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Publication Gender differences in hedge fund performance persistence(2022) Klubinski, William Joseph; Verousis, Thanos; Tsoligkas, Fanis; Northumbria University; University of Bath - School of ManagementThis paper analyses gender differences in hedge fund (HF) performance persistence using parametric and non-parametric risk-adjusted-performance persistence indicators. We find evidence consistent with performance persistence, which in relative (risk-adjusted) terms, is more pronounced amongst females, as opposed to male managers, in short to medium-term horizons. We also, observe a complete loss of persistence for the female managers in the long term, which for the male managers prevails and continues throughout all analysed periods. The findings contribute to the debate on the existence of differences in behaviour across males and females.Publication Price-cost margins and fixed costs(2020) Abraham, Filip; Bormans, Yannick; Konings, Jozef; Roeger, Werner; KU LeuvenThis paper introduces a new method which allows to simultaneously estimate price-cost margins and fixed costs in production, using standard production data on expenditures of inputs and revenue at the firm level. In particular, we exploit properties of the primal and dual price based and cost based Solow residual, in which we allow not only for the flexible treatment of capital (either fixed, variable or a combination of both) but also for the flexible treatment of other input factors, such as labor and intermediate inputs. We use a 30 year long firm level panel of Belgian firms to estimate price-cost margins and fixed costs as a share of revenue to show the following key results: Ignoring fixed costs in production, as in most of the literature, underestimates price-cost margins and overestimates excess profit margins. We also find that fixed costs as well as price-cost margins decline in the last three decades, pushing excess profit margins downwards, suggesting highly competitive markets in Belgium.Publication Price-cost margins and fixed costs(2021) Abraham, Filip; Bormans, Yannick; Konings, Jozef; Roeger, Werner; KU Leuven; University of Liverpool; German Institute for Economic Research (DIW Berlin)This paper provides a new method to estimate price-cost margins in the presence of fixed costs of production. We exploit properties of the primal and dual revenue based and cost based Solow residual. Ignoring fixed costs in production underestimates price-cost margins and overestimates excess profit margins. Using a 30 year panel of Belgian firms we estimate price cost margins of 25.9% on average, with fixed costs as a fraction of sales of 23.4%. Fixed costs as well as price-cost margins have declined in the last three decades, pushing excess profit margins close to zero, suggesting competitive markets. The presence of fixed costs implies that price-cost margins might change not only due to a change in firms' market power, but also due to changes in the production process (i.e., the mix between variable and fixed costs) or even due to a combination of both. Our novel methodology is able to distinguish these underlying mechanisms, thereby providing an additional layer of insight to the ongoing academic and policy debate on firms' market power.Publication Acquisitions by financial versus strategic buyers: Interest, competition, and persistence during the private bidding process(2023) De Maeseneire, Wouter; Dereeper, Sebastien; Luypaert, Mathieu; Thuy Nguyen, MaiWe explore how target firm attributes affect the interest of financial versus strategic bidders in the private stages of a corporate takeover process. Using a unique set of hand-collected data from 606 US public deals from 2005 to 2016, we demonstrate the difference between strategic and financial bidder attraction from deal initiation onwards, as such unaffected by deal process characteristics or pricing strategies. Our results indicate that the target firm’s sales growth rate, cash flow generation, and technological innovation are found to influence financial versus strategic bidder interest from the start of the private process, whereas industry outperformance, market-to-book, and leverage seem to particularly affect the persistence of financial bidders throughout the deal process. In general, targets with stand-alone value-improving potential and opportunities to exploit financial leverage benefits are more likely to attract financial buyers while targets with probable synergy gains appeal more to strategic bidders.Publication When do founders adopt buyout terms?(2023) Subotic, Marjana; Collewaert, Veroniek; Korsgaard, A.Publication Innovation strategy and founding team compensation(2023) Albuja, Andrea; Collewaert, Veroniek; Vanacker, TomPublication Organizational barriers in the innovation process: bridge or break down?(2009) Blindenbach-Driessen, FloortjeIn a traditional functionally organized firm, innovation activities are typically fostered in a dedicated Research and Development (R&D) environment, i.e. an environment that facilitates learning and experimentation. The underlying assumption is that operational activities of these firms are of such a different nature than innovation activities that these cannot be combined within a single unit. However, in today’s more agile and flexible organizations innovation and operational activities are likely more similar. This paper investigates the implications for innovation management theories when operational and innovation activities have more resemblances than in a traditional functionally organized firm.Publication International and product diversification: their interrelationship and impact on firm performance(2007) Bowen, Harry; Wiersema, MargaretheCorporate strategic decisions regarding the international and product market scope of a firm’s activities are the essence of corporate strategy, and how these choices in turn affect performance is the subject of a large body of research in the fields of international business and strategic management. When making these strategic decisions, managers are likely to take into account that these decisions are interrelated since they will require allocating a firm’s fixed bundle of resources. Yet, the international business and strategy literatures have mostly treated these two scope decisions as independent strategies, and have also largely ignored the interrelated nature of these strategic scope decisions vis-à-vis their expected impact on performance. As a result, little is known about the nature of the relationship between these strategic choices - whether they are substitute or complementary strategies - or how they jointly impact firm performance. To address this important gap in our understanding of corporate strategy, this paper examines the joint and simultaneous nature of the relationships among these strategic scope decisions and firm performance in a unified framework. Our analysis serves to integrate prior international business and strategy research, and our model and empirical methods address a number of shortcomings of prior empirical studies. Our results indicate that the relationship between a firm’s international and product market strategies and its performance is nonlinear, with performance first rising but then falling as the firm’s international or product diversification rises, implying that the performance impact of these strategies is path dependent. Our results also provide the first evidence that, within the firm, international and product diversification are substitute strategies for performance.Publication Explaining venture capital firms' syndication behavior: A longitudinal study(2004) De Clercq, Dirk; Dimov, DimoPublication When do venture capital firms learn from their portfolio companies?(2004) De Clercq, Dirk; Sapienza, HarryIn this study we examine when venture capital firms (VCFs) learn from their portfolio companies (PFCs). Relying primarily on learning and behavioral theories, we develop hypotheses regarding the effects of prior experience, knowledge overlap, trust, and PFC performance on learning by VCFs. We use a combination of primary and secondary data from 298 U.S.-based VCFs to test the hypotheses. Interview data are used to illuminate the results and to guide our discussion of implications. Many of our results were surprising. For example, we found that the VCF’s overall experience is negatively related to VCF learning, and we found trust in VCF-PFC dyads also negatively associated with VCF learning. Whereas we expected to observe a curvilinear relationship between knowledge overlap and learning, we found that lower levels of knowledge of overlap were associated with greater learning in a linear fashion. Finally, we found that VCFs perceive greater learning in higher performing PFCs. We discuss the limitations and implications of our findings, and also suggest avenues for future researchPublication The value of excess cash and corporate governance: Evidence from US. cross-listings(2009) Fresard, Laurent; Salva, CarolinaWe examine whether and, if so, how a U.S. cross-listing mitigates the risk that managers will squander corporate cash holdings. We find strong evidence that the value investors attach to excess cash reserves is substantially larger for foreign firms listed on U.S. exchanges and over the counter than for their domestic peers. Further, we show that this excess-cash premium stems not only from the strength of U.S. legal rules and disclosure requirements designed to safeguard investors’ money, but also from increased monitoring by financial analysts and large investors. Overall, since investors’ valuation of excess cash mirrors how they expect the cash to be used, our analysis shows that a U.S. listing constrains managers’ inefficient allocation of corporate cash reserves significantly.Publication An energy system model to study the impact of combining renewable electricity and gas policies(2021) Roach, Martin; Meeus, Leonardo; European University InstituteEnergy system models are needed to help policy makers design renewable energy policies that combine support for renewable electricity with support for renewable gas. In this paper, we advance a stylized model that includes demand for electricity, heating, and hydrogen in industry that is supplied by competing technologies. We first show that the status quo in most countries, which is a combination of carbon pricing with support for renewable electricity, only supports green gases indirectly and in a limited way. When we then add direct support for renewable gas to the model, we have two main findings. First, a Renewable Energy Sources - Gas (RES-G) target is more effective in supporting biomethane than in supporting green hydrogen. Second, there are strong interaction effects between a RES-E target and a RES-G target that can be both complementary and substitutive.Publication The issues that shape strategy(2020) Meeus, LeonardoCompanies do not only compete in markets; they also compete on social and political issues. Depending on the business opportunities or threats they identify related to an issue, companies will behave as veterans that defend the status quo in an industry, as reformers that will work with the authorities to change the rules of the game, or as heroes that help solve an issue. In this article, we identify the typical elements of success for each of these three generic nonmarket strategies. We do this based on a framework that focuses on the framing of issues, the alliances that can be mobilized around an issue, and the arenas that can be used to make a move.Publication Least-cost distribution network tariff design in theory and practice(2018) Schittekatte, Tim; Meeus, Leonardo; Florence School of Regulation, Robert Schuman Centre for Advanced Studies, European University Institute, Via Boccaccio 121, I-50133 Florence, Italy; Réseaux Innovation Territoire et Mondialisation Université Paris-Sud, 91400 Orsay, FranceIn this paper a game-theoretical model with self-interest pursuing consumers is introduced to assess how to design a least-cost distribution tariff under two constraints that regulators typically face. The first constraint is related to difficulties regarding the implementation of cost-reflective tariffs. In practice, so-called cost-reflective tariffs are only a proxy for the actual cost driver(s) in distribution grids. The second constraint has to do with fairness. There is a fear that active consumers investing in distributed energy resources (DER) might benefit at the expense of passive consumers. We find that both constraints have a significant impact on the least-cost network tariff design, and the results depend on the state of the grid. If most of the grid investments still have to be made, passive and active consumers can both benefit from cost-reflective tariffs, while this is not the case for passive consumers if the costs are mostly sunk.Publication Reliability Options: Can they deliver on their promises?(2019) Bhagwat, Pradyumna; Meeus, Leonardo; European University Institute - Robert Schuman Centre for Advanced Studies (RSCAS)Capacity mechanisms have been controversial in theory as well as practice. Lessons from experience with different capacity mechanisms led to the development of the reliability options. This mechanism promises two advantages over other types of capacity mechanisms. Firstly, it ensures the availability of capacity contracted via the capacity mechanism during scarcity. Secondly, the reliability option mechanism limits any energy market distortion due to its implementation and provides the consumer a hedge from high prices. We assess the ability of reliability options in delivering the two promises by analysing the reliability option designs in Italy and Ireland. We find that they deliver on the first promise but only partly on the second.Publication Flexibility markets : Q&A with project pioneers(2019) Schittekatte, Tim; Meeus, LeonardoFlexibility markets are recognised as a promising tool to make better use of existing distribution grids and thereby also reduce the need for grid investments. In this paper, we analyse four pioneering projects implementing flexibility markets: Piclo Flex, Enera, GOPACS and NODES. Based on a literature review, we develop a six-question framework and we then analyse the projects with that framework. The questions are: (1) Is the flexibility market integrated in the existing sequence of EU electricity markets; (2) Is the flexibility market operator a third party; (3) Are there reservation payments; (4) Are the products standardised; (5) Is there TSO-DSO cooperation for the organisation of the flexibility market; (6) Is there DSO-DSO cooperation for the organisation of the flexibility market. We find that all the considered flexibility markets are operated by a third party. All projects also engage with multiple DSOs in order to become the standardised platform provider. Important differences between the projects are the extent to which the flexibility markets are integrated into other markets, the use of reservation payments, the use of standardised products and the way TSO-DSO cooperation has been implemented.Publication The welfare and price effects of sector coupling with power-to-gas(2019) Roach, Martin; Meeus, LeonardoElectricity markets with high installed capacities of Variable Renewable Energy Sources (VRES) experience periods of supply and demand mismatch, resulting in near-zero and even negative prices, or energy spilling due to surplus. The participation of emerging Power-to-X solutions in a sector coupling paradigm, such as Power-to-Gas (PTG), has been envisioned to provide a source of demand flexibility to the power sector and decarbonize the gas sector. We advance a long-run equilibrium model to study the PTG investment decision from the point of view of a perfectly competitive electricity and gas system where each sector’s market is cleared separately but coupled by PTG. Under scenarios combining PTG technology costs and electricity RES targets, we study whether or not there is a convergence in the optimal deployment of PTG capacity and what is the welfare distribution across both sectors. We observe that PTG can play an important price-setting role in the electricity market, but PTG revenues from arbitrage opportunities erodes as more PTG capacity is installed. We find that the electricity and gas sector have aligned incentives to cooperate around PTG, and instead find an issue of misaligned incentives related to the PTG actor. Although not the focus of our analysis, in some scenarios we find that the welfare optimal PTG capacity results in a loss for the PTG actor, which reveals some intuition that subsidizing PTG can make sense to reduce the cost of RES subsidies. A sensitivity analysis is conducted to contextualize these findings for system specificities.Publication Is destiny worth the distance? On private equity in emerging markets(2018) Darolles, Serge; Ain Tommar, Sara; Jurczenko, Emmanuel; Université Paris Dauphine - Department of Finance; Paris Dauphine University; Glion Institute of Higher EducationWe study the performance determinants of private equity investing in emerging markets (EM) compared to developed markets (DM) using a novel dataset. Using a multilevel linear model specification, our results suggest that performance in emerging markets in highly dependent on geographical and cultural proximity. The effect is significantly higher for GPs investing in both markets compared to pure DM- and EM-players respectively. Cross-cultural and geographical effects are enhanced when the GP investment teams are also culturally close using different measures. Our results also show that the realized returns are highly dependent on the investment period, the investment style and the GP’s experience on each market.Publication On the performance of listed private equity(2018) Ain Tommar, Sara; Université Paris Dauphine - DRM-CEREG; Paris Dauphine University; Université Paris Dauphine - DRM-CEREGListed private equity (LPE) refers to publicly-traded investment companies whose activity is to invest in privately-held companies or in traditional private equity funds. The recent years have witnessed a slew of such listings and many investors were offered exposure to traditional private equity investments (TPE) through LPE. While listed private equity and traditional private equity have the same investment universe, we argue that the performance of the latter does not pertain to LPE. We build a representative dataset of the LPE universe and compare their performance to TPE. We examine whether belonging to indices and having minimum liquidity requirements is linked to performance. Our results suggest that listing significantly deteriorates absolute performance measures but is positively and significantly related to better investment multiples.Publication Dual sourcing and smoothing under non-stationary demand time series: Re-shoring with speedfactories(2019) Boute, Robert; Disney, Stephen M.; Van Mieghem, Jan A.; Cardiff University - Cardiff Business School; Northwestern University - Kellogg School of ManagementWe investigate the emerging trend of near-shoring a small part of the global production to local SpeedFactories. The short lead time of the responsive SpeedFactory reduces the risk of making large volumes in advance, yet it does not involve a complete re-shoring of demand. Using a break-even analysis we investigate the lead time, demand, and cost characteristics that make dual sourcing with a SpeedFactory desirable compared to complete off-shoring. We propose order rules that extend the celebrated inventory optimal order-up-to replenishment policy to settings where capacity costs exist and demonstrate their excellent performance. We highlight the significant impact of autocorrelated and non-stationary demand series, which are prevalent in practice yet challenging to analyze, on the economic benefit of re-shoring. Methodologically, we adopt Z-transforms and present exact analyses of several discrete-time linear production-inventory models.