Theoretically, wealthier people should buy less insurance, and should self-insure through saving instead, as insurance entails monitoring costs. Here, we use administrative data for 63,000 individuals and, contrary to theory, and that the wealthier have better life and property insurance coverage. Wealth-related differences in background risk, legal risk, liquidity constraints, financial literacy, and pricing explain only a smallfraction of the positive wealth-insurance correlation.
For more than a year, researchers across the University of North Carolina at Chapel Hill’s (UNC) Kenan-Flagler Business School (KFBS) and School of Medicine (SOM) worked with Sharecare, Inc. (Sharecare) to establish a framework for measuring the true value of corporate well-being interventions and develop a measurement tool to quantify their impact over time. The goal of the research was to assess the value of implementing corporate well-being interventions to improve employee health and lower direct medical costs to employers.
We measure and calibrate the racial/ethnic densities (RAEDs) of executives in US public companies. We show that the magnitudes of underrepresentation for Blacks and Hispanics and overrepresentation for Whites are 10+ times larger when executive RAEDS are calibrated against the US population than when calibrated against an economic benchmark that reflects the demand for and supply of proto-executive talent. We conclude that at least 90% of the underrepresentation of Black and Hispanic executives in US public companies comes from factors in effect before US public companies hire proto-executive talent rather than actions taken by companies after such talent is hired.
We keep hearing that the corporate tax code is riddled with “loopholes” and that large corporations are tax cheats for using them and not paying their “fair share.” Is it true? No, most large corporations pay the amount in taxes they do because Congress expressly wrote the tax code to allow them to pay that amount.
The more significant revenue loss, however, is from exceptions to the tax code. When it comes to lost corporate tax revenue, exceptions are the rule, and not following the rules is the exception.
In a series of influential studies, McKinsey (2015, 2018, 2020) report a statistically significant positive relation between the industry-adjusted EBIT margin of global samples of large public firms and the racial/ethnic diversity of their executives. However, when we revisit McKinsey’s tests using recent data for US S&P 500® firms, we find statistically insignificant relations between McKinsey’s inverse normalized Herfindahl-Hirschman measures of executive racial/ethnic diversity and not only industry-adjusted EBIT margin, but also industry-adjusted sales growth, gross margin, ROA, ROE, and TSR. Our results suggest that despite the imprimatur often given to McKinsey’s (2015, 2018, 2020) studies, caution is warranted in relying on their findings to support the view that US publicly traded firms can deliver improved financial performance if they increase the racial/ethnic diversity of their executives.
Corporations are able to deduct some strange things on their tax returns. But new tax proposals from President Joe Biden and Sen. Elizabeth Warren introduce a few doozies.
Sound crazy? We think it does. But because Biden and Warren want to place a tax on financial accounting income (the income that companies report to investors), everything that is allowed as an expense for financial accounting purposes would become a proper deduction under the new proposed taxes.And that includes a lot of things.
Are the agglomeration economies of technology hubs augmented by a localized market for start-ups – acquisitions, and IPOs? How does this affect the ability of places outside of those hubs to foster digital startups as a tool of local economic development? We study this with a particular focus on acquisitions by the seven largest American digital platforms – Amazon, Alphabet [Google], Apple, Microsoft, Facebook, Oracle and Adobe, which we call, collectively, Big Tech. We cover the years 2001-2020. We show that firms acquired by Big Tech are, disproportionately to the sectors in which they operate, concentrated in major tech clusters, and particularly in the Silicon Valley (San Francisco/San Jose). We argue that the acquisition market – and its effects on both the major tech hubs and the left behind rest – depends crucially on the proprietary control of access to various digital network products. Regulation of these markets, particularly in the form of common carrier status and open standards, could achieve a considerable re-balancing.
Economic theory holds that competition drives innovation, improves the quality of goods and services, and lowers prices for consumers. Health care delivery is no exception.
We propose and test a framework of private information acquisition and decision timing for asset allocators hiring outside investment managers. Using unique data on due diligence interactions between an institutional allocator and 860 hedge fund managers, we find that the production of private information complements public information. The allocator strategically chooses how much proprietary information to collect, reducing due diligence time by 18 months and improving outcomes. Selected funds outperform unselected funds by 9% over 20 months. The outperformance relates to the allocator learning about fund return-to-scale constraints and manager skill before other investors.
Background: Influenza imposes heavy societal costs through healthcare expenditures, missed days of work, and numerous hospitalizations each year. Considering these costs, the healthcare and behavioral science literature offers suggestions on increasing demand for flu vaccinations. And yet, the adult flu vaccination rate fluctuated between 37% and 46% between 2010 and 2019.Aim: Although a demand-side approach represents one viable strategy, an operations management approach would also highlight the need to consider a supply-side approach. In this paper, we investigate how to improve clinic vaccination rates by altering provider behavior.
We study the impact of widespread adoption of work-at-home technology using an equilibrium model where people choose where to live, how to allocate their time between working at home and at the office, and how much space to use in production. A key parameter is the elasticity of substitution between working at home and in the office that we estimate using cross-sectional time-use data.
We specify and estimate a time-varying Markov model of COVID-19 cases for the US in 2020. We find that the estimated level of undetected infections spiked in March and remained elevated through May. However, since late April estimated undetected infections have generally declined though it was not until June or July that detected cases exceeded the estimated number of undetected cases.
We examine the impact of four classes of workplace interruptions on short-term (working hours) and long-term (across-shifts) worker performance in an agribusiness setting. The interruptions are organized in a two-by-two framework where they result (or do not result) in a physical task requirement and lead to a varying degree of attention shift from the primary task.
Since 2001, the number of financial statement line items forecasted by analysts and managers that I/B/E/S and FactSet capture in their data feeds has soared. Using this new data, we find that 13 item surprises—11 income statement and 2 cash flow statement analyst and management guidance surprises—reliably explain firms’ signed earnings announcement returns.
This paper evaluates the pros and cons of including private equity fund investments in defined contribution plans. Potential benefits include higher returns and improved diversification as well as a relatively safe method for accessing investments previously only available to institutions and the very wealthy. Despite these enticing benefits, they need to be weighed against potential challenges and costs that may arise from creating this broader access to private funds.
Mergers and acquisitions (M&As) are an important mechanism through which new technology is adopted by firms. We document patterns of labor reallocation and wage changes following M&As, consistent with the adoption of technology. Specifically, we show target establishments invest more in technology, become less routine task intensive, employ a greater share of high technology workers, and pay more unequal wages.
The ways in which media news is slanted can shape beliefs about the economy, thereby affecting the decision to start a new business. Using exogenous variation in the introduction of Fox News Channel across US counties, I find that increased exposure to a pro-Republican slant during a Republican administration is positively associated with new firm creation.
Public opinion polls reveal Americans are turning to companies with purpose and ethics to lead us through the profound anxiety and crises we are currently experiencing as a nation. We developed a corporate reputational equity checklist that will enable firms to brand or rebrand themselves as inclusive and equitable places to work, as well as position their companies as a collective of civically engaged corporate citizens poised and willing to address society’s most pressing ills, including systemic racism.
The patent system grants inventors temporary monopoly rights in exchange for a public disclosure detailing their innovation. These disclosures are meant to allow others to recreate and build on the patented innovation. We examine how the quality of these disclosures affects follow-on innovation.
Speed is often critical for successful commercialization of a new technology, and patents help entrepreneurs secure funding, enter the market, and avoid expropriation of their ideas. In this article, we employ a recent change to U.S. patent law—the introduction of an elective program accelerating patent examination—to investigate the role of patent examination speed in strategic entrepreneurship.
Cities increasingly will have to demonstrate a strong commitment to reputational equity to remain attractive places to live, work, play, and do business given the racially and ethnically disparate impacts of Covid-19 pandemic and recent senseless killings of unarmed African Americans that spawned a nationwide protest movement. We leverage evidence-based best practices of inclusive and equitable development from the research literature to devise a reputational equity checklist—a portfolio of strategies, policies, tactics, procedures and practices cities will need to embrace to dismantle all forms of “Isms” and “Phobias” that are principally responsible for the major divisions that exist in American society today.
Faced with demand uncertainty in a nascent industry, entrants often consider which customer segments to serve by tailoring the usage breadth and coherence of their product portfolios. Portfolios have high or low usage breadth, which is the extent to which they target customers in many segments, and high or low coherence, which measures how much the portfolios’ products overlap in targeted customer segments.
We examine the period over which banking authorities discussed, adopted, and implemented Basel III to understand whether, when, and how firms respond to proposed regulation. We find evidence to suggest that the affected banks not only lobbied rule makers against it, but these banks also made strategic financial reporting changes and altered their business models prior to rule makers finalizing the regulation.
As the nature of work has become more service-oriented, knowledge-intensive, and rapidly changing, people—be they workers or customers—have become more central to operational processes and have impacted operational outcomes in novel and perhaps more fundamental ways. Research in people-centric operations (PCO) studies how people affect the performance of operational processes. In this OM Forum, we define PCO as an area of study, offer a categorization scheme to take stock of where the field has allocated its attention to date, and offer our thoughts on promising directions for future research.
The idea that new ventures are simple mimetic reflections of the organizational practices of existing organizations contradicts the recognized importance of organizational diversity for innovation. There is an inherent contradiction in the literature between the persistence implied by the inheritance of practices from prior employment, and the experimentation prevalent in the organizational practices contributed by new organizations. This paper first accounts for mechanisms that may drive heritage of practices from parent organizations to their spawns.
We use detailed establishment-level data to understand whether and how the composition of the US stock market differs from the composition of US firms as a whole. Although the locational composition of employment in public firms is similar to that of all US firms, we find certain industries significantly overrepresented. Further, the gap between the industrial composition of publicly traded firms and all US firms has grown over the last thirty years.
We find that equity loan fees are the best predictor of cross-sectional returns. When compared to 102 other anomalies, the loan fee anomaly has the highest monthly long-short return (1.17%), has the highest monthly Sharpe Ratio (0.40), and unlike other anomalies, exhibits strong persistence throughout the sample.
This paper characterizes the implications of risk-on/risk-off shocks for emerging market capital flows and returns. We document that these shocks have important implications not only for the median of emerging markets flows and returns but also for the left tail.