Employee Treatment and Contracting with Bank Lenders: An Instrumental Approach for Stakeholder Management
Bill Francis, Iftekhar Hasan, Liuling Liu, Haizhi Wang
Journal of Business Ethics,
2019
Abstract
Adopting an instrumental approach for stakeholder management, we focus on two primary stakeholder groups (employees and creditors) to investigate the relationship between employee treatment and loan contracts with banks. We find strong evidence that fair employee treatment reduces loan price and limits the use of financial covenants. In addition, we document that relationship bank lenders price both the levels and changes in the quality of employee treatment, whereas first-time bank lenders only care about the levels of fair employee treatment. Taking a contingency perspective, we find that industry competition and firm asset intangibility moderate the relationship between good human resource management and bank loan costs. The cost reduction effect of fair employee treatment is stronger for firms operating in a more competitive industry and having higher levels of intangible assets.
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Do Asset Purchase Programmes Shape Industry Dynamics? Evidence from the ECB's SMP on Plant Entries and Exits
Manfred Antoni, Talina Sondershaus
IWH Discussion Papers,
No. 12,
2019
Abstract
Asset purchase programmes (APPs) may insulate banks from having to terminate relationships with unproductive customers. Using administrative plant and bank data, we test whether APPs impinge on industry dynamics in terms of plant entry and exit. Plants in Germany connected to banks with access to an APP are approximately 20% less likely to exit. In particular, unproductive plants connected to weak banks with APP access are less likely to close. Aggregate entry and exit rates in regional markets with high APP exposures are also lower. Thus, APPs seem to subdue Schumpeterian cleansing mechanisms, which may hamper factor reallocation and aggregate productivity growth.
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National Culture and Risk-taking: Evidence from the Insurance Industry
Chrysovalantis Gaganis, Iftekhar Hasan, Panagiota Papadimitri, Menelaos Tasiou
Journal of Business Research,
April
2019
Abstract
The gravity of insurance within the financial sector is constantly increasing. Reasonably, after the events of the recent financial turmoil, the domain of research that examines the factors driving the risk-taking of this industry has been signified. The purpose of the present study is to investigate the interplay between national culture and risk of insurance firms. We quantify the cultural overtones, measuring national culture considering the dimensions outlined by the Hofstede model and risk-taking using the ‘Z-score’. In a sample consisting of 801 life and non-life insurance firms operating across 42 countries over the period 2007–2016, we find a strong and significant relationship among insurance firms' risk-taking and cultural characteristics, such as individualism, uncertainty avoidance and power distance. Results remain robust to a variety of firm and country-specific controls, alternative measures of risk, sample specifications and tests designed to alleviate endogeneity.
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Potential International Employment Effects of a Hard Brexit
Hans-Ulrich Brautzsch, Oliver Holtemöller
Abstract
We use the World Input Output Database (WIOD) to estimate the potential employment effects of a hard Brexit in 43 countries. In line with other studies we assume that imports from the European Union (EU) to the UK will decline by 25% after a hard Brexit. The absolute effects are largest in big EU countries which have close trade relationships with the UK like Germany and France. However, there are also large countries outside the EU which are heavily affected via global value chains like China, for example. The relative effects (in percent of total employment) are largest in Malta and Ireland. UK employment will also be affected via intermediate input production. Within Germany, the motor vehicle industry and in particular the “Autostadt” Wolfsburg are most affected.
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Urban Occupational Structures as Information Networks: The Effect on Network Density of Increasing Number of Occupations
Shade T. Shutters, José Lobo, Rachata Muneepeerakul, Deborah Strumsky, Charlotta Mellander, Matthias Brachert, Teresa Farinha, Luis M. A. Bettencourt
Plos One,
forthcoming
Abstract
Urban economies are composed of diverse activities, embodied in labor occupations, which depend on one another to produce goods and services. Yet little is known about how the nature and intensity of these interdependences change as cities increase in population size and economic complexity. Understanding the relationship between occupational interdependencies and the number of occupations defining an urban economy is relevant because interdependence within a networked system has implications for system resilience and for how easily can the structure of the network be modified. Here, we represent the interdependencies among occupations in a city as a non-spatial information network, where the strengths of interdependence between pairs of occupations determine the strengths of the links in the network. Using those quantified link strengths we calculate a single metric of interdependence–or connectedness–which is equivalent to the density of a city’s weighted occupational network. We then examine urban systems in six industrialized countries, analyzing how the density of urban occupational networks changes with network size, measured as the number of unique occupations present in an urban workforce. We find that in all six countries, density, or economic interdependence, increases superlinearly with the number of distinct occupations. Because connections among occupations represent flows of information, we provide evidence that connectivity scales superlinearly with network size in information networks.
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Benchmark Value-added Chains and Regional Clusters in R&D-intensive Industries
Reinhold Kosfeld, Mirko Titze
International Regional Science Review,
No. 5,
2017
Abstract
Although the phase of euphoria seems to be over, policy makers and regional agencies have maintained their interest in cluster policy. Modern cluster theory provides reasons for positive external effects that may accrue from interaction in a group of proximate enterprises operating in common and related fields. Although there has been some progress in locating clusters, in most cases only limited knowledge on the geographical extent of regional clusters has been established. In the present article, we present a hybrid approach to cluster identification. Dominant buyer–supplier relationships are derived by qualitative input–output analysis from national input–output tables, and potential regional clusters are identified by spatial scanning. This procedure is employed to identify clusters of German research and development-intensive industries. A sensitivity analysis reveals good robustness properties of the hybrid approach with respect to variations in the quantitative cluster composition.
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Non-linearity in the Finance-Growth Nexus: Evidence from Indonesia
Nuruzzaman Arsyad, Iftekhar Hasan, Wahyoe Soedarmono
International Economics,
August
2017
Abstract
This paper investigates the finance-growth nexus where bank credit is decomposed into investment, consumption, and working capital credit. From a panel dataset of provinces in Indonesia, it documents that higher financial development measured by financial deepening and financial intermediation exhibits an inverted U-shaped relationship with economic growth. This non-linear effect of financial deepening is driven by both investment credit and consumption credit. These results suggest that too much investment credit and, to a lesser extent, consumption credit are detrimental to economic growth. Ultimately, only financial intermediation associated with working capital credit has a positive and monotonic impact on economic growth.
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When the Meaning of Work Has Disappeared: Experimental Evidence on Employees’ Performance and Emotions
Adrian Chadi, Sabrina Jeworrek, Vanessa Mertins
Management Science,
No. 6,
2017
Abstract
This experiment tests for a causal relationship between the meaning of work and employees’ motivation to perform well. The study builds on an existing employer–employee relationship, adding realism to the ongoing research of task meaning. Owing to an unexpected project cancelation, we are able to study how varying the information provided about the meaning of previously conducted work — without the use of deception, but still maintaining a high level of control — affects subsequent performance. We observe a strong decline in exerted effort when we inform workers about the meaninglessness of a job already done. Our data also suggests that providing a supplemental alternative meaning perfectly compensates for this negative performance effect. Individual characteristics such as reciprocal inclinations and trust prompt different reactions. The data also show that the meaning of work affects workers’ emotions, but we cannot establish a clear relationship between emotional responses and performance.
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Do Local Banking Market Structures Matter for SME Financing and Performance? New Evidence from an Emerging Economy
Iftekhar Hasan, Krzysztof Jackowicz, Oskar Kowalewski, Łukasz Kozłowski
Journal of Banking and Finance,
2017
Abstract
This paper investigates the relationship between local banking structures and SMEs’ access to debt and performance. Using a unique dataset on bank branch locations in Poland and firm-, county-, and bank-level data, we conclude that a strong position for local cooperative banks facilitates access to bank financing, lowers financial costs, boosts investments, and favours growth for SMEs. Moreover, counties in which cooperative banks hold a strong position are characterized by a more rapid pace of new firm creation. The opposite effects appear in the majority of cases for local banking markets dominated by foreign-owned banks. Consequently, our findings are important from a policy perspective because they show that foreign bank entry and industry consolidation may raise valid concerns for SME prospects in emerging economies.
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Enforceability of Noncompetition Agreements and Firm Innovation: Does State Regulation Matter?
Desheng Yin, Iftekhar Hasan, Nada Kobeissi, Haizhi Wang
Innovation: Organization & Management,
No. 2,
2017
Abstract
In this study, we examine how noncompetition agreements and the mobility of human capital – a core asset of any firm – affect innovations of publicly traded firms in the United States. We find that firms in states with stricter noncompetition enforcement have fewer patent applications. We also examine patent forward citations and find that tougher enforcement of such contracts is associated with less innovative patents. Notably, we find that stronger enforcement of noncompetition agreements impedes innovation for firms facing intense industry labor mobility. High-powered, equity-based compensation positively moderates the relationship between noncompetition enforcement and innovation, but only for the quality of innovation.
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