The higher costs of doing business in China: Minimum wages and

firms' export behavior

Abstract

This paper examines the relationship between changes in the minimum wage and firms'

export behavior in China using detailed firm-level data of medium and large

manufacturing enterprises between 1998 and 2007. We find that a 10% increase in the

minimum wage is associated with a 0.9 percentage-points decrease in the probability of

exporting goods and a 0.9% decline in export sales, conditional on exporting. These

findings are generally robust to alternative estimation methods and data sources. We

further observe a larger decline among firms with lower average wages and a lower

capital–labor ratio. The results suggest that Chinese exports and comparative advantage

in international markets are not negligibly affected by higher local labor costs and

regulations measured through raises in minimum wage standards.

Operational and financial hedging: Evidence from export and import

behavior

Abstract

We use hand-collected data on a sample of German public firms during 2011-2014 to

show that firms use currency derivatives more often when they export or import, and

especially when exchange-rate fluctuations are larger, but to a lesser extent when having

high export and import shares simultaneously. We interpret this finding as evidence of

operational hedging that arises when foreign-denominated revenues and costs match,
crowding out financial hedging. Our identification strategy uses both cross-sectional

heterogeneity in exchange-rate exposures and time-series variation in exchange-rate

fluctuations. The results highlight the importance of examining operating strategies as

integral determinants of corporate financing policies.

Antecedents and consequences of export entrepreneurship

Abstract

Purpose of the research

This paper has two main objectives. First objective involves defining export

entrepreneurship as well as its dimensions of speed, degree, and scope. These objectives

respond to current literature scarcity and fragmentation. Second, to employ empirical

analysis to explore export entrepreneurship determinants and consequences through

resource-based view and contingency approach.

Methodology
A conceptual model with a multi-sectoral sample of 212 Spanish exporting companies

is the basis for empirical analysis.

Principal results

Results reveal that export entrepreneurship positively depends on internal factors such

as managerial export commitment and resources regarding experience and structure.

Likewise, export entrepreneurship depends on external environment contingency

factors, such as competitive intensity and distance between export firm’s markets. This

study also shows that export entrepreneurship positively affects export performance.

Major conclusions

Managers can use above findings to systematize decisions and actions regarding their

firms' export activity and improve export performance.

What are business students taught about farming: Do textbooks paint

a negative picture?

Abstract

This paper interrogates the construction of the farm, farming, and the farmer in the

Business School. The text of several hundred textbooks used in North America is

analyzed to surface the presentation of the farm. Through this the social and power

status of the farmer is described and the potential impact of the students' perspective on

this primary industry is discussed. It is found that business and management textbooks

portray farming as a low status occupation and the industry as requiring government

support in order to persist.

The buyer margins of firms' exports

Abstract

We use detailed data on exporters from Costa Rica, Ecuador and Uruguay as well as on

their buyers to show that: aggregate exports are disproportionally driven by few multi-

buyers exporters; and each multi-buyer exporter's foreign sales of any product in a given

destination are in turn accounted for by a dominant buyer. We propose an analytically

solvable multi-country model of endogenous selection in which dominant exporters,

dominant products and dominant buyers emerge in parallel as multi-product sellers with

heterogeneous technologies compete for buyers with heterogeneous needs. The model

not only provides an explanation of the existence of dominant buyers but also makes

specific predictions on how the relative importance of dominant buyers should vary

across export destinations depending on their market size and accessibility. We show

that these predictions are borne out by our data and discuss their welfare implications in

terms of gains from trade.

Export market exit and financial health in crises periods

Abstract

This paper uses rich firm-level data for the UK to investigate the link between firms’

financial health and export exit, paying attention to the ERM currency crisis and the

global financial crisis. Our results show that deterioration in the financial position of

firms has increased the hazard of export exit during the 2007–09 crisis but has no

significant effect on the early 1990s crisis. We also explore the extent to which firms in

financially vulnerable industries face greater sensitivity of export exit to financial

conditions. We conclude that firms in sectors with great reliance on external finance

experience higher hazards of exiting the export market during the 2007–09 crisis.

Executive labor market segmentation: How local market density

affects incentives and performance

Abstract

I study how the density of executive labor markets affects managerial incentives and

thereby firm performance. I find that U.S. executive markets are locally segmented

rather than nationally integrated, and that the density of a local market provides

executives with non-compensation incentives. Empirical results show that in denser

labor markets, executives face stronger performance-based dismissal threats as well as

better outside opportunities. These incentives result in higher firm performance in

denser markets, especially when executives have longer career horizons. Using state-

level variation in the enforceability of covenants not to compete, I find that the positive

effects of market density on incentive alignment and firm performance are stronger in
markets where executives are freer to move. This evidence further supports the

argument that local labor market density works as an external incentive alignment

mechanism.

Product market competition and debt choice

Abstract

Executive labor market segmentation: How local market density affects incentives and

performance

Abstract

I study how the density of executive labor markets affects managerial incentives and

thereby firm performance. I find that U.S. executive markets are locally segmented

rather than nationally integrated, and that the density of a local market provides

executives with non-compensation incentives. Empirical results show that in denser

labor markets, executives face stronger performance-based dismissal threats as well as

better outside opportunities. These incentives result in higher firm performance in

denser markets, especially when executives have longer career horizons. Using state-

level variation in the enforceability of covenants not to compete, I find that the positive

effects of market density on incentive alignment and firm performance are stronger in

markets where executives are freer to move. This evidence further supports the

argument that local labor market density works as an external incentive alignment

mechanism.
The “Cubic Law of the Stock Returns” in emerging markets

Abstract

Excess volatility in main emerging and developed stock markets is carefully analysed in

this study. Tail distribution of returns of both stock market index and individual stocks

is evaluated and compared with the theoretical distribution found by Gabaix et al.

(2003, 2006). For stock market index, recursive and rolling estimation are used. In

recursive estimation, we find that all the developed markets obey “the Cubic Law of the

Stock Returns”, while most of the emerging countries exhibit heavier tail with a tail

index lower than 3 at 95% significance level. In rolling estimation, the tail index in the

developed markets does not stabilise around 3, and after 2008 financial crisis, all the

developed markets and most emerging ones suffer a drop in the tail index. For

individual stocks, the tail distributions of stock returns, trading volume, and the number

of trades in each emerging country behave quite differently from the theoretical model

by Gabaix et al. (2006), especially the stock returns.

The impact of export promotion on export market entry

Abstract

For small open economies, it is essential that many firms find their way to the export

market and most governments provide some form of export promotion assistance. We
use detailed firm-level data for Flanders, the largest region in Belgium, to evaluate

whether its program raises firms' propensity to start exporting outside the EU single

market. We find robust evidence for such an effect by relying on the selection-on-

observables assumption which we implement using various estimators. We address a

likely upward bias due to self-selection into support using two strategies: (i) focus on

sub-samples of firms where endogenous selection into treatment is less likely, and (ii)

use firms that receive the weakest form of support as controls for firms receiving more

extensive support. The effects remain positive and statistically significant, but are

smaller in magnitude and in the second case estimated much less precisely.

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