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Loss F., Renucci A. (2013), Reputation Capital, Financial Capital, and Entrepreneurship, Oxford Economic Papers, 65, 2, p. 352-371
About 90% of entrepreneurs in the high-tech and professional service industries were previously employed in the same sector. In this paper, we provide a theory for how aspiring entrepreneurs choose an employer. We contrast 'transparent' employers (or firms) promoting personal accountability and employee empowerment with 'opaque' employers emphasizing team work and down-playing individual accomplishment. Markets use transparent firms' output to a larger extent to update employees' reputation since this output is more informative about individual talent. This has three effects. First, it harms employees who could become entrepreneurs if their reputation was maintained, but benefits the others. Second, it fosters effort, which raises wages, and thus the financial capital available to start a venture. Third, the perspective of entrepreneurship can induce employees to exert excessive effort, an effect that transparency exacerbates. We show that intermediate-reputation employees choose opaque firms, whereas higher- and lower-reputation employees choose transparent firms. Empirical implications follow.
Verge T., Malavolti-Grimal E., Loss F. (2013), Communication and Binary Decisions: Is it Better to Communicate?, JITE : Journal of Institutional and Theoretical Economics, 169, 3, p. 451-467
We study information transmission between informed experts and an uninformed decision-maker who only takes binary decisions. In the single expert case, we show that information transmission can only be relatively poor. Hence, even sophiscated communication games do not yield equilibria which (ex ante) outperform delegation. Referring to multiple experts allow the decision-maker to obtain more information. However, this information can never be perfect, and sophisticated communication games, for instance with multilateral, multistage communication, do not outperform simple communication methods.
Loss F. (2012), Optimal Hedging Strategies and Interactions between Firms, Journal of Economics and Management Strategy, 21, 1, p. 79-129
This paper studies corporate risk management in a context of financial constraints and imperfect competition in the product market. The paper shows that interactions between firms affect their hedging strategies. As a general rule, firms' hedging demands decrease with the correlation between their internal funds and investment opportunities. Moreover, when a firm's hedging demand is high in the case where investments are strategic substitutes, its hedging demand is low in the case where investments are strategic complements and vice versa.
Loss F., Malavolti-Grimal E., Vergé T., Berges-Sennou F. (2008), European Competition Policy Modernization: From Notification to Legal Exception, European Economic Review, 52, 1, p. 77â98
Council Regulation (EC) 1/2003 came into force in May 2004 and replaced the mandatory notification of agreements by a regime of ex post monitoring. This paper shows that ex post monitoring is the optimal audit regime when the competition authority's probability of error is low. On the other hand, the notification system becomes optimal when the competition authority's probability of error is high. The paper also shows that block exemptions and black list (regimes of per se (il)legality) should be implemented when the agreements' expected welfare impact is very high and very low, respectively.
Loss F., Malavolti-Grimal E., Vergé T. (2007), Comment décentraliser la politique européenne de concurrence ?, Economie et Prévision, 178, 2, p. 115-124
Cet article étudie la décentralisation de la politique européenne de concurrence. Déléguer le contrôle des accords entre entreprises permet de bénéficier de la meilleure connaissance du marché local de l'autorité nationale. En revanche, ceci induit une perte de contrôle sur les décisions prises, pouvant nuire au bien-être global du fait de l'existence potentielle de conflits d'intérêt. Comme nous le montrons ici, ce problème peut être en partie supprimé lorsque l'autorité centrale délègue la réalisation de l'audit mais garde le contrôle de la prise de décision. L'autorité centrale doit néanmoins faire des concessions en suivant parfois les recommandations de l'autorité nationale, pour donner à celle-ci des incitations suffisantes à aller rechercher l'information.
Loss F. (2004), Couverture, coûts d'agence et taille d'une entreprise, Annales d'Economie et de Statistique, 74
Cet article étudie la demande de couverture d'une entrepri-se, où la couverture permet de réduire les coûts d'agence entre les action-naires et le ou les agents. On montre que lorsque la fusion entre deuxfirmes implique une perte d'information, la demande de couverture de lanouvelle entreprise est généralement supérieure à celle des entreprisesavant fusion. Cela provient de la perte d'information et du fait que la cou-verture permet de couvrir le risque supporté par plusieurs agents.
This article analyses the hedging demand of a firm,where hedging helps to reduce the agency costs between stockholdersand one or several risk averse agents. We show that when a merger bet-ween two firms implies less information, the hedging demand of the newfirm is generally higher than the hedging demands of the firms before mer-ger. This is due to the loss of information and because hedging allows toreduce the risk borne by several agents.
Berges-Sennou F., Loss F., Malavolti-Grimal E., Vergé T. (2002), European competition policy reform: autorisation or exemption regime?, Revue Economique, 53, 3, p. 437-447
La Commission européenne s'est récemment posé la question de la modernisation du traitement des accords entre entreprises. Elle souhaite modifier le système actuel de contrôle des accords par notifications, au profit d'une répression ex-post. L'objectif de cet article est de montrer que cette réforme peut être justifiée par une meilleure connaissance du fonctionnement des marchés. Nous montrons que, lorsque l'analyse des accords réalisée par la Commission est plutôt de mauvaise qualité, mieux vaut contrôler ex ante les accords. En revanche, si le jugement de la Commission s'améliore, conséquence d'une meilleure connaissance des différents secteurs de l'économie, un système de contrôle ex post est préférable pour le bien-être social.
The European Commission recently considered abolishing the notification system and to focus on a regime of ex post investigation. Our objective is to show that a better understanding of markets can justify this reform. When the precision of the competition authority's analysis is not high enough, an ex ante control, like the notification system, is preferable. On the other hand, if decision accuracy improves, an ex post investigation regime achieves a higher social welfare.
Loss F., Renucci A. (2008), Reputation Capital, Financial Capital, and Transition to Entrepreneurship, EFMA 2008, Athènes, Grèce
We provide a theory for career choices of employees willing to become entrepreneurs and facing credit constraints. We show that they need a sufficient mix of reputation and financial capital. We consider their choice to work for transparent or opaque firms. Transparent firms disclose more information about their employees. It has two consequences. First, it eases the updating of the employees'reputation, which is positive for those with a bad initial reputation and negative otherwise. Second, it fosters incentives to exert effort, which increases the wage, and thus, the financial capital available for setting a business venture. Employees thus adopt strategies that depend on their initial reputation. We also show that employees whose alternative is to choose between transparent and opaque projects to work on once employed make transparency choices that differ from employees who choose firms to work for. The former are less likely to become entrepreneurs than the latter.
Loss F., Renucci A. (2007), Professional Reputation, Cash, and Transition to Entrepreneurial Activity, EEA - ESEM, Budapest, Hongrie
Loss F., Renucci A. (2005), Professional Reputation, Cash, and Transition to Entrepreneurial Activity, AFFI 2005 (Association Française de Finance), Paris, France
We analyze the role of professional reputation in the transition to entrepreneurial activity when credit is rationed. We study an employee's willingness to allow the market to learn information about talent by choosing more or less informative projects. This choice impacts the employee's incentives to exert effort, which determines the wage, and in turn the cash to be invested in the business venture. We show that reputation and cash are substitutes in overcoming credit rationing. However, maintaining a good reputation conflicts with accumulating cash. Hence, employees adopt a different strategy depending on their initial reputation. Besides, starting a business venture early can in expectation be easier than waiting in order to build a reputation and accumulate cash.
Renucci A., Loss F. (2004), When Promotions Induce Good Managers to Be Lazy, Cahiers de recherche Cereg, Paris, Université Paris-Dauphine, 52
In our context, a good-reputation manager favors risk when being perceived as good allows to be promoted while risk is observable but not verifiable. Indeed, it renders more difficult the learning process regarding her talent. In turn, this lowers her level of effort since the extent to which effort impacts the perception the market has about her talent is lessened. We show how and when monitoring helps employers restore incentives to work. By contrast, career concerns discipline a bad-reputation manager in our context, provided that promotions are sufficiently attractive. These results hold when two managers of heterogeneous reputation compete for one position.