Time: 12:00-12:45
Travers Child (VU University Amsterdam)
Business Networks and Crisis Performance: Professional, Political, and Family Ties
Do political ties, family-group business affiliation, and professional connections collectively matter for firm performance?Using a unique dataset for 1,279 large East Asian firms during the 2008 financial crisis, this paper offers the first side-by-side comparison of their performance effects. We find that professional networks buoyed performance; political and family networks did not. The effects stem largely from distant board connections, suggesting information access is a key benefit of professional networks. A one standard deviation improvement to professional network position cushioned quarterly ROA by 1/3 of a percentage point during the crisis. Joint with Richard W. Carney
Field: Empirical Corporate Finance
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Time: 12:45-13:30
Piotr Denderski (VU University Amsterdam)
A market theory of self-employment: competitive search equilibrium and policy implications
We uncover a novel motive for self-employment which, contrary to earlier studies, does neither require imposed ex-ante heterogeneity nor random entry restrictions. In our economy there are search frictions in the labor market and the market for an indivisible consumption good. Households face an explicit career choice between self-employment and searching for a job at a firm. In the labor market firms post wages and compete for workers that search for vacancies. In the goods market consumers direct their search towards firms and the self-employed. Firms offer a larger service probability and charge higher prices than the self-employed. Because firms also extract some match surplus from workers, there may exist a unique mixed-strategy equilibrium of the career choice game. We characterize the equilibrium under free entry of firms and discuss its efficiency for risk-neutral and risk-averse preferences of workers. We apply our model to study labor market regulations that depend on the type of employment. Joint work with Florian Sniekers.
Field: Macroeconomics and Labor Economics
