Sunk Costs, Managerial Incentives and Firm Productivity

Alexandra Groß-Schuler and Jürgen Weigand

Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, 2001, vol. 70, issue 2, 275-287

Abstract: In this paper, we use a production function approach to examine the impact of ownership concentration, product market competition and financial pressure on German firm productivity. Additionally, we are interested in the influence of ownership identity and changes in ownership structure. We also test whether the specificity of assets affects productivity performance. Based on a panel of 361 German manufacturing companies for the time period of 1991-1996 we find that supplier concentration has a positive influence on firm productivity. There is also some evidence for a discipline-of-debt effect. Interestingly, the presence of several strong shareholders affects productivity negatively. In high sunk costs industries an owner change is negatively correlated with firm productivity whereas in low sunk costs industries productivity increases after owners have changed.

Date: 2001
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Persistent link: https://EconPapers.repec.org/RePEc:diw:diwvjh:70-20-15

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Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research is currently edited by Marcel Fratzscher, Martin Gornig, Claudia Kemfert, Alexander Kritikos, Stefan Liebig, Lukas Menkhoff, Dorothea Schäfer, Bernhard Emunds, Thomas Gehrig, Horst Gischer, Hans-Helmut Kotz, Claus Michelsen, Doris Neuberger, Andreas Pfingsten and Andreas Stephan

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