Working Paper: CEPR ID: DP10500
Authors: Jan Hanousek; Even Koenda; Anastasiya Shamshur
Abstract: Using a stochastic frontier model and a comprehensive dataset, we study factors that affect corporate efficiency in Europe. We find that (i) larger firms are less efficient than smaller firms, (ii) greater leverage contributes to corporate efficiency, and (iii) high competition is less conductive to efficiency than moderate or low competition. In terms of ownership, we find that (iv) efficiency increases when a majority owner must deal with minority shareholders and that (v) domestic majority owners improve efficiency more than foreign majority owners when no minority shareholders are present, but (vi) the opposite is true when minority shareholders hold a substantial fraction of the firm?s equity. In the analysis, we distinguish between a pre-crisis period (2001?2008) and a post-crisis period (2009-2011), and find that our results are sensitive to the period of observation.
Keywords: efficiency; europe; firms; ownership structure; panel data; stochastic frontier
JEL Codes: C33; D24; G32; L60; L80; M21
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| firm size (L25) | efficiency (D61) |
| leverage (G24) | efficiency (D61) |
| competition (L13) | efficiency (D61) |
| ownership structure (G32) | efficiency (D61) |
| majority owner (domestic) (F23) | efficiency (D61) |
| majority owner (foreign) with minority shareholders (F23) | efficiency (D61) |
| majority owner (foreign) without minority shareholders (F23) | efficiency (D61) |