Recent papers by Jan Hanousek
We study 6,083 European firms that were acquired between 1999 and 2015. Soon after the acquisitio... more We study 6,083 European firms that were acquired between 1999 and 2015. Soon after the acquisition, the acquired firms promptly and substantially close the gap between their actual leverage ratios and their target (optimal) ratios. Firms that were over-(under-) leveraged at the start of their acquisition year move their debt-to-assets ratio from 34.1% to 20% (10% to 18.5%) by the end of the following year. Under-leveraged firms expand their assets rapidly following acquisition, as they gain improved access to investable resources. Our results are consistent with the trade-off theory of capital structure and with the existence of firm-specific target leverage ratios.
Bookmarks Related papers MentionsView impact
Based on real options theory and institutional factors, we develop a theoretical framework for in... more Based on real options theory and institutional factors, we develop a theoretical framework for investment in the presence of corruption and use a sample of private firms in 13 European countries over 2001-2013 to carry out the first large-scale analysis of the impact of the level of corruption and uncertainty about corruption on post-entry investment of MNE subsidiaries. We employ several waves of managerial surveys (the Business Environment and Enterprise Performance Survey; BEEPS) to construct local-rather than merely countrylevel measures of corruption level and uncertainty. In combination with a large European firm-level database (Amadeus), we show that corruption uncertainty and corruption level do not have an effect on the investment of MNE subsidiaries. We next carry out the analysis on the sample of domestic firms and find a negative investment effect that is driven primarily by corruption uncertainty rather than corruption level. We also show that investment of domestic firms that are similar (matched) to MNE subsidiaries is unaffected directly by corruption, but is affected by uncertainties related to finances and judiciary. Our results are robust to controlling for various types of uncertainty, and they provide new insights into the effects of corruption on investment.
Bookmarks Related papers MentionsView impact
We examine the relationship between dividend smoothing and firm valuation across 21 countries usi... more We examine the relationship between dividend smoothing and firm valuation across 21 countries using several empirical methods and smoothing measures. Our main results show that dividends are capitalized at significantly larger values for high-smoothing firms than for low-smoothing firms. We also find that dividend-smoothing premiums are higher in countries with weak shareholder protectionsuggesting that smoothing serves as a substitute mechanism to reduce agency costs. Overall, our findings support the view that managers use dividend smoothing predominantly as a bonding mechanism to reduce agency costs (Leary and Michaely (2011)), and not as a rent extraction mechanism (Lambrecht and Myers (2012)).
Bookmarks Related papers MentionsView impact
Journal of Corporate Finance, 2021
We examine the persistence of corporate corruption for a sample of privately-held firms from 12 C... more We examine the persistence of corporate corruption for a sample of privately-held firms from 12 Central and Eastern European countries from 2001 to 2015. Using publicly available information and stochastic frontier analysis, we create a proxy for corporate corruption based on a firm's internal inefficiency. We find that corruption enhances a firm's profitability. A channel analysis further reveals that inflating staff costs is the most common approach by which firms divert funds to finance corruption. In spite of corruption's negative effects on a country's economy, we conclude that it persists because of its ability to improve corporate profitability. We refer to this effect as the Corporate Advantage Hypothesis.
Bookmarks Related papers MentionsView impact
Journal of Corporate Finance, 2018
Using a sample of U.S. firms over the period, 1984 to 2013, this study examines the relation betw... more Using a sample of U.S. firms over the period, 1984 to 2013, this study examines the relation between market and book leverage ratios. Unlike Welch (2004) who contends that changes in market leverage do not induce adjustments in book leverage, we find an asymmetric effect. That is, firms adjust their book leverage only when the changes in market leverage are due to increases in equity values. No adjustment is observed when firm equity values decrease. Our results are consistent with Myers (1977) and Barclay et al. (2006) who argue that optimal debt levels decrease with corporate growth opportunities.
Bookmarks Related papers MentionsView impact
In this study, we provide an analysis of federal contractor default. We examine both the predicta... more In this study, we provide an analysis of federal contractor default. We examine both the predictability and the consequences of contractor default. We discover that a firm's political contributions, size, sales derived from government contracts, and primary industry concentration are positively related to default, while the average quality of firm contracts and liquidity are negatively related to default. Production of a product rather than service delivery, the number of modifications, and the requirement of a subcontractor are positively related to contract default. Department of Defense contracts and the use of commercial item procedures are negatively related to default. Defaulting firms tend to receive smaller contracts after default. To mitigate possible punishment, defaulting firms increase their political contributions, especially to congressional candidates.
Bookmarks Related papers MentionsView impact
Journal of comparative Economics, 2021
We use a quasi-natural experiment of reciprocal imposition of trade sanctions by Russia and the E... more We use a quasi-natural experiment of reciprocal imposition of trade sanctions by Russia and the EU since 2014. Using UNCTAD/BACI bilateral flows data we take this unique opportunity to analyse both sanctions. In particular, we study the effectiveness of narrow versus broadly defined sanctions, and differences in the effectiveness of sanctions imposed on exports and imports. We show that the Russian sanctions imposed on European and American food imports resulted in about an 8 times stronger decline in trade flows than those imposed by the EU and the US on exports of extraction equipment. These results do not appear to be driven by diversion of trade flows via non-sanctioning countries. Hence the difference in sanctions' effectiveness can be attributed to the limited retroactivity of Western sanctions, which allowed exemptions for exports made pursuant to contracts made prior to 2014.
Bookmarks Related papers MentionsView impact
We study the effects of corruption on firm efficiency using a unique dataset of private firms fro... more We study the effects of corruption on firm efficiency using a unique dataset of private firms from 14 Central and Eastern European countries from 2000 to 2013. We find that an environment characterized by a high level of corruption has an adverse effect on firm efficiency. This effect is stronger for firms with a lower propensity to behave corruptly, such as foreign-controlled firms and firms managed by female CEOs, while local firms and firms with male CEOs are not disadvantaged. We also find that an environment characterized by considerable hetero-geneity in the perception of corruption is associated with an increase in firm efficiency. This effect is particularly strong for foreign-controlled firms from low corruption countries, while no effect is observed for firms managed by a female CEO.
Bookmarks Related papers MentionsView impact
The well-known biases caused by taking the logarithm of a heteroskedastic dependent variable are ... more The well-known biases caused by taking the logarithm of a heteroskedastic dependent variable are a potential threat in stochastic frontier analyses (SFA), which are often estimated in log-linear form. This paper shows that while these biases can indeed be substantial, they do not affect the identification of best and worst performing firms, which is often more important than parameters of the frontier function. The efficiency ranks remain correctly identified except for special cases which are easily detectable. Furthermore, we document that the popular normal-truncated-normal SFA model with time-invariant efficiency shows a notable robustness to the mis-specification of the distribution of efficiency terms. The reason for this property is the model's similarity to Gaussian pseudo-maximum likelihood estimator. Simulations are used to illustrate these properties and to show that the recovery of the correct productivity ranks is feasible even with very short panels. Empirical exercises show that using short panels is practicable in real datasets.
Bookmarks Related papers MentionsView impact
The Economics of Transition, 2019
We analyze the response of tax evasion to the introduction of a flat tax in several transition ec... more We analyze the response of tax evasion to the introduction of a flat tax in several transition economies. Using a novel estimator based on household level data, we show that in most of the countries studied there was no discernible effect on the measured size of unreported income following a flat tax reform. This may imply that decreases in marginal tax rates may frequently have been accompanied by a parallel deterioration in attitudes towards public services and the government in general.
Bookmarks Related papers MentionsView impact
Empirical Economics, 2021
We develop an estimator of unreported income that relies on more flexible identifying assumptions... more We develop an estimator of unreported income that relies on more flexible identifying assumptions than those that have been used previously. Assuming only that evaders have a higher consumption-income gap than non-evaders in surveys, our model enables the estimation of both the probability of hiding income and the amount of unreported income for each household. We illustrate the method using Czech and Slovak household budget surveys. Our results are robust to alternative specifications. Furthermore, we show that since the underreported share decreases with reported income, income inequality in these countries may be lower than suggested by the reported income.
Bookmarks Related papers MentionsView impact
Econometric Reviews, 2018
The detection of (structural) breaks or the so called change point problem has drawn increasing a... more The detection of (structural) breaks or the so called change point problem has drawn increasing attention from the theoretical, applied economic and nancial elds. Much of the existing research concentrates on the detection of change points and asymptotic properties of their estimators in panels when N, the number of panels, as well as T, the number of observations in each panel are large. In this paper we pursue a di erent approach, i.e., we consider the asymptotic properties when N → ∞ while keeping T xed. This situation is typically related to large (rm-level) data containing nancial information about an immense number of rms/stocks across a limited number of years/quarters/months. We propose a general approach for testing for break(s) in this setup. In particular, we obtain the asymptotic behavior of test statistics. We also propose a wild bootstrap procedure that could be used to generate the critical values of the test statistics. The theoretical approach is supplemented by numerous simulations and by an empirical illustration. We demonstrate that the testing procedure works well in the framework of the four factors CAPM model. In particular, we estimate the breaks in the monthly returns of US mutual funds during the period January 2006 to February 2010 which covers the subprime crises.
Bookmarks Related papers MentionsView impact
We analyze the response of tax evasion to the introduction of a flat tax in several transition ec... more We analyze the response of tax evasion to the introduction of a flat tax in several transition economies. Using a novel estimator based on household level data, we show that in most of the countries studied there was no discernible effect on the measured size of unreported income following a flat tax reform. This may imply that decreases in marginal tax rates may frequently have been accompanied by a parallel deterioration in attitudes towards public services and the government in general. The countries that show a response to the flat tax reform appear to be those where satisfaction with government services increased.
Bookmarks Related papers MentionsView impact
Recent Working papers by Jan Hanousek
SSRN
We explore how the type of owner affects private enterprise investment decisions in Europe. In co... more We explore how the type of owner affects private enterprise investment decisions in Europe. In contrast to the literature, we analyze firms with concentrated (more than 95%) ownership stakes to reduce the potential that agency problems contaminate our results. We consider four types of supermajority ownersfamily, institutional, corporate, and state and use detailed ownership and financial information from a large sample of private firms from 24 European countries from 2001 to 2018. We find that family-owned firms exhibit higher gross investment rates and substantially higher sensitivity to investment opportunities, profitability, cash flow, and value-added growth compared to corporate and institutional owners. At the same time, and more consistent with the literature, family-owned firms invest significantly less in intangible assets than other ownership types. To demonstrate the robustness of our results, we employ matching samples complemented by analysis of owner-type transitions from family owners to corporate and institutional owners.
Bookmarks Related papers MentionsView impact
SSRN
This study introduces a new measure of the political risk to which firms are subject. We find tha... more This study introduces a new measure of the political risk to which firms are subject. We find that the aggregate equity trading U.S. senators significantly predicts a firm's future risk and return. This measure possesses industry-relevant information beyond what is contained in existing measures of political risk and uncertainty. We show that aggregated Senatorial trading conveys information about future industry performance more than individual equity transactions. Our findings are robust to alternate model specifications and are economically significant. Our results significantly extend the findings of previous studies on how political risk affects a firm's performance.
Bookmarks Related papers MentionsView impact
This paper studies the rationale and effects of buying bots on (former Twitter). We observe that ... more This paper studies the rationale and effects of buying bots on (former Twitter). We observe that large amount of attention to corporate accounts around earnings announcements is driven by bots. Bot activity is a significant predictor of investor disagreement, which is persistent long-term. Moreover, bot activity increases analyst dispersion for the following quarterly earnings announcement. Consistent with managerial short-termism, bot activity often accompanies intense earnings management. Our results are robust to various specifications, including a matching approach indicating causal interpretation.
Bookmarks Related papers MentionsView impact
Papers 2009-2018 by Jan Hanousek
We performed an extensive simulation study to compare the relative performance of many price-jump... more We performed an extensive simulation study to compare the relative performance of many price-jump indicators with respect to false positive and false negative probabilities. We simulated twenty different time series specifications with different intraday noise volatility patterns and price-jump specifications. The double McNemar nonparametric test (Psychometrika 12 (1947), 153-157) has been applied on constructed artificial time series to compare fourteen different price-jump indicators that are widely used in the literature. The results suggest large differences in terms of performance among the indicators, but we were able to identify the best-performing indicators. In the case of false positive probability, the best-performing price-jump indicator is based on thresholding with respect to centiles. In the case of false negative probability, the best indicator is based on bipower variation.
Bookmarks Related papers MentionsView impact
Bookmarks Related papers MentionsView impact
We analyze the impact of multinational enterprises (MNEs), via their foreign direct investment, o... more We analyze the impact of multinational enterprises (MNEs), via their foreign direct investment, on domestic firms in 30 European host economies, from 2001 to 2013. We incorporate international industrial and trade linkages into a standard theoretical framework and test them empirically on a unique dataset compiled from the Amadeus, Eurostat, UNComtrade and BACI data sources and aggregated at industry level. While controlling for horizontal, vertical, and export channels at the upstream and downstream levels, we show that the presence of MNEs significantly affects domestic firms by changing the degree of competition and improving productivity. The impact is not always positive, as domestic firms are often crowded-out, but the negative effect for an average firm is mostly small.
Bookmarks Related papers MentionsView impact
Bookmarks Related papers MentionsView impact
Uploads
Recent papers by Jan Hanousek
Recent Working papers by Jan Hanousek
Papers 2009-2018 by Jan Hanousek