Belenzon, Chatterji and Daley (2017) find that eponymy-firms being named after their owners-is linked to firm...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Belenzon, Chatterji and Daley (2017) find that eponymy-firms being named after their owners-is linked to firm performance. The baseline specification in their paper takes the form ROAita Eponymousit +ZitB1 + ... + Zait Ba+nj + T₂ + cc + U₁ where the indices i and t denote firms and years, ROA,, is return on assets, Eponymousit is a binary indicator variable that takes the value of one if firm i's name in year t includes the name of owner and zero otherwise, and explanatory variables Zlit ..., Zdit include time- varying controls for log of assets, log number of shareholders, equity dispersion, and u,, is a regression error term. The variables n, T, c are complete sets of three-digit standard industrial classification (SIC) codes, country, and year dummies. The total number of observations is more than 6 million and there are more than 1 million firms in the data for the period 2002-2012. (a) [5 points] Belenzon, Chatterji and Daley (2017) propose a signaling explanation for the eponymy-performance relationship. They argue that eponymy creates a stronger association between the entrepreneur and her firm that increases the reputational benefits of having the market hold a favorable impression of the quality of her firm. Consequently, they infer that high-ability entrepreneurs are more drawn to eponymy than are low-ability ones. Based on this explanation, what is your prediction on a₁? Explain briefly. (b) [5 points] Given the information given above, do the authors of the paper have balanced panel data? Explain briefly. (c) [5 points] In the basic specification, there is no firm fixed effect. In the data, only 0.3 percent of firms change their eponymy status during the sample period. Can you conjecture why the authors did not include the firm fixed effect in their basic specification? Justify your answer. Belenzon, Chatterji and Daley (2017) find that eponymy-firms being named after their owners-is linked to firm performance. The baseline specification in their paper takes the form ROAita Eponymousit +ZitB1 + ... + Zait Ba+nj + T₂ + cc + U₁ where the indices i and t denote firms and years, ROA,, is return on assets, Eponymousit is a binary indicator variable that takes the value of one if firm i's name in year t includes the name of owner and zero otherwise, and explanatory variables Zlit ..., Zdit include time- varying controls for log of assets, log number of shareholders, equity dispersion, and u,, is a regression error term. The variables n, T, c are complete sets of three-digit standard industrial classification (SIC) codes, country, and year dummies. The total number of observations is more than 6 million and there are more than 1 million firms in the data for the period 2002-2012. (a) [5 points] Belenzon, Chatterji and Daley (2017) propose a signaling explanation for the eponymy-performance relationship. They argue that eponymy creates a stronger association between the entrepreneur and her firm that increases the reputational benefits of having the market hold a favorable impression of the quality of her firm. Consequently, they infer that high-ability entrepreneurs are more drawn to eponymy than are low-ability ones. Based on this explanation, what is your prediction on a₁? Explain briefly. (b) [5 points] Given the information given above, do the authors of the paper have balanced panel data? Explain briefly. (c) [5 points] In the basic specification, there is no firm fixed effect. In the data, only 0.3 percent of firms change their eponymy status during the sample period. Can you conjecture why the authors did not include the firm fixed effect in their basic specification? Justify your answer.
Expert Answer:
Answer rating: 100% (QA)
ANSWER a Based on the signaling explanation proposed by Belenzon Chatterji and Daley 2017 we can predict that a the coefficient on the binary indicato... View the full answer
Related Book For
Fundamentals of Cost Accounting
ISBN: 978-0077398194
3rd Edition
Authors: William Lanen, Shannon Anderson, Michael Maher
Posted Date:
Students also viewed these economics questions
-
Let A, B be sets. Define: (a) the Cartesian product (A B) (b) the set of relations R between A and B (c) the identity relation A on the set A [3 marks] Suppose S, T are relations between A and B, and...
-
QUIZ... Let D be a poset and let f : D D be a monotone function. (i) Give the definition of the least pre-fixed point, fix (f), of f. Show that fix (f) is a fixed point of f. [5 marks] (ii) Show that...
-
5. Explain how Culture can help companies set legal and ethical standards?
-
A farm tractor tows a 3300-kg trailer up a 14 incline with a steady speed of 2.8 m/s. What force does the tractor exert on the trailer? (Ignore friction.)
-
Find Vo and the power dissipated in all the resistors in the circuit of Fig. 3.60. Figure 3.60 For Prob. 3.11 12 V 2 36 V
-
Discuss the criminal trial process.
-
Chung, Inc., is preparing its direct labor budget for 2012 from the following production budget based on a calendar year. Each unit requires 1.6 hours of direct labor.InstructionsPrepare a direct...
-
X 10 Let A = -9 y 7 4 Z 210 If the kernel of A contains the vector what are x, y, and z? -2
-
AKEI is an elite desk manufacturer. At the start of May 2015, the following budgeted unit amounts (based on a standard costing system) related to its manufacture of executive desks (made out of oak):...
-
Calculate the child tax credit for the following taxpayers. Round any division "up" to the nearest whole number. a. Jeremy is a single (head of household) father with $80,100 of AGI and has a...
-
A superconducting solenoid is to be designed to generate a magnetic field of 3.50 T. If the solenoid winding has 984 turns/m, what is the required current?
-
A 4.88 x 10 -6 C charge moves 265 m/s perpendicular (at 90) to a magnetic field of 0.0579 T. What is the magnetic force on the charge?
-
A 3 kg sample of a substances at a boiling point. If 5360 kJ of energy are enough to boil away the entire substance, what is its Latent heat of a vaporization?
-
A spacecraft moves at a speed of 0.8c relative to Earth, and shots a bullet with rest mass of M = (the rest energy is 3 Joules), and its velocity 3 J C relative to Earth is in the same direction as...
-
Find and analyze a recent article (within the last three months) in the news that discusses an aspect of the mass media industry and how it's changing/adapting to today's world. 1. Summarize this...
-
Quentin, Tara and Tito form a business entity with each contributing the following. Adjusted Basis Fair Market Value Quentin: Cash $220,000 $220,000 Tara: Land $55,000 90,000 Tito: Services 60,000...
-
Which of the following raises the credibility of areport? Which of the following raises the credibility of a report? Multiple Choice avoiding predictions avoiding the use of cause-effect statements...
-
A consulting firms accounting records show the following costs for year 1: Direct materials supplies . . . . . . . . . . . . . . $ 360,000 Direct labor . . . . . . . . . . . . . . . . . . . . . . . ....
-
Match each of the following specific measurements to its benchmark category. a. Number of product recalls b. Percentage of late deliveries c. Number of requests for transfer d. Length of time to fill...
-
Fixed cost variances are computed differently from the variances for variable costs. Why?
-
An article states there is no significant evidence that median income increased. The implied null hypothesis is: (1) Median income increased. (2) Median income changed. (3) Median income did not...
-
If you make multiple measurements of your height, you are likely to find that the results vary by nearly half an inch in either direction due to measurement error and actual variations in he ight....
-
Migrating geese tend to travel at approximately constant speed, flying in segments that are straight lines. A goose flies 32 km south, then turns to fly 20 km west. Afterward, how far is the goose...
Study smarter with the SolutionInn App