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Does BPO pay off at the firm-level? Although there are several studies which analyze the potential benefits of BPO, there is a virtual absence of research papers on BPO outcomes. Based on an analysis of 137 Business process outsourcing (BPO) ventures at 254 German banks in a period between 1994 and 2005, we found that the outsourcer's financial performance in terms of profitability and cost efficiency was increased significantly compared to industry peers without BPO. The increase stems not from workforce reductions but rather from increased employee productivity. Further, we show how BPO governance ensures BPO success: individually negotiated outsourcing contracts help to improve cost efficiency and profitability measures. Relational governance based on trust has only positive effects on profitability. Keywords: Business Process Outsourcing, firm performance, firm characteristics, banking, German banks, governance JEL Classifications: G21, L14, L21, L24
Applying an investment perspective to higher education, the paper presents detailed empirical evidence on the rate of return to higher education and its determinants. Employing a sample of 17,180 higher education graduates derived from the German Labor Force Survey 2004, we show considerable variation in the rates of return to higher education across the different subjects, with some subjects on average not representing attractive private investments from an economic point of view. We find that the decision what to study is worth several hundred thousand Euros. Applying regression analysis, we find gender- and degree-specific return advantages only in certain subjects. Comparing the return of an investment in higher education and the production cost of higher education, we show that more expensive subjects (apart from Medicine) yield a lower return. When considering the cost of study, the overall order of attractiveness of the different forms of education remains stable, but the investment in further subjects is no longer clearly attractive. Keywords: Returns to Education, Human Capital, Higher Education Earnings Capacity.
This dissertation contains five independent chapters dealing with wage dispersion and unemployment. The first chapter deals with the explanation of international changes in wage inequality and unemployment in the 80s and 90s. Both theoretically and empirically, social benefits and its link to average income are blamed for the different experiences across countries. The second chapter discusses the search framework, to explain residual wage inequality and finds that institutional wage compression has ambiguous effects on employment. In the third chapter, we apply the theory to German data. We show that job-to-job transitions are important in explaining both frictions and career advances. In the fourth chapter, we empirically assess the relationship between wage dispersion and unemployment for homogeneous workers. We find that neither a frictional nor a neo-classical view in explaining this relationship are convincing. Unemployment within cells is not negatively correlated with wage dispersion. Finally, the last chapter builds a theoretical model which treats heterogeneous individuals in a production function framework and a frictional labor market. The model generates both wage dispersion within and between skill groups and both frictional and structural unemployment. In sum, the dissertation stresses the importance of modelling frictions to understand different types of wage inequality and unemployment.
Many tax-codes around the world allow for special taxable treatment of savings in retirement accounts. In particular, profits in retirement accounts are usually tax exempt which allow investors to increase an asset's return by holding it in such a retirement account. While the existing literature on asset location shows that risk-free bonds are usually the preferred asset to hold in a retirement account, we explain how the tax exemption of profits in retirement accounts affects private investors' asset allocation. We show that total final wealth can be decomposed into what the investor would have earned in a taxable account and what is due to the tax exemption of profits in the retirement account. The tax exemption of profits can thus be considered a tax-gift which is similar to an implicit bond holding. As this tax-gift's impact on total final wealth decreases over time, so does the investor's equity exposure. JEL Classification Codes: G11, H24
Both practitioners and academics agree about the importance of price and its direct influenceon consumers’ purchase decision as well as the company profit. In the reality, we rarely see a
single price for a given product. One visit in a store already shows that consumers face many various prices. This strategy of differential prices allows to increase profit but also improves consumers’ situation and increases welfare. A wide range of various price differentiation mechanisms exists on the market which makes price differentiation a very interesting phenomenon. Additionally, market developments constantly allow for new price differentiation applications. In this work, I research a fascinating topic of price differentiation, its various forms
and new application possibilities in changing market areas.
This thesis is concerned with various aspects of estimating trend output and growth and discusses and evaluates methods to prepare medium-term GDP growth projections. Furthermore, econometric techniques suited for cross-correlated macroeconomic panel data with a focus on factor models are applied for unit root and cointegration testing as well as panel error correction estimation. Applications involve the identification of growth determinants as well as the modelling of aggregate labor supply in a multi-country framework. The first chapter evaluates a very popular method for potential output estimation and medium-term forecasting---the production function approach---in terms of predictive performance. For this purpose, a particular forecast evaluation framework is developed and an evaluation of the predictions of GDP growth for the three to five years ahead for each individual G7 country is carried out. In chapter two, a new approach for estimating trend growth of advanced economies is proposed. The suggestion combines econometric methods that have been used to test and estimate the implications of the extended Solow growth model in a cross sectional time series setting with an application of multivariate time series filter techniques. The last chapter discusses several panel unit root tests designed to accommodate cross-sectional dependence. These methods are then applied to an OECD country sample of the aggregate labor supply measure "hours worked".
Acquiring foreign firms far away might be hazardous to your share price: evidence from Germany
(2007)
This paper examines shareholder wealth effects of cross-border acquisitions. In a sample of 155 large acquisitions by German corporations from 1985–2006 international transactions in total do not lead to significant announcement returns. Geography, however, makes a difference: Shareholders of acquiring firms gain 6.5% in cross-border transactions into countries that have a common border with Germany but lose 4.4% in other international transactions. We find proximity to be one of the most important success factors in cross-border mergers and acquisitions, even when we control for firm, deal and country characteristics.
We analyze the effect of committee formation on how corporate boards perform two main functions: setting CEO pay and overseeing the financial reporting process. The use of performance-based pay schemes induces the CEO to manipulate earnings, which leads to an increased need for board oversight. If the whole board is responsible for both functions, it is inclined to provide the CEO with a compensation scheme that is relatively insensitive to performance in order to reduce the burden of subsequent monitoring. When the functions are separated through the formation of committees, the compensation committee is willing to choose a higher pay-performance sensitivity as the increased cost of oversight is borne by the audit committee. Our model generates predictions relating the board committee structure to the pay-performance sensitivity of CEO compensation, the quality of board oversight, and the level of earnings management.
Mutual insurance companies and stock insurance companies are different forms of organized risk sharing: policyholders and owners are two distinct groups in a stock insurer, while they are one and the same in a mutual. This distinction is relevant to raising capital, selling policies, and sharing risk in the presence of financial distress. Up-front capital is necessary for a stock insurer to offer insurance at a fair premium, but not for a mutual. In the presence of an owner-manager conflict, holding capital is costly. Free-rider and commitment problems limit the degree of capitalization that a stock insurer can obtain. The mutual form, by tying sales of policies to the provision of capital, can overcome these problems at the potential cost of less diversified owners.