Physical Climate Change and the Sovereign Risk of Emerging Economies
Hannes Böhm
Journal of Economic Structures,
2022
Abstract
I show that rising temperatures can detrimentally affect the sovereign creditworthiness of emerging economies. To this end, I collect long-term monthly temperature data of 54 emerging markets. I calculate a country’s temperature deviation from its historical average, which approximates present-day climate change trends. Running regressions from 1994m1 to 2018m12, I find that higher temperature anomalies lower sovereign bond performances (i.e., increase sovereign risk) significantly for countries that are warmer on average and have lower seasonality. The estimated magnitudes suggest that affected countries likely face significant increases in their sovereign borrowing costs if temperatures continue to rise due to climate change. However, results indicate that stronger institutions can make a country more resilient towards temperature shocks, which holds independent of a country’s climate.
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Institutions and Corporate Reputation: Evidence from Public Debt Markets
Xian Gu, Iftekhar Hasan, Haitian Lu
Journal of Business Ethics,
Nr. 1,
2023
Abstract
Using data from China’s public debt markets, we study the value of corporate reputation and how it interacts with legal and cultural forces to assure accountability. Exploring lawsuits that change corporate reputation, we find that firms involved in lawsuits experience a decrease in bond values and a tightening of borrowing terms. Using the heterogeneities in legal and social capital environments across Chinese provinces, we find the effects are more pronounced for private firms, firms headquartered in provinces with low legal protections, and firms headquartered in provinces with high social capital. The results show that lawsuits that allege misconduct are associated with reputational penalties and that such penalties serve as substitutes for legal protections and as complements to cultural forces to provide ex post accountability and motivate ex ante trust.
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The Geography of Information: Evidence from the Public Debt Market
Bill Francis, Iftekhar Hasan, Maya Waisman
Journal of Economic Geography,
Nr. 1,
2023
Abstract
nWe investigate the link between the spatial concentration of firms in large, central metropolitans (i.e. urban agglomeration) and the cost of public corporate debt. Looking at bond issues over the period 1985–2014, we find that bonds issued by companies headquartered in urban agglomerates have lower at-issue yield spreads than bonds issued by firms based in remote, sparsely populated areas. Measures of the count of institutional bondholders in a firm’s vicinity confirm that the spatial cross-sectional variation in bond spreads is driven by the proximity of metropolitan firms to large concentrations of institutional investors. Our results are robust to controls for firm productivity and governance, analyst following, and exogenous shocks to institutional investor attention. The effect of headquarters location on bond spreads is especially pronounced for more difficult to value, speculative-grade bonds, bonds issued by smaller, less visible firms and bonds issued without protective covenants. Overall, we provide evidence that the geographical distribution of firms and investors generates a corresponding distribution of value-relevant, firm-level information that affects its cost of capital.
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IWH Report 2020-2022
Einzelveröffentlichungen,
2023
Abstract
Mit dem Jahresbericht 2020-2022 geben wir in Dossiers, Interviews, Statements, Fotos und Illustrationen auf 120 Seiten einen Einblick in die vielseitige Forschung am IWH.
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Einsicht. Weitblick. IWH Report 2017-2019
Einzelveröffentlichungen,
2020
Abstract
Wer sind wir? Was treibt uns an, was treibt uns um? Wozu forschen wir, und wer macht Forschen am IWH möglich? Der Jahresbericht 2017-2019 gibt auf 104 Seiten Einblick in unsere Arbeit, unsere Themen und unser Institutsleben.
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Heterogeneous Treatment Effects in Groups
Gerhard Riener, Simon Wiederhold
Economics Letters,
Nr. 3,
2013
Abstract
We show in a laboratory experiment that the same method of group induction carries different behavioral consequences. These heterogeneous treatment effects can be directly related to the quality of the relationship established between the subjects. Our results indicate the importance of manipulation checks in group-formation tasks in economic experiments.
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How Can Skill Mismatch be Measured? New Approaches with PIAAC
Daniela Ackermann-Piek, Anja Perry, Simon Wiederhold
Methods, Data, Analyses,
Nr. 2,
2014
Abstract
Measuring skill mismatch is problematic, because objective data on an individual skill level are often not available. Recently published data from the Program for the International Assessment of Adult Competencies (PIAAC) provide a unique opportunity for gauging the importance of skill mismatch in modern labor markets. This paper systematically compares existing measures of skill mismatch in terms of their implications for labor market outcomes. We also provide a new measure that addresses an important limitation of existing measures, namely, assigning a single competency score to individuals. We find that the importance of skill mismatch for individual earnings differs greatly, depending on the measure of mismatch used.
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Returns to Skills around the World: Evidence from PIAAC
Eric A. Hanushek, Guido Schwerdt, Simon Wiederhold, Ludger Woessmann
European Economic Review,
January
2015
Abstract
Existing estimates of the labor-market returns to human capital give a distorted picture of the role of skills across different economies. International comparisons of earnings analyses rely almost exclusively on school attainment measures of human capital, and evidence incorporating direct measures of cognitive skills is mostly restricted to early-career workers in the United States. Analysis of the new PIAAC survey of adult skills over the full lifecycle in 23 countries shows that the focus on early-career earnings leads to underestimating the lifetime returns to skills by about one quarter. On average, a one-standard-deviation increase in numeracy skills is associated with an 18 percent wage increase among prime-age workers. But this masks considerable heterogeneity across countries. Eight countries, including all Nordic countries, have returns between 12 and 15 percent, while six are above 21 percent with the largest return being 28 percent in the United States. Estimates are remarkably robust to different earnings and skill measures, additional controls, and various subgroups. Instrumental-variable models that use skill variation stemming from school attainment, parental education, or compulsory-schooling laws provide even higher estimates. Intriguingly, returns to skills are systematically lower in countries with higher union density, stricter employment protection, and larger public-sector shares.
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Team Building and Hidden Costs of Control
Gerhard Riener, Simon Wiederhold
Journal of Economic Behavior and Organization,
March
2016
Abstract
In a laboratory experiment, we investigate the interaction of two prominent firm strategies to increase worker effort: team building and control. We compare a team-building treatment where subjects initially play a coordination game to gain common experience (CE) with an autarky treatment where subjects individually perform a task (NCE). In both treatments, subjects then play two-player control games where agents provide costly effort and principals can control to secure a minimum effort. CE agents always outperform NCE agents. Conditional on control, however, CE agents’ effort is crowded out more strongly, with the effect being most pronounced for agents who successfully coordinated in the team-building exercise. Differential reactions to control perceived as excessive is one explanation for our findings.
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