Corporate efficiency in Europe

0447276 - NHU-C 2016 GB eng V - Research Report
Hanousek, Jan - Kočenda, E. - Shamshur, A.
Corporate efficiency in Europe.
London: Centre for Economic Policy Research, 2015. 36 s. CEPR discussion paper series, 10500. ISSN 0265-8003
R&D Projects: GA ČR(CZ) GA15-15927S
Institutional support: PRVOUK-P23
Keywords : firms * ownership structure * panel data and stochastic frontier
Subject RIV: AH - Economics
http://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=10500

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.
Permanent Link: http://hdl.handle.net/11104/0249155