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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The Levelling Effect of Product Market Competition on Gender Wage Discrimination
Boris Hirsch, Michael Oberfichtner, Claus Schnabel
IZA Journal of Labor Economics,
No. 19,
2014
Abstract
Using linked employer–employee panel data for West Germany that include direct information on the competition faced by plants, we investigate the effect of product market competition on the gender pay gap. Controlling for match fixed effects, we find that intensified competition significantly lowers the unexplained gap in plants with neither collective agreements nor a works council. Conversely, there is no effect in plants with these types of worker codetermination, which are unlikely to have enough discretion to adjust wages in the short run. We also document a larger competition effect in plants with few females in their workforces. Our findings are in line with Beckerian taste-based employer wage discrimination that is limited by competitive forces.
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College Choice Allocation Mechanisms: Structural Estimates and Counterfactuals
J.-R. Carvalho, T. Magnac, Qizhou Xiong
Abstract
We evaluate a simple allocation mechanism of students to majors at college entry that was commonly used in universities in Brazil in the 1990s and 2000s. Students first chose a single major and then took exams that select them in or out of the chosen major. The literature analyzing student placement, points out that this decentralized mechanism is not stable and is not strategy-proof. This means that some pairs of major & students can be made better off and that students tend to disguise their preferences using such a mechanism. We build up a model of performance and school choices in which expectations are carefully specified and we estimate it using cross-section data reporting choices between two medical schools and grade performances at the entry exams. Given those estimates, we evaluate changes in selection and students’ expected utilities when other mechanisms are implemented. Results highlight the importance of strategic motives and redistributive effects of changes of the allocation mechanisms.
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Lingering Illness or Sudden Death? Pre-exit Employment Developments in German Establishments
Daniel Fackler, Claus Schnabel, J. Wagner
Industrial and Corporate Change,
No. 4,
2014
Abstract
Using a large administrative data set for Germany, this article compares employment developments in exiting and surviving establishments. Applying a matching approach, we find a clear “shadow of death” effect reflecting lingering illness: in both West and East Germany establishments shrink dramatically already several years before closure, employment growth rates differ strongly between exiting and surviving establishments, and this difference becomes stronger as exit approaches. Moreover, we provide first evidence that prior to exit the workforce becomes on average more skilled, more female, and older in exiting compared to surviving establishments. These effects are more clearly visible in West than in East Germany.
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Is There a Gap in the Gap? Regional Differences in the Gender Pay Gap
Boris Hirsch, Marion König, Joachim Möller
Scottish Journal of Political Economy,
No. 4,
2013
Abstract
In this paper, we investigate regional differences in the gender pay gap both theoretically and empirically. Within a spatial model of monopsonistic competition, we show that more densely populated labour markets are more competitive and constrain employers’ ability to discriminate against women. Utilizing a large administrative data set for western Germany and a flexible semi-parametric propensity score matching approach, we find that the unexplained gender pay gap for young workers is substantially lower in large metropolitan than in rural areas. This regional gap in the gap of roughly 10 percentage points remained surprisingly constant over the entire observation period of 30 years.
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An Options-based Approach to Forecast Competing Bids: Evidence for Canadian Takeover Battles
Stefan Eichler, Dominik Maltritz
Applied Economics,
No. 34,
2013
Abstract
During takeover battles, a tender offer provides a call option right to the target’s shareholders: it guarantees the offered price but maintains the chance of a higher offer. We present an options-based approach to estimate the probability and expected value of higher competing takeover bids using target stock price data. Analysing Canadian takeover battles in the period 1997 to 2007 we find that during the 5 trading days prior to the occurrence of an increased takeover bid, the estimated probability of a higher bid exceeds 80% on average and the expected value of a potential competing bid almost matches the realized value.
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The Impact of Female Managers on the Gender Pay Gap: Evidence from Linked Employer–Employee Data for Germany
Boris Hirsch
Economics Letters,
No. 3,
2013
Abstract
We find that increasing the female share in first-level management by 10% points decreases the unexplained within-job gender pay gap by 0.5 log points. The effect is more pronounced for the female share in second-level than in first-level management.
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Women Move Differently: Job Separations and Gender
Boris Hirsch, Claus Schnabel
Journal of Labor Research,
No. 4,
2012
Abstract
Using a large German linked employer–employee data set and methods of competing risks analysis, this paper investigates gender differences in job separation rates to employment and nonemployment. In line with descriptive evidence, we find lower job-to-job and higher job-to-nonemployment transition probabilities for women than men when controlling for individual and workplace characteristics and unobserved plant heterogeneity. These differences vanish once we allow these characteristics to affect separations differently by gender. When additionally controlling for wages, we find that both separation rates are considerably lower and also significantly less wage-elastic for women than for men, suggesting an interplay of gender differences in transition behaviour and the gender pay gap.
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The Determinants of Inward Foreign Direct Investment in Business Services Across European Regions
Davide Castellani
Finanza e Statistica 104/2012,
2012
Abstract
The paper accounts for the determinants of inward foreign direct investment in business services across the EU-27 regions. Together with the traditional variables considered in the literature (market size, market quality, agglomeration economies, labour cost, technology, human capital), we focus on the role of forward linkages with manufacturing sectors and other service sectors as
attractors of business services FDI at the regional level. This hypothesis is based on the evidence that the growth of business services is mostly due to increasing intermediate demand by other services industries and by manufacturing industries and on the importance of geographical proximity for forward linkages in services.
To our knowledge, there are no studies investigating the role of forward linkages for the location of FDI. This paper aims therefore to fill this gap and add to the FDI literature by providing a picture of the specificities of the determinants of FDI in business services at the regional level. The empirical analysis draws upon the database fDi Markets, from which we selected projects having as a destination NUTS 2 European regions in the sectors of Business services over the period 2003-2008. Data on FDI have been matched with data drawn from the Eurostat Regio
database. Forward linkages have been constructed using the OECD Input/Output database. By estimating a negative binomial model, we find that regions specialised in those (manufacturing) sectors that are high potential users of business services attract more FDI than other regions. This confirms the role of forward linkages for the localisation of business service FDI, particularly in the case of manufacturing.
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