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Background: In view of steadily rising healthcare expenditures (HCE), studies on spending distributions can provide important guidance for policy decisions. Since the majority of HCE is concentrated in a few high-cost cases, this study focusses on the spending distribution between different cost-risk groups. We show detailed allocation structures, distinguishing several categories of HCE and the survival status of insureds to gain insights regarding the share of mortality costs.
Methods: Our analyses rely on data from a large sickness fund that covers around four million insureds. We classify the population into ten equal risk groups by costs and then determine expenditure shares of total HCE and daily per-capita expenditures depending on survival status and risk group affiliation.
Results: Our results offer that the often stated dominating effect of mortality costs of HCE is only evident in lower cost-risk groups and almost exclusively attributable to inpatient care. Furthermore, HCE in the calendar year of death is the same for most cost-risk groups, with the exception of risk groups at both ends of the distribution. However, in the case of the highest cost-risk group, the difference between survivors and decedents is proportionally small. The differences in cost structure between decedents in high-risk and other risk groups are primarily attributable to pharmaceutical spending.
Conclusion: Short-term high HCE in the year of death occur equally in all cost-risk groups and are hardly avoidable. By contrast, in the extremely high cost-risk groups, the cost difference between the year before death and the year of death is much smaller. Overall, this group remains the main target to influence the rise in HCE and its characteristics should be considered with respect to future HCE projections.
This paper proposes a method for deriving the joint asymptotic distribution of sample proportions when the population and sample size increase jointly to infinity. The joint distribution of the sample proportions is derived by reducing the multi- variate to a univariate problem and applying the Cramer-Wold device. Knowing the asymptotic distribution we are in a position to conduct inference on linear or non-linear functions of the population proportions such as a ratio or the log-odds. We motivate and develop our method by means of a topical epidemiological application, namely the infection fatality rate of a virus such as SARS-CoV-2. We demonstrate that our method can be extended to more general settings of interest.
We examine the effects of the COVID-19 pandemic on the economic decline expected in Germany in 2020. The magnitude of the economic slump that will occur in 2020 depends on the extent of the slump during the shutdown, on the point in time, at which a significant easing of shutdown occurs, and on the length of adjustment process towards the structures that prevailed before the pandemic. We derive several scenarios and find that the shutdown will only remain in the single-digit percentage range if we apply very optimistic assumptions about the extent of the initial decline in GDP during the shutdown and the speed of adjustment after opening up of the economy. However, assuming that the economic crisis cannot end before the medical crisis ends, which medical experts project not to happen before the end of 2020, such optimistic assumptions do not appear realistic. Hence, we find it more likely that the percentage decline of GDP in Germany will be two-digit in 2020. Our findings are in contrast to the growth projections recently issued by the German Council of Economic Experts or by the Federal Ministry of Economic Affairs and Energy of Germany.
This paper documents that ECB announcements on monetary policy increase stock market volatility in the euro area (EA) using several volatility measures from January 1999 to December 2019. Employing event study methods, a more pronounced impact exists following the global financial crisis starting in 2007. All assets react similarly so that no national peculiarities arise. The effects also spill over to 12 non-EA markets analyzed. Stock markets are more sensitive to negative monetary policy news than to positive ones. Further weighting the announcements by financial market reactions, stock markets behave in a more heterogeneous way.
The profession of anaesthesia technologist is a relatively new profession in Germany. The German hospital Association published the first training guideline in 2011. Likewise the surgical technologist profession, the profession of anaesthesia technologists are not officially certified. Hence, similar disadvantages such as further career restrictions and uncertainties in case of unemployment exist. Even the hospitals need to cover the full training expenses. The training of an anaesthesia technologist lasts three years, containing of practical work experience within the anaesthesia units such as the post-anaesthesia caring unit and a theoretical education. The action site is limited to the anaesthesia units only. An anaesthesia technologist is an assistant to the doctor and takes care of the patient before, during and after the anaesthesia. Since the anaesthesia technologist profession is a very young profession group, little is known about the preferences of this group. However, hospital manager need to understand the individual preferences to be able to provide a target group tailored recruitment.
The motivation was to provide results to inform the human resource management of hospitals about the preferences of the very young profession group of anaesthesia technologist with respect to contribute to a successful development of this profession in order to cope with the current labour shortage crisis.
Nursing without caring?
(2019)
We know that existing professions in the health care sector value work environment and job conditions to a great extent. However, we are also witnessing an expansion of new roles into the health care sector, many of which substitutie the tasks of existing professions. This may be efficient, in that it releases professionals’ time. However, there is little understanding of what motivates these new professions in entering or remaining in these newly created roles. This study tries to evaluate the preference structure of one of these new staff groups, surgical technologist, through examining the preferences of trainees, defined over a number of attributes, in this group. The DCE study covers 80% of the target population. The results show a vigorous disfavour towards any perceived nursing job characteristics such as caring activities, hierarchical work environment or shift types. The results inform policy makers and hospital manager about the importance to focus not only on the nursing profession but also to take into account the existence of a group of people who is willing to work within the health care system however, associated with strong preferences against nursing activities, especially caring. Implementing and further development of new and specialised profession through reallocating former nursing tasks- should be considered while coping with labour shortage.
This paper examines the role of uncertainty in the context of the business cycle in the Eurozone. To gain a more granular perspective on uncertainty, the paper decomposes uncertainty along two dimensions: First, we construct the four different moments of uncertainty, including the point estimate, the standard deviation, the skewness and the kurtosis. The second dimension of uncertainty spans along three distinct groups of economic agents, including consumers, corporates and financial markets. Based on this taxonomy, we construct uncertainty indices and assess the impact on real GDP via impulse response functions and further investigate their informational value in rolling out-of-sample GDP forecasts. The analysis lends evidence to the hypothesis that higher uncertainty expressed through the point estimate, a larger standard deviation among confidence estimates, positive skewness and a higher kurtosis are all negatively correlated with the business cycle. The impulse response functions reveal that in particular the first and the second moment of uncertainty cause a permanent effect on GDP with an initial decline and a subsequent overshoot. We find uncertainty in the corporate sector to be the main driver behind this observation, followed by financial markets’ uncertainty whose initial effect on GDP is comparable but receding much faster. While the first two moments of uncertainty improve GDP forecasts significantly, both the skewness and the kurtosis do not augment the forecast quality any further.
At the beginning of their career civil servants in Germany can choose between the social health insurance (SHI) system and a private plan combined with a direct reimbursement of the government of up to 70 percent. Most civil servants chose the latter, not only but also because they have to cover all contribution payments in the social system themselves, while normal employees get nearly 50 percent from their employers. The city state of Hamburg decided to change the system by paying a share of the contributions if civil servants choose the social plan. We use a stochastic microsimulation model to analyse which socio-economic types of civil servants could benefit from the Hamburg plan and if this changes the mix of insured persons in the SHI system. Our results show that low income and high morbidity types as well as families have a substantially higher incentive to choose SHI. This reform might thereby increase the adverse selection of high risk cases towards SHI.
Gone with the windfall
(2018)
Due to the debate about the generosity of LTC insurance benefits the German government decided to increase benefits and widen the circle of LTC beneficiaries with the Second LTC Strengthening Act. In this paper, we evaluate the long-term implications of this recent reform for the German LTC insurance scheme. Using the framework of generational accounting we show that the reform has led to a widening of the short-term gap between revenues and expenditure and that the LTC insurance is not sustainably financed, neither pre- nor post-reform. By the early 2020s there will be fiscal pressure for further reforms. From an intergenerational perspective, the reform can be seen as a windfall to current beneficiaries increasing the intergenerational redistribution through the pay-as-you-go system.
This paper examines the recession probabilities for the Eurozone along four different dimensions: First, we identify the best performing indicators for a recession within the next 12 months based on 43 underlying single variables and their different transformations in a benchmark model. We find that a modified version of the yield curve incorporating the shadow interest rate removes the downward rigidity of the front-leg and restores part of the informational content of the term spread at the zero lower bound. However, the best performing single indicator of the benchmark model is Real M1 followed by the Purchasing Managers Index (PMI), the investment grade corporate bond spread and the Terms of Trade. Second, the paper establishes three submodels to increase the lead-time and the stability of recession models: (i) Monetary transmission channels via principal component analysis; (ii) Bivariate regressions to identify paramount combinations; (iii) Unstable surges vis-à-vis the Hodrick-Prescott trend to detect animal spirits and hawkish mistakes. Third, the analysis is extended over various forecasting horizons (6m, 18m and 24m). Fourth, the results are analyzed from the perspective of risk-affine and risk-averse investors.
This study provides novel insights to the ongoing debate how market efficiency is challenged by investor behavior. Applying search engine data we find that retail investor attention can enhance market efficiency. High attention is associated with better incorporation of idiosyncratic stock information, which we interpret as improved pricing efficiency. This effect is even more pronounced in bullish markets. In bearish markets, however, retail investor attention leads to a deterioration of pricing efficiency, which might be explained with herding behavior. Our evidence holds for a broad sample of European and US stocks.
In search of alpha
(2015)
In this study we develop a trading strategy that exploits limited investor attention. Trading signals for US S&P 500 stocks stocks are derived from Google Search Volume data, taking a long position if investor attention for the corresponding security was abnormally low in the past week. Our strategy generates 19% average annual return and thereby outperforms a simple market buy-and-hold strategy. After controlling for the well-known risk factors, a significant alpha (abnormal return) of 10% p.a. remains. Returns are sufficiently large to cover transaction costs.
This paper develops techniques of estimation and inference in a prototypical macroeconomic adaptive learning model with slowly decreasing gains. A sequential three-step procedure based on a `super-consistent' estimator of the rational expectations equilibrium parameter is proposed. It is shown that this procedure is asymptotically equivalent to first estimating the structural parameters jointly via ordinary least-squares (OLS) and then using the so-obtained estimates to form a plug-in estimator of the rational expectations equilibrium parameter. In spite of failing Grenander's conditions for well-behaved data, a limiting normal distribution of the estimators centered at the true parameters is derived. Although this distribution is singular, it can nevertheless be used to draw inferences about joint restrictions by applying results from Andrews (1987) to show that Wald-type statistics remain valid when equipped with a pseudo-inverse. Monte-Carlo evidence confirms the accuracy of the asymptotic theory for the finite sample behaviour of estimators and test statistics discussed here.
It is a well known result in the literature of principal-agent relationships that if the principal has the possibility to monitor the agent’s action at some cost, his monitoring probability is a decreasing function in the level of outcome. Moreover, the principal will reward the agent, if he is found to have complied with his interests. The purpose of this article is to show that these results depend crucially on the assumption that the principal can commit to his monitoring device at the time of contracting. In fact, we show that in a situation in which the principal is not able to commit to his investment in his monitoring technology, (1) the principal’s investigation intensity is increasing in the level of outcome and, (2) the agent’s reward is lower in the case investigation reveals the agent’s action than it is in the case in which investigation is uninformative.
We consider an R&D contest between n firms in the presence of external spillovers. Our analysis focuses on the effects of these knowledge spillovers on joint venture activities between firms. In particular, we are interested in how different budget responsiblities within the research joint venture (RJV) affect profits of firms taking part in the joint venture and profits of their non-cooperating rival firms. Three arrangements for RJVs are analyzed: First, cooperation, in which the firms participating in the joint venture completely share the knowledge they created in the innovation process and each firm has a sovereign budget responsibility. Second, a collusive arrangement in which the participating firms not only share their knowledge but have joint budget responsibilities in the sense that they make all strategic choices cooperatively and maximize joint profits. Third, a hierarchical form, in which the cooperating firms establish a joint headquarter which has strategic budget responsibility in the sense that can strategically subsidize R&D expenditures of its member firms so as to maximize overall RJV profits. We show that the first two arrangements can be mimiced in the hierarchical structure and that a hierarchical structure is optimal if it completely subsidizes its members’ R&D activities. In this case all rival firms are driven out of the contest.
The aim of this study is to measure total transaction costs as well as the cost components for six German investment management firms from August 1st until October 31st 2001. The investigation is based on a unique order-level data set that includes all relevant information (e.g. time of investment decision, order-release to the broker and trade execution). For computing transaction costs we use tick by tick price data for the 75 stocks of the Euro Stoxx 50- and Stoxx 50-universe.
Volume weighted, i.e. effectively paid, one way transaction costs sum up to 66.76 bp. Market pact is the highest cost component and amounts to 27.93 bp for volume weighted averages. According to a regression analysis market impact is driven by high volatilities and bid ask spreads; market momentum induces market impact to fall, indicating mean reversion of stock prices. High free float and market activity do not influence the market impact, but lead – just as high volatilities and bid ask spreads - to a reduction in trading aggressiveness. Trading duration decreases with high volatility and diminishing bid ask spreads. Overall, the results illustrate that to some extent German investment management firms trade strategically. Nevertheless, a further reduction in market impact, and therefore an increase in investment performance, seems to be possible, if traders pay greater attention on the liquidity indicators known already at order release.
Fair value and audit fees
(2012)
This paper investigates the effect of fair value reporting and its attributes on audit fees. We use as our primary sample the European real estate industry around mandatory IFRS adoption (under which reporting of property fair values becomes compulsory), due to its unique operating and reporting characteristics. We document lower audit fees for firms reporting property assets at fair value relative to those employing depreciated cost―a difference that appears driven (in part) by impairment tests that occur only under depreciated cost. We further find that audit fees are decreasing in firm’s exposure to fair value, and increasing both in the complexity of the fair value estimation and for recognition (versus only disclosure) of fair values. We corroborate our findings in two alternative settings: contrasting UK and US real estate firms; and using UK investment trusts. Overall, the results suggest that fair values can lead to lower monitoring costs; however, any reductions in audit fees will vary with salient characteristics of the fair value reporting, including the difficulty to measure and the treatment within the financial statements.
A growing body of literature investigates the interaction of changes in accounting standards with institutions such as investor protection laws and corporate governance mechanisms. We examine the unintended consequences of fair value accounting in determining mandated preferred dividends. We study the case of Russian energy conglomerate UES, which had a good corporate governance track record and a consistent dividend history. Following its adoption of fair value accounting, UES reported the highest quarterly profit in world corporate history, but it subsequently omitted dividends for all its shareholders. The case analysis suggests that the transitory nature of fair value adjustments and the interaction with the investment policy were important considerations in justifying the dividend omission. The reduction in preferred dividends was not offset by any capital gains, and led to a wealth transfer from preferred to ordinary shareholders. Thus, requiring the use of fair value accounting when determining the dividend distribution base can lead to unintended consequences, and increase agency costs for minority shareholders.
This study investigates why countries mandate accruals in the definition of corporate taxable income. Accruals alleviate timing and matching problems in cash flows, which smoothes taxable income and thus better aligns it with underlying economic performance. These accrual properties can be desirable in the tax setting as tax authorities seek more predictable corporate tax revenues. However, they can also make tax revenues procyclical by increasing the correlation between aggregate corporate tax revenues and aggregate economic activity. We argue that accruals shape the distribution of corporate tax revenues, which leads regulators to incorporate accruals into the definition of taxable income to balance the portfolio of government revenues and expenditures. Using a sample of 26 OECD countries, we find support for several theoretically motivated factors explaining the use of accruals in tax codes. We first provide evidence that corporate tax revenues are less volatile in high accrual countries, but high accrual countries collect relatively higher (lower) tax revenues when the corporate sector grows (contracts). Critically, we then show that accruals and smoother tax revenues are favored by countries with higher levels of government spending on public services and uncertain future expenditures, while countries with procyclical other tax collections favor cash rules and lower procyclicality of corporate tax revenues.
This study revisits prior research on the valuation of dividends in an accounting-based valuation framework. Using a battery of tests, we show that market value deflation is essential in market-based tests of dividend displacement and signaling because it controls for ‘stale’ information in addition to scale (size) differences across firms. For U.S. firms, we show that after controlling for ‘stale’ information, the empirical association between dividends and market values switches from positive to negative. This switch is not explained by scale differences across firms. Further, we show that after controlling for staleness, the valuation of dividends remains positive for European firms. This result is explained by the relatively stronger association of dividends with future earnings in these settings (i.e., signaling). Lastly, our country-specific estimates of dividend valuation provide a potentially valuable index for studies aimed at examining the effects of accounting and securities regulation on information asymmetries in an international context.
This paper examines pricing differences across recognized and disclosed fair values. We build on prior literature by examining two theoretical causes of such differences: lower reliability of the disclosed information, and/or investors’ higher related information processing costs. We examine European real estate firms reporting under International Financial Reporting Standards (IFRS), which require that fair values for investment properties, our sample firms’ key operating asset, either be recognized on the balance sheet or disclosed in the footnotes. Consistent with prior research, we predict and find a lower association between equity prices and disclosed relative to recognized investment property fair values, reflecting a discount assigned to disclosed fair values. We then predict and find that this discount is mitigated by lower information processing costs (proxied via high analyst following), and some support that it is also mitigated by higher reliability (proxied via use of external appraisals). These latter results are documented using subsample analyses to test one attribute (either information processing costs or reliability) while holding the other constant. Overall, these findings are consistent with fair value reliability and information processing costs providing complementary explanations for observed pricing discounts assessed on disclosed accounting amounts.
This paper contrasts the individual capital gains realization behavior between progressive and proportional tax regimes. Using a longitudinal panel of over 288,000 individuals in Sweden, I exploit the 1991 tax reform in Sweden that changed progressive capital gains tax rates ranging from 12% to 80% to a proportional tax rate of 30%. Using the proportional tax system to control for non-tax reasons to realize capital gains, I show that individuals are highly responsive to capital gains tax incentives created by temporary income changes under a progressive capital gains tax. More specifically, I find that individuals with temporary negative (positive) income changes sell (hold) shares that they would hold (sell) in the absence of temporary tax incentives. Further, I show that high-income individuals are more tax sensitive than low-income individuals. This result indicates that low-income individuals facing temporary negative income changes could trade predominantly for non-tax reasons.
This paper analyzes whether a dividend tax cut for owner–managers of closely held corporations encourages income shifting, income generation, or both. We use rich Swedish administrative micro data from 2000 to 2011 comprising detailed firm- and individual-level information. We find robust evidence of extensive income shifting across tax bases in response to the 2006 Swedish dividend tax cut. Owner–managers of closely held corporations reclassify earned income as dividend income but do not increase total income. The response is more pronounced for owner–managers with tax incentives and with easier access to income shifting through a high ownership share.
This paper empirically examines why tax avoidance differs across individuals. We use rich Swedish administrative panel data on all taxpayers, with a link between corporate and individual tax returns. Surprisingly, few individuals utilize legal and observable tax avoidance opportunities. Our results show that there are several frictions in tax avoidance participation. In addition to monetary benets from tax avoidance (incentives), the opportunity to participate in tax avoidance (access), as well as information and knowledge about these opportunities (awareness), are important factors for the individual's tax avoidance decision. We further show that information about tax avoidance opportunities spreads within informal networks.
We study the importance of owner wages and dividends as alternative payout channels in privately held firms. Using data on all Swedish closely held corporations and their owner–managers over the period 2000–2009, we find that dividends comprise one-fourth of total payout to owner–managers. Dividends are used as a flexible payout channel. Wages are the preferred payout channel and are rather sticky. Choice of payout channel and level of payout are affected by dividend and wage taxation. Consistent with the difference in flexibility across payout channels, shareholder taxes have a stronger impact on dividends than on wages.
We examine the role of tax incentives, tax awareness, and complexity in tax evasion. We observe a specific type of tax evasion among business owners in Swedish administrative panel data, after the tax authority has approved all tax returns. For the period 2006–2009, approximately 5% of tax returns overstate a claimed dividend allowance. Tax awareness decreases and complexity increases the likelihood of misreporting. Our results indicate that some observed misreporting could be accidental, while some misreporting is deliberate tax evasion. We identify a positive and significant effect of tax rates on tax evasion, by exploiting a large kink in the tax schedule. The majority of misreporting cases remains undetected by the tax authority. Self-correction of tax evasion by taxpayers is the dominant type of detection.
This paper analyzes heterogeneity in capital gains tax elasticities across individuals. Using panel data of over 260,000 individuals, I find that the sensitivity of capital gains to taxes is decreasing over the individual life cycle. Younger individuals respond more strongly to changes in capital gains taxes than older individuals. An increase in age of 18 years decreases the lock-in effect of capital gains taxes by approximately 10%.
The paper studies the effect of uncertainty in firm-speciffic tax avoidance on firm value. We first show in a clean surplus valuation model that expectations about future profitability interact with corporate tax avoidance. Two dimensions of corporate tax avoidance strategies matter for valuation: uncertainty and level of expected future tax rates. We confirm the importance of level and uncertainty of tax avoidance for forecasts of future tax rates using a small sample of analyst tax rate forecasts. Consistent with the model and the implications from analyst forecasts, we derive a tax signal-to-noise ratio based on historical tax information. In our sample of 2,820 firms, we show empirically that this tax signal-to-noise ratio amplifies the effect of pre-tax earnings on firm value. Pre-tax earnings have a stronger effect on firm value for firms with effective and persistent tax avoidance. Firms with volatile effective tax rates receive a discount on their earnings.
This paper studies the effect of corporate taxes on investment. Since firms with a foreign parent have more cross-country profit shifting opportunities than domestically owned firms do, their effective tax rate and, consequently, their tax-induced costs to investment are lower. We therefore expect capital investment responses to a corporate tax cut to be heterogeneous across firms. Using firm-level data on German corporations, we exploit the 2008 tax reform, which substantially cut corporate taxes as an exogenous policy shock and expect domestically owned firms' investments to be more responsive to the reform. We show exactly this in a difference-in-differences setting. We find that the reduction in corporate tax payments led to a one-to-one increase in the real investments of domestic firms. The effect is stronger for domestic firms relying more on internal funds. Correspondingly, labor investment increased more for domestic firms, ensuring a constant mix of input factors. In addition, we show that domestic firms' sales grew faster after the tax cut than the sales of foreign-owned firms. Our results imply that corporate tax changes can increase corporate investment but that domestic firms benefit more than foreign-owned firms from a tax cut through higher investment responses resulting in greater sales growth.
We test whether dividend taxes affect corporate investments. We exploit Sweden’s 2006 dividend tax cut of 10 percentage points for closely held corporations and five percentage points for widely held corporations. Using rich administrative panel data and tripledifference estimators, we find that this dividend tax cut does not affect aggregate investment but that it affects the allocation of corporate investment. Cash-constrained firms increase investment after the dividend tax cut relative to cash-rich firms. Reallocation is stronger among closely held firms that experience a larger tax cut. This result is explained by higher external equity in cashconstrained firms and by higher dividends in cash-rich firms after the tax cut. The heterogeneous investment responses imply that the dividend tax cut raises efficiency by improving allocation of investment.
This paper studies the cross-base tax elasticity of capital gains realizations to labor income taxes when capital gains are taxed at a separate proportional tax rate. Using a longitudinal panel of over 265,000 individuals in Sweden, this paper shows in a regression kink design that labor income taxes affect capital gains at the extensive and intensive margins. An increase in the marginal labor income tax rate increases the likelihood of realizing capital gains and the amount of realized capital gains. One implication of this result is that the excess burden of labor income taxation is affected by cross-base tax elasticities.
whether the moral evaluation of tax evasion is subject to a self-serving bias. We find that tax morale is egoistically biased: Subjects with the opportunity to evade taxes judge tax evasion as less unethical as opposed to those who cannot evade. The detection probability does not affect this result. Further, we do not find moral spillover effects, for example, on legal activities.
This paper tests the effect of dividend taxation on employment. Since dividend taxation affects real investments, tax-induced changes in real investments should map into employment effects. Using a difference-in-difference approach around the Swedish 2006 dividend tax cut and unique corporate-level data with income tax information on every employee, we find robust evidence of dividend tax-induced employment effects. In response to the dividend cut, both employment and wage levels increase in cash-constrained firms relative to cash-rich closely held corporations.
Does legality matter?
(2015)
Previous research argues that law expresses social values and could, therefore, influence individual behavior independently of enforcement and penalization. Using three laboratory experiments on tax avoidance and evasion, we study how legality affects individuals’ decisions. We find that, without any risk of negative financial consequences, the qualification of tax minimization as illegal versus legal reduces tax minimization considerably. Legislators can thus, in principle, affect subjects’ decisions by defining the borderline between legality and illegality. However, once we introduce potential negative financial consequences, legality does not affect tax minimization. Only if we use moral priming to increase subjects’ moral cost do we again find a legality effect on tax minimization. Overall, this demonstrates the limitations of the expressive function of law. Legality appears to be an important determinant of behavior only if we consider activities with no or low risk of negative financial consequences or if subjects are morally primed.
Empirical evidence suggests that there is substantial cross-firm variation in the extent of tax avoidance. However, this variation is not well understood. This paper provides a theoretical background for testing, and thus explaining, cross-firm differences in tax avoidance. We develop a formal model with two agents to analyze the incentives that lead firms to engage in tax avoidance. The tax avoidance decision is a function of moral hazard, tax-planning costs, and the potential to increase earnings. If the potential to increase earnings is low, the tax-planning decision is determined by moral-hazard problems. In contrast, when this potential is high, the tax-planning decision is mainly driven by taxplanning costs, such as reputational and political costs. One implication of our model is that moral hazard can (partly) explain why some firms do not engage in tax avoidance: Severe problems of moral hazard make tax avoidance less likely. Our model can be applied to test dierences in tax avoidance between different types of firms.
The Leading Question:
What Western multinational corporations (MNCs) need to know to successfully reverse their innovation flow i.e. launch new products developed in emerging markets in their domestic markets?
Main Findings:
- Realities in emerging markets are well suited for designing basic products that can be the starting point for product up-contenting.
- Products originally developed for emerging markets can be successfully adapted for sale in developed markets – a “reverse” innovation flow gains momentum.
- This strategy can both help to unlock new customer segments in wealthy markets and to compete against emerging MNCs, private labels, and generics conquering these markets bottom-up.
In diesem Beitrag wird die Expansion eines Samples von 47 HDAX-Unternehmen zwischen 1995 und 2004 hinsichtlich des Expansionsverlaufs, der Expansionsrichtung (Internationalisierung und Diversifikation) und der Expansionsumsetzung beschrieben. Die Betrachtung von 1.830 einzelnen Expansionsschritten führt zu einem detaillierten und umfassenden Bild der Expansionspfade dieser Unternehmen. Insgesamt zeigt sich, dass die Entwicklung der betrachteten Unternehmen sehr heterogen verläuft. Hieraus ergeben sich verschiedene interessante Fragestellungen und Implikationen für die weitere Forschung zur Expansion von Unternehmen. Vor allem scheint es fraglich, ob die bisherige Praxis, Internationalisierung und Produktdiversifikation getrennt zu betrachten, dem Phänomen der Expansion von Unternehmen gerecht wird.
Research on strategic agenda building has traditionally emphasized individual agency, thereby neglecting organizational context. Developing a contextual model of strategic agenda building, we address this limitation. Based on the evolutionary framework we show that an organization’s core elements, that is, strategy, culture, structure and top management team, heavily influence what issues are considered in organizational agenda building processes. Moreover, the strategic agenda building process, apart from the role of capabilities and cognition, provides an alternative explanation for path dependency.
The paper analyzes firms' expansion paths within and across industries and specifically different patterns along these paths. Using a procedure previously applied in statistical process control and employing longitudinal data on the expansion of 91 German firms, we analyzed firms' clustering behavior regarding different characteristics. Results reveal that expansion is a heterogeneous process: the clustering behavior along the expansion path does not only differ between firms, but also within one firm regarding different characteristics of its expansion path.
Der Family Office Manager
(2009)
This study examines the relation between executives’ inside debt holdings and corporate tax risk. As executives’ inside debt holdings are unsecured and unfunded, they should align executives’ interests with those of outside debtholders and incentivize executives to act more conservatively toward risk. Hence, inside debt should also reduce the risk of tax avoidance activities. Consistent with this prediction, we find that executive inside debt holdings are negatively related to tax risk. Further, this relation becomes stronger at higher levels of tax risk. We also find that the relation between insider debt and tax risk is stronger for firms that are not facing liquidity constraints and among well-governed firms. The latter result implies that institutional ownership and inside debt compensation are substitutes in reducing tax risk. Overall, our results suggest that part of the observed cross-sectional difference in tax avoidance can be explained by a reduction in tax risk that is related to executive inside debt holdings.
This paper examines the sensitivity of profit shifting to the corporate tax rate difference between a subsidiary and its parent company. We exploit tax rate variation stemming from European tax reforms over the period 2003-2013 while accounting for tax base adjustments that might affect firms’ profit shifting response to tax rate changes. We find that affiliates’ profits are sensitive to tax rate changes. However, tax base broadening reforms mitigate the tax rate incentives for profit shifting and significantly reduce the semi-elasticity of profits with respect to corporate tax rates. Finally, we provide evidence of a downward trend in the tax sensitivity of profit shifting, suggesting that the spread of anti-avoidance regulation may have successfully constrained profit-shifting strategies.
This paper employs event study methods to evaluate the effects of ECB’s nonstandard monetary policy program announcements on 10-year government bond yields of euro area member states. It covers data from 11 euro area countries from January 1, 2007 to August 31, 2017 and distinguishes between the more solvent countries (Austria, Belgium, Finland, France, Germany, the Netherlands) and the less solvent ones (Greece, Ireland, Italy, Portugal, Spain). The paper makes three contributions to the literature. First, it is the first paper to reveal that measurable effects of announcements arise with a one-day delay meaning that government bond markets take some time to react to ECB announcements. Second, it quantifies the country-specific extent of yield reduction which seems inversely related to the solvency rating of the corresponding countries. The reduction of the spread between both groups in response to an event is due to a stronger decrease in the less solvent group. Third, this result is confirmed by letting the announcement variable interact with the spread level, which is an innovation in this strand of literature. By employing different data as control variables, it turns out that the results are robust for a given event set.
We analyze the effects of limited feedback on beliefs and contributions in a repeated public goods game setting. In a first experiment, we test whether exogenously determined feedback about a good example (i.e., the maximum contribution in a period) in contrast to a bad example (i.e., the minimum contribution in a period) induces higher contributions. We find that when the type of feedback is not transparent to the group members, good examples boost cooperation while bad examples hamper it. There is no difference when the type of feedback is transparent. In a second experiment, feedback is endogenously chosen by a group leader. The results show that a large majority of the group leaders count on the positive effect of providing a good example. This is true regardless whether they choose the feedback type to be transparent or non-transparent. Half of the group leaders make the type of feedback transparent. With endogenously chosen feedback about good examples no difference in contributions can be observed among transparent and non-transparent feedback selection. In both experiments feedback shapes subjects’ beliefs. With exogenously chosen feedback, transparent feedback tends to reduce beliefs when good examples are provided as feedback and tends to increase beliefs in when bad examples are provided as feedback compared to the respective non-transparent cases. Our results shed new light on the design of feedback rovision in public goods settings.
Private Equity Controlling
(2008)
Diversification research
(2006)
Das Family Office
(2006)
Family Business Governance
(2005)
Companies may not only apply their knowiedge assets intemally, i.e. in own products and/or Services, they may also exploit the knowiedge assets extemally, i.e. commercialize them in disembodied form. While the extemal acquisition of knowiedge in general and the concept of absorptive capacity in particular have received great attention by researchers, the extemal exploitation of knowiedge has long been neglected despite its increasing importance in practice. To bridge the resulting gaps in prior research, the concept of desorptive capacity as a complement to absorptive capacity is proposed by taking a capability-based approach to the extemal knowiedge exploitation. Building on this theoretical concept, measures are developed, and data from a questionnaire-based study in 136 European Companies across industries is used to examine various hypotheses relating potential sources of desorptive capacity to the success of firms in extemally commercializing disembodied knowiedge. Thus, this work also constitutes the first large-scale study that intends to empirically identify success factors of extemally leveraging knowiedge assets. The findings of the study provide strong Support for the desorptive capacity concept, which helps to explain the discrepancies between the very positive view on the extemal knowiedge commercialization in most works in the literature and the considerable difficulties with managing these activities that are often perceived in practice.
Die Musik- und Spielfilmindustrie unterliegt sowohl auf der Angebots- als auch auf der Nachfrageseite einem Wandel. Der Beitrag untersucht, wie die Anbieter auf die aus dem Wandel resultierenden Bedrohungen reagieren. Auf großzahliger empirischer Basis werden hierfür zunächst die Marketing-Mixe systematisch erfaßt. Ausgehend hiervon werden Hypothesen getestet, die die Gestaltung der Marketing-Mixe in Beziehung zu der akuten Bedrohungslage in dieser Industrie setzten. Im Ergebnis zeigt sich, daß bislang eine adäquate Gestaltung der Vermarktung als Gegenreaktion auf die momentane Wettbewerbssituation in der Musik- und Filmindustrie nicht hinreichend erfolgt ist, woraus sich weitreichende Potentiale zur Neugestaltung der Marketing-Mixe ergeben.
Companies may realise all major knowledge management tasks, i.e. knowledge acquisition, accumulation and exploitation, not only internally but also externally. Therefore, we propose the integrate-or-relate decision in knowledge accumulation as a complement to the well-known make-or-buy and keep-or-sell decisions in knowledge acquisition and exploitation. A key factor for taking adequate decisions, for building up appropriate organisational capabilities and for realising a firm’s knowledge potentials are unbiased attitudes to the knowledge management tasks. While past research has focused on the NIH syndrome as a negative attitude to external knowledge acquisition, a more holistic view is adopted in this article by extending prior research on two dimensions. Firstly, we consider all major knowledge management tasks and do not limit our analysis to knowledge acquisition; secondly, we take into account that apart from too negative attitudes also overly positive attitudes to the external realisation of knowledge management tasks may exist. Building on prior research, we identify the following six syndromes: ‘not-invented-here’ vs. ‘buy-in’ in knowledge acquisition, ‘all-stored-here’ vs. ‘relate-out’ in knowledge accumulation and ‘only-use-here’ vs. ‘sell-out’ in knowledge exploitation. After briefly reviewing research into NIH and developing a knowledge management framework, the syndromes are defined, and possible antecedents, consequences and managerial actions are described.
Companies increasingly make use of the external knowledge exploitation, i.e. the commercialization of disembodied knowledge, although they often perceive considerable difficulties in managing the external commercialization tasks. These difficulties are partly due to the imperfections of the markets for knowledge, which, however, may be mastered by an adequate management as the examples of various well-known companies show. In combination, these facts point to the need of research into the external exploitation of knowledge. A thorough analysis of past research confirms this need and shows that the existing literature is highly fragmented. By integrating the main findings of the different research streams, we establish a detailed overview on the literature on external knowledge exploitation. The key characteristics and the main forms of externally commercializing knowledge are presented. Then, major imperfections in the markets for knowledge are examined, and the increasing importance of the topic in practice as well as primary reasons for this trend are described. Afterwards, major strategic and monetary objectives and the risks of commercializing disembodied knowledge are identified before turning to the management of the external knowledge exploitation, particularly regarding strategies, processes and structures. Apart from reviewing the literature, a research agenda, which describes promising paths for future research, is set up based on past research results and findings from other fields, particularly the internal knowledge exploitation and the external knowledge acquisition.
Changes in the regulatory framework allow German business schools to select an important part of their students by themselves for the first time through entrance exams. We analyze if the students participating in these entrance exams differ from average first-year business students and which factors influence their choice of a business school. A separate analysis for a cluster of very highly motivated students reveals that for these students a short study time and a practical Orientation are of utmost importance as decision criteria. We derive suggestions for German business schools that want to target this specific segment of students.
Unternehmensentwicklung
(2004)
Der Beitrag erfasst den Stand der Forschung zum Gebiet der Untemehmensentwicklung. Hierbei werden Arbeiten aus mehr als einem Jahrhundert eingeschlossen. Aus den bestehenden Forschungsstromungen wird ein Konzept fur die weitere Forschung zur Untemehmensentwicklung hergeleitet. Methodisch ist der Beitrag der konzeptionellen Forschung zuzuordnen. Die existierenden Ansatze werden anhand verwendeter Grundannahmen miteinander verglichen. Das erarbeitete Konzept fur die weitere Forschung setzt auf bestimmten Ausprägungen hinsichtlich dieser Grundannahmen auf. Der Beitrag versucht, der Diskussion der Untemehmensentwicklung neue Impulse fur die weitere empirische Forschung sowohl im Hinblick auf die inhaltliche als auch die methodische Gestaltung zu verleihen. Fur die Praxis versucht der Beitrag, ein Konzept bereitzustellen, anhand dessen Entscheidungstrager eigene Handlungen spiegeln konnen, um auf Schwachstellen in der Entwicklung des eigenen Unternehmens aufmerksam zu werden. Darüber hinaus liefert der Beitrag fur die Akteure der Kapitalmärkte Ansatzpunkte zur besseren Fundierung der Bewertung von Untemehmensentwicklungen.
Desorptive capacity
(2004)
As competition is becoming increasingly knowledge-based, companies do not only have to develop the competence of managing knowledge internally but also need the competence of managing the acquisition and emission of knowledge in order to appropriately leverage its value. Regarding the external acquisition of knowledge, a consistent theoretical framework has been developed with the concept of absorptive capacity probably being the most important construct. In research into absorptive capacity, it is assumed either explicitly or by implication that the knowledge is applied internally. However, companies may also directly commercialize disembodied knowledge which is a growing phenomenon in practice. This trend is especially remarkable against the background of the imperfections of the markets for knowledge, which make such external commercialization of knowledge a difficult task. Accordingly, a company should build up an organizational capability to adequately manage the external knowledge commercialization process. Therefore, we develop the construct of desorptive capacity as a complementary concept to absorptive capacity in the area of external knowledge exploitation. The construct is defined, and it is shown that desorptive capacity is path-dependent. Moreover, it is highlighted how a firm may actively manage its desorptive capacity. Finally, the issue of operationalizing desorptive capacity is addressed, and implications of the theoretical analysis for research and practice are presented.
The constant introduction of new products is of great importance for the long-term financial success of companies. Newly launched products in consumer goods and services markets show high failure rates, often reaching 50%. In order to reduce flop rates, companies can integrate innovative and knowledgeable customers, so called 'lead users', into the new product development process. However, the detection of such lead users is difficult, especially in consumer goods markets with very large customer bases. A new and potentially valuable approach for the identification of lead users are virtual stock markets, which have been proposed and applied for political and business forecasting, but not for expert identification yet. The goal of this paper is to analyze theoretically and empirically the feasibility of virtual stock markets for lead user identification. We find in our empirical study that virtual stock markets are an effective instrument to identify lead users in consumer goods markets. Using the proposed method, companies operating in these markets can identify lead users more easily and integrate them into new product development projects. Thus, they can improve the innovation processes and reduce new product flop rates.
Empirical organizational research has serious methodological limitations if it is based on the perceptions of single informants. Single informant studies are likely to suffer from a systematic measurement error, a so-called method error or informant bias which negatively impacts the validity of their empirical findings. Previous empirical innovation research is based on single informants. This causes substantial doubts regarding the validity of findings in past empirical innovation research based on perceptual, self-reported measures and their managerial implications. This study undertakes a comprehensive theoretical and empirical investigation into the causes and the effects of a single informant bias in empirical innovation research. Based on multiple informant data on various aspects of innovation management in a company, multitrait-multimethod analyses are applied in order to quantify the extent of the informant bias. The results show that the informant bias is substantial and that construct validity cannot be achieved based on the assessments of a single informant only. Only multiple informant data allows the selection of an appropriate informant depending on the organizational trait to be measured based on formal statistical criteria. The higher the level of interfunctional integration and the higher the intensity of vertical communication inside the organization, the lower is the informant bias. This information can be used by researchers to assess whether an informant bias is likely to occur prior to conducting empirical surveys. The findings of this study substantiate the presumed doubts about the validity of past single informant studies in innovation research and demand the use of multiple informants in future empirical studies.
This article analyses the scope and impact of patent management in high technology companies. The exploratory empirical study is based on a conceptual framework, which relates patent management to firm performance by taking various contingent factors into account. The empirical analyses give a detailed descriptive overview about patent management in high technology firms. Further, differences in patent management between young and established high technology companies and special characteristics of biotechnology firms are examined. Finally, preliminary insights regarding the impact of patent management on firm performance are gained. The empirical findings have implications for improving patent management in high technology firms.
Highly recognized case studies and the intuitive notion that a heroic champion is required to help innovations overcome the indifference or even resistance that they face in many organizations explain that there has been a positive bias among academics and managers toward the role of champions in innovation processes. A look into the previous empirical literature on champions reveals, however, that a rigorous empirical investigation into organizational factors causing the emergence of executive champions and their impact on innovation performance is lacking. In addition, previous empirical research on champions is plagued with methodological problems such as measurement issues and single informant bias. This study uses multiple informant data from 258 respondents from 43 firms to examine various hypotheses. The findings reveal that executive champions are likely to emerge in organizational cultures that are conducive to innovation and they are less likely to emerge in organizational cultures that are unfavorable for innovation. We further find a non-linear, inverted u-shaped relationship between the level of executive championing activity and innovation performance. We find, in contrast with the commonly held belief, that executive champions have a strong negative impact on innovation performance particularly in cultures that make it difficult to innovate. Among the tested moderators, only the implementation of incentives for executive champions based on innovation performance offsets the negative impact of these champions on innovation performance. The findings lead us to substantially rethink the commonly believed role champions play in innovation processes.
Web-based interaction between customers and producers offer new promising ways of bringing customers into the company right to where the value creation begins - in new product development (NPD). Despite the high potential of virtual customer integration (VCI), practical application is limited. The decision of initial utilization of VCI depends on the manager’s predisposition - favorable or unfavorable -towards VCI; usually, it is the responsibility of managers and executives belonging to the development, marketing or innovation departments to sanction such a decision. To get a deeper understanding of antecedents leading to the application of VCI, further information is needed. In this paper, the authors shed light on the various factors affecting managerial intention to apply virtual customer integration. The theory of planned behavior (TPB) provides a basis for developing a research model explaining the relation between managers’ cognition, attitude, social norms, perceived behavioral control and their intention to adopt VCI. The initial results of our empirical study, wherein we interviewed 94 managers within the consumer goods and services field, show that the TPB accounts for 66 percent of the variance in the managers’ intention to apply VCI. Furthermore, the study reveals that social norms and perceived behavioral control are the main factors which influence managerial decision to apply VCI. This contrasts with the widely-held theory that an individual's attitude is the most significant factor of influence.
Within the e-leaming industry, demand and supply factors jointly determine a need for mass customization of e-leaming products. This paper asks whether e-leaming products can be mass-customized, and if so, how this can be done. Firstly, the paper characterizes e-leaming and e-leaming technologies. Secondly, a learning model is developed in order to enhance the understanding of how learning processes differ across individuals. Based on this, the paper argues that e-leaming products in general can be mass-customized. However, mass customization is only possible for some e-leaming technologies and some types of communication, namely instruction and supplementary interaction, while it cannot support collaboration. In this context, solutions for the most common problems of mass customization are discussed. The results are then applied to the market for higher management education. It is shown that mass customization has a limited relevance for degree programs that are demanded by individuals, while it is crucial for programs that are either demanded by organizations or offered in specialized modules.
The purpose of this paper is to determine whether and how e-leaming technologies and e-leaming programs should be used in order to support knowledge management in multinational companies. These questions are important for two reasons. Firstly, so far only a few papers discuss the relationship between knowledge management and e-learning. Secondly, e-leaming initiatives in multinational companies are of limited success. The paper relates requirements of different types of knowledge with the characteristics of e-leaming technologies and e-leaming programs. Based on this, the paper shows how multinational companies should use e-leaming technologies and e-leaming programs. Different roles of corporate headquarters are discussed in this context.
Corporate Raider
(2002)
This paper looks at the value-relevance of accounting data and measures of web-traffic for Internet firms listed on the Neuer Markt. In particular, the objective is to identify value drivers during the period from October 1999 to May 2000. In doing so, the study attempts to contribute to the understanding of the investment behaviour of market participants during that time, in a market environment characterised by rapid technological change and growth. The study subdivides Internet companies into Ecommerce and Enabler firms and analyses the value-relevance accordingly. It emerged that, across both samples, no significant value-relevance of traditionally applied financial valuation metrics such as earnings and cashflow could be evidenced. However, a positive association of total sales with market capitalisation can be shown for both samples, and in addition, sales and marketing expenses (Ecommerce) as well as research and development costs (Enabler) can also be identified as value drivers. Furthermore, the paper finds a number of webmetrics to be highly value-relevant and positively associated with market capitalisation, viz. customer loyalty, reach, page impressions and unique visitors. Combining and comparing the information content and value-relevance supports the notion that webmetrics, which are not part of standardised reporting regulations, did provide at least as much explanatory power for variations in market value as standardised accounting data.
In diesem Artikel findet eine tiefgreifende Untersuchung des Einflusses der Logistik auf den Unternehmenserfolg statt. Die Wirkungen der Logistikleistung und der Logistikkosten auf die Erfolgskomponenten Anpassungsfähigkeit, Markterfolg und wirtschaftlichen Erfolg werden in einem Kausalmodell integriert, das mit dem statistischen Programmpaket LISREL 8 validiert wird. Die Ergebnisse der Untersuchung zeigen, dass die Logistik eine erhebliche Erfolgswirkung auf sämtliche Komponenten des Unternehmenserfolgs besitzt.
In diesem Artikel wird das neue Logistikkonzept der Flussorientierung konzeptualisiert und operationalisiert. Flussorientierung bezeichnet dabei eine umfassende Unterne hmensgestaltung, die darauf gerichtet ist, einen schnellen, durchgängigen und turbulenzarmen Fluss von Materialien Waren und Informationen über die gesamte Wertschöpfungskette zu ermöglichen. Es wird eine 14-faktorielle Skala zur Erfassung der Ausprägung der Flussorientierung entwickelt und validiert. Diese wird in zwei LISRELModellen eingesetzt, um die Auswirkungen der Flussorientierung auf den Logistikerfolg zu messen. Die Ergebnisse der Untersuchung zeigen, dass ein hoher Grad der Flussorientierung zu einer überlegenen Logistikleistung und niedrigeren Logistikkosten führt.
Business angels in Germany
(2000)