IWH Subsidy Database
Background Every year, companies in Germany receive subsidies from the German state, the Laender, and the European Union. These are quite high, ranging in double-digit billion…
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Behaviour
The maths behind gut decisions First carefully weigh up the costs and benefits and then make a rational decision. This may be the way we want it to be. But in reality, invisible…
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CompNet Database
The CompNet Competitiveness Database The Competitiveness Research Network (CompNet) is a forum for high level research and policy analysis in the areas of competitiveness and…
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