Papers Containing Keywords(s): 'profitable'
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Authors
Timothy Bates - 4
John Haltiwanger - 3
Viewing papers 11 through 17 of 17
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Working PaperPRODUCTIVITY AND ACQUISITIONS IN U.S. COAL MINING
December 1999
Working Paper Number:
CES-99-17
This paper extends the literature on the productivity incentives for mergers and acquisitions. We develop a stochastic matching model that describes the conditions under which a coal mine will change owners. This model suggests two empirically testable hypotheses: i. acquired mines will exhibit low productivity prior to being acquired relative to non-acquired mines and ii. extant acquired mines will show post-acquisition productivity improvements over their pre-acquisition productivity levels. Using a unique micro data set on the universe of U.S. coal mines observed from 1978 to 1996, it is estimated that acquired coal mines are significantly less productive than non-acquired mines prior to having been acquired. Additionally, there is observable and significant evidence of post-acquisition productivity improvements. Finally, it is found that having been acquired positively and significantly influences the likelihood that a coal mine fails.View Full Paper PDF
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Working PaperMICROENTERPRISE AS AN EXIT ROUTE FROM POVERTY:* RECOMMENDATIONS FOR PROGRAMS AND POLICY MAKERS
November 1998
Working Paper Number:
CES-98-17
The objective of this study is to shed light on whether and how microenterprise programs can be used as an economic development strategy to enable low-income people to achieve self-sufficiency through self-employment. Our findings provide little support for the notion that hard work and a small loan are sufficient ingredients for business success. Viable small firms are usually headed by well-educated owners and/or those possessing specific skills that serve as a basis for successful business creation and operation. Potential entrepreneurs lacking assets, skills, and support networks are unlikely to support themselves through self-employment earnings alone. As a poverty alleviation strategy, microenterprise is not a panacea. Nevertheless, programs targeting the poor who do have skills, resources, and support networks can be useful vehicles for helping some to escape poverty.View Full Paper PDF
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Working PaperEfficiency of Bankrupt Firms and Industry Conditions: Theory and Evidence
October 1996
Working Paper Number:
CES-96-12
We show that the incentives to reorganize inefficient firms and redeploy their assets depend on the change in industry output and industry characteristics. We use plant-level data to investigate the productivity of Chapter 11 bankrupt firms and asset-sale and closure decisions. We find no evidence of bankruptcy costs in industries with declining output growth, where most bankruptcies occur. In declining industries, bankrupt firms' plants are not less productive than industry averages and do not decline in productivity while in Chapter 11. In these industries, Chapter 11 appears to be a mechanism for fostering exit of capacity. In high-growth industries, there is some limited evidence of productivity declines while in Chapter 11 for a subsample of firms that remain in Chapter 11 for four or more years. Examining asset sales and closures by bankrupt firms and their competitors, we find that Chapter 11 status is of limited importance in predicting these decisions once industry and plant characteristics are taken into account. More generally, the findings imply that Chapter 11 may involve few real economic costs, and that industry effects and sample selection issues are very important in evaluating the performance of bankrupt firms.View Full Paper PDF
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Working PaperExploring The Role Of Acquisition In The Performance Of Firms: Is The "Firm" The Right Unit Of Analysis?
November 1995
Working Paper Number:
CES-95-13
In this article, we examine the effect of acquisitions on productivity performance of acquiring firms using the conventional regression analysis and a method of productivity decomposition. Our empirical work uses both plant- and firm-level data taken from the Longitudinal Research Database (LRD) on the entire population of U.S. food manufacturing firms that operated continuously during 1977-87. We find that (1) acquisitions had a significant, positive effect on acquiring firms' productivity growth, but this effect becomes insignificant when only firm-level data on multi-unit firms are included in the regressions; and (2) the decomposition results show that while the productivity contribution of the external component (acquired plants) is positive, the contribution of the internal component (existing plants) is negative; the two components offset each other leaving productivity of multi-unit acquiring firms virtually unchanged after acquisitions. These results suggest that assessing the impact of acquisitions on the structure and performance of firms requires a careful look at the individual components (i.e., plants) of the firms, particularly for large multi-unit firms.View Full Paper PDF
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Working PaperTechnology Locks, Creative Destruction And Non-Convergence In Productivity Levels
April 1995
Working Paper Number:
CES-95-06
This paper presents a simple solution to a new model that seeks to explain the distribution of plants across productivity levels within an industry, and empirically confirms some key predictions using the U.S. textile industry. In the model, plants are locked into a given productivity level, until they exit or retool. Convex costs of adjustment captures the fact that more productive plants expand faster. Provided there is technical change, productivity levels do not converge; the model achieves persistent dispersion in productivity levels within the context of a distortion free competitive equilibrium. The equilibrium, however, is rather turbulent; plants continually come on line with the cutting edge technology, gradually expand and finally exit or retool when they cease to recover their variable costs. The more productive plants create jobs, while the less productive destroy them. The model establishes a close link between productivity growth and dispersion in productivity levels; more rapid productivity growth leads to more widespread dispersion. This prediction is empirically confirmed. Additionally, the model provides an explanation for S-shaped diffusion.View Full Paper PDF
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Working PaperFirms Started As Franchises Have Lower Survival Rates Than Independent Small Business Startups
May 1994
Working Paper Number:
CES-94-03
Aspiring entrepreneurs choosing to become franchisees certainly expect to improve their chances of survival during the turbulent early years of business startup and operation. Alignment with a franchiser parent company offers the franchisee managerial assistance, access to financial capital, and access to markets via the right to utilize the parent company trademark. This study examines survival patterns among franchise and nonfranchise small firms started between 1984 and 1987: survival through late 1991 is tracked for all firms. Although the franchise operations are larger scale, better capitalized young firms, the independent business startups are found to be more profitable and their survival prospects are better than those of franchises.View Full Paper PDF
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Working PaperOn Productivity and Plant Ownership Change: New Evidence From the LRD
November 1993
Working Paper Number:
CES-93-15
This paper investigates the questions of what type of establishment experiences ownership change, and how the transferred properties perform after acquisition. Are they the profitable operations suggested by Ravenscraft and Scherer (1986), or the poorly operating ones found by Lichtenberg and Siegel (1992)? Is the primary motive of ownership change the rehabilitation of low productivity plants as suggested by Lichtenberg and Siegel? Our empirical work is based on an unbalanced panel of 28,294 plants taken from the U.S. Bureau of the Census' Longitudinal Research Database ( LRD ). The data set provides complete coverage of the food manufacturing industry (SIC 20) for the period 1977-1987. Our principle findings are that (1) ownership change is generally associated with the transfer of plants with above average productivity, however, large plants, empirically, those with more than 200 employees, are more likely to be purchased than closed when they are performing poorly; and (2) transferred plants experience improvement in productivity performance following the ownership change.View Full Paper PDF
