The Determinants of Corporate Liquidity in the Netherlands

We investigate the driving forces of corporate liquidity for a balanced panel of large Dutch non-financial firms during the period 1986-1997 using an error-correction framework. This framework allows a crucial distinction between short-run and long-run determinants of corporate liquidity. We conclude from our empirical estimates that long-run corporate liquidity targets exist and are based on a small number of firm characteristics. In the short run liquidity responds passively to exogenous shocks. The latter phenomenon is consistent both with buffer stock behaviour and pecking order theory. Passive liquidity behaviour does not extend to the long run, however. On average eighty percent of deviations from target is eliminated within one year. Overall, we conclude that the corporate liquidity ratio is an actively managed financial ratio and does not passively adjust to financial decisions taken elsewhere in the firm. Based on long run evidence, a pecking order theory of corporate liquidity holdings must be rejected.financial economics and financial management ;

Skill-biased technical change: On technology and wages in the Netherlands

This paper investigates the shift in demand away from low-skilled and towards high-skilled labour in the Netherlands over the 1990s. Making the distinction between the effects of technical change on job type and job level, the conclusion is that skill-biased technical change based on job level is the chief cause for this shift.labour economics ;

Manager to go? Performance dips reconsidered with evidence from Dutch football

This paper examines whether the forced resignation of managers of Dutch football teams leads to an improvement in the results. We find by analysing 12 years of football in the highest Dutch league that forced resignations are preceded by declines in team performance and followed by improvements in performance. However, the improvement in performance after appointing a new manager does not exceed the seasonal average of both the old and new manager. More importantly, using a control group, it turns out that when the manager would not have been forced to resign, performance would have improved more rapidly. We conclude from this that sacking a manager seems to be neither effective nor efficient in terms of improving team performance.economics of technology ;

Banking Sector Strength and the Transmission of Currency Crises

We show that, complementary to trade and financial linkages, the strength of the bankingsector helps explain the transmission of currency crises. Specifically, we demonstrate thatthe Mexican, Thai, and Russian crises predominantly spread to countries with weaknesses intheir banking sectors. At the same time, the role of banking sector strength varies per crisis;where the Mexican crisis spread to countries with a strong presence of foreign banks indomestic credit provision, the Thai crisis disproportionately contaminated countries wherethe banking sector was most sensitive to currency realignments, wh ile the Russian crisisspread to countries with inefficiencies in the banking sector.macroeconomics ;

Dutch corporate liquidity mangement: New evidence on aggregation

In this paper we investigate Dutch corporate liquidity management in general, and target adjustment behaviour in particular. To this purpose, we use a simple error correction model of corporate liquidity holdings applied to firm-level data for the period 1977-1997. We confirm the existence of long-run liquidity targets at the firm level. We also find that changes in liquidity holdings are driven by short-run shocks as well as the urge to converge towards targeted liquidity levels. The rate of target convergence is higher when we include more firm-specific information in the target. This result supports the idea that increased precision in defining liquidity targets associates with a faster observed rate of target convergence. It also suggests that the slow speeds of adjustment obtained in many macro studies on money demand are artefacts of aggregation bias.corporate liquidity demand, precautionary liquidity

Knowledge Spillovers and Wage Inequality: An Empirical Investigation of Knowledge-Skill Complementarity

This paper examines the importance of knowledge-skill complementarity in the process of contemporary economic growth. By analyzing Dutch manufacturing and carrying out an extensive spillover and wage inequality analysis, it is shown that knowledge-intensive sectors pay their high-skilled workers a relatively higher wage in the form of a wage premium, which is defined as the sector bias of technical change.research and development ;