Benjamin Balsmeier

Outside Directors on the Board and Innovative Firm Performance

We investigate how outside directors on supervisory boards influence innovative activities of the firms they advise and monitor. Based on panel data on the largest German companies, the econometric analysis shows a positive influence of external executives on innovative firm performance, measured by patent applications. Differentiating between outside directors from innovative and non-innovative companies reveals that only outside directors from innovative firms increase patenting activities at the firms they advise and monitor. This effect increases with the technological proximity between the appointing firm and the outsiders home firm. Outside directors from non-innovative firms are negatively associated with the appointing firms innovativeness. The results indicate that external executives with an appropriate professional background can provide valuable specific knowledge and expertise to the board.

International Financial Reporting Standards and Private Firms’ Access to Bank Loans

Prior research has focused on publicly listed firms when examining the economic consequences of adopting International Financial Reporting Standards (IFRS). This study extends the literature by examining the ability of private firms to attract bank loans through the use of IFRS. Based on firm-level data from 25 countries, we show that private firms that voluntarily use IFRS are associated with a higher propensity to attract debt from foreign banks. We find no such association when examining their relationships with domestic banks. Supplementary analyses show that the results are mainly driven by private firms operating in countries with strong regulatory enforcement. The findings suggest that, conditional on adequate enforcement, the use of IFRS provides useful information for foreign non-relationship banks.

How Important is Industry-Specific Managerial Experience for Innovative Firm Performance?

This study examines how industry-specific managerial experience affects firms’ innovation performance in the context of different institutional environments. Based on firm-level data from 27 Central and Eastern European countries we identify a robust positive relationship between industry-specific experience of the top-manager and the decision to innovate as well as the share of new product-related sales. These effects are particularly pronounced for small firms operating outside the European Union or, more generally, in institutionally less developed countries. The results suggest that managerial experience affects firm innovations largely indirectly, for example, by reducing uncertainty about future returns on innovations or by providing knowledge about how to cope with institutional shortfalls potentially hampering the commercial success of new products. JEL-Classification: G38, L25, O32, P26

Why top-manager origin matters for innovation strategies

It is widely accepted nowadays that certain top-manager characteristics have great influence on corporate investment strategies and a firms innovativeness. The present paper focuses on how top-manager origin is related to innovative firm activity. More specifically we discuss whether managers hired from outside the firm are associated with higher or lower innovative firm performance compared to internally promoted top-managers. Internally promoted managers can rely more easily on informal long term agreements and have more firm-specific knowledge whereas their externally hired colleagues have the advantage of broader outside experiences.

The impact of skilled immigrants on their local teammates’ performance

ABSTRACT We use the Bosman ruling, which invalidated restrictions on the maximum number of foreign players allowed on professional football teams, to identify a causal positive impact of foreign players in German Bundesliga clubs on the individual performance of their domestic teammates.

Hazard Rates and Personal Interdependencies in Supervisory Boards of DAX-Companies

We estimate and analyse the hazard rates of members of the supervisory board in German leading companies, listed in the DAX, with a special focus on personal interdependencies with other supervisory boards and executives committees. We find fundamental differences between supervisory board members representing owners and those representing employees. Several variables measuring personal interdependencies are only relevant for the former whereas the latter have a longer tenure if the salary of the executives is higher, which can be interpreted as an indicator of collusion.