Innovation in product development, technological breakthrough, and market entry plays a key role in firms’ competition, and the merits of innovation are quite obvious such as taking a first-mover advantage or earning lion’s share. However, innovation pays more and push firms dedicate more resources and commitments to it. Though it is a good strategy for firms to grow and profit, it isn’t an opt...

This paper analyzes the impact of different disclosure regimes on corporate decisionmaking during initial public offering. Specifically, it examines how disclosure rules affect firms’ incentives to acquire forward-looking information, their disclosure practices and investment strategies. The disclosure regimes examined are Non-Disclosure, Voluntary, and Mandatory Disclosure Regimes. The analysi...

This paper examines the bank lending relationships of a large sample of technology and nontechnology firms that went public during the 1996 through 2000 period. We use a unique hand collected dataset to examine the characteristics of firms that establish pre-IPO bank lending relationships and whether post-IPO performance is related to the existence and size of pre-IPO banking relationships. We ...

Relying upon a rich and unique panel of Hungarian firms over 7 years, from 1992 up to 1998, this paper estimates simultaneously TFP, Total Factor Productivity, identified as efficiency, and the parameters of a model where investment depends upon internal funds, wages, and sales, as in Prasnikar J. and Svejnar J. (2000). It shows that while real investment is higher in foreign firms, the improve...

The transient fluctuation of the prosperity of firms in a network economy is investigated with an abstract stochastic model. The model describes the profit which firms make when they sell materials to a firm which produces a product and the fixed cost expense to the firms to produce those materials and product. The formulae for this model are parallel to those for population dynamics. The swing...

Emerging telecommunications competition includes convergence of industries and the removal of barriers to formerly protected markets. Successful entry and protecting existing lines of business mean selecting those markets that will be most profitable to serve. Success will require much more product and price differentiation and targeting to particular customers. This paper describes methods for...

This paper considers three firms that engage in an R&D contest to develop a new profitable technology. For a broad range of parameters, the firm that leads the contest (i.e., has the highest probability of success) is better-off licensing or selling its superior interim knowledge to one of the two lagging firms or to both rather than holding on to its lead. Although transferring interim R&D kno...

This paper examines North American pulp and paper company bankruptcies that occurred between 1990 and 2009. We demonstrate that shareholders suffer substantial losses (37%) during the month a bankruptcy occurs. Encouragingly, we show that financial ratios are useful in predicting firm failure and that failed firms are less profitable, more liquidity constrained and higher in debt leverage. Usin...

We extend the well-known fair wage-effort hypothesis to situations in which firms suffer from negative productivity shocks and test experimentally whether a fair employment hypothesis exists. The fair employment hypothesis stipulates that firms employ workers even if it is not profitable for them in the short run (after a negative productivity shock) in order to induce reciprocal behavior. Our ...

We study the financing patterns of large and indivisible projects – arguably the main focus of capital structure theory – by developing a filter that identifies investment spikes in a large population of firms. Consistent with the pecking-order theory we find that projects are predominantly financed with debt, particularly in large and profitable firms. However, we reject the hypothesis that in...