10/22/2020 — We consider an electric utility company that serves retail electricity customers over a discrete-time horizon. In each period, the company observes the customers' consumption as well as high-dimensional features on customer characteristics and exogenous factors. A distinctive element of our work is that these features exhibit three types of heterogeneity—over time, customers, or both. Based on the consumption and feature observations, the company can dynamically adjust the retail electricity price at the customer level.

• KEYWORD(S):
• operations

10/19/2020 — 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.

• KEYWORD(S):
• investments

10/16/2020 — With the upcoming November election and calls by President Trump for 1 or more vaccines for coronavirus disease 2019 (COVID-19) to be ready before the end of the year, if not by the election, many have started to wonder whether the US Food and Drug Administration (FDA) can withstand this type of political pressure.

• KEYWORD(S):
• healthcare

10/7/2020 — 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.

• KEYWORD(S):
• strategy and entrepreneurship

10/1/2020 — This paper proposes a new test for a large set of zero restrictions in regression models based on a seemingly overlooked, but simple, dimension reduction technique. The procedure involves multiple parsimonious regression models where key regressors are split across simple regressions.

• KEYWORD(S):
• data project

10/1/2020 — 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.

• KEYWORD(S):
• private equity
• strategy and entrepreneurship

9/29/2020 — In a recent episode of his award-winning show, “United Shades of America,” W. Kamau Bell interviews a Black man about systemic racism in America who said, “This country is not designed for us and, in fact, is designed against us.” As an African American, this observation triggered three critical questions.

9/24/2020 — The paper introduces structured machine learning regressions for heavy-tailed dependent panel data potentially sampled at different frequencies. We focus on the sparse-group LASSO regularization. This type of regularization can take advantage of the mixed frequency time series panel data structures and improve the quality of the estimates.

• KEYWORD(S):
• finance
• machine learning

9/21/2020 — We examine the impact of logistics performance metrics such as delivery time, and customer’s requested delivery speed on logistics service ratings and third-party sellers’ sales on an e-commerce platform.

• KEYWORD(S):
• retail
• strategy and entrepreneurship
• technology

9/21/2020 — This article presents tests for the existence of common factors spanning two large panels/groups of macroeconomic and financial variables, and the estimation of common and group-specific factors. New analytical results are derived regarding (i) the difference in the asymptotic distribution of the test statistics when aggregating the data first and then extracting the principal components (PCs), or vice versa, as well as (ii) the estimation of the common factor and its asymptotic distribution, extending the work of Andreou et al. (2019).

• KEYWORD(S):
• finance

9/16/2020 — We comment on the Securities and Exchange Commission’s proposed Reporting Threshold for Institutional Investment Managers (“Proposal”). We estimate the cost savings from the Proposal are economically small, and amount to 0.004% (0.008%) of assets under management for the average (median) affected filer, and 0.02% of assets for the smallest filer. This small cost savings needs to be weighed against the potentially large costs to investors and others created by eliminating a public disclosure that they heavily use.

• KEYWORD(S):
• asset pricing
• private equity

9/10/2020 — Knowledge of our changing demography can serve as both foundation and frame for how to achieve greater social, economic, environmental, and health equity in North Carolina. After describing how disruptive demographics are transforming the our state, this essay highlights a set of equity issues undergirding our shifting demography and concludes with a set of tools and strategies to make North Carolina a place where equity, inclusion, and belonging is the new normal.

• KEYWORD(S):
• disruptive demographics
• inclusive development
• north carolina

9/5/2020 — We characterize how wishful thinking affects the interpretation of information in economies with strategic and external effects. While players always choose to exhibit overconfidence in private information, their interpretation of public information depends on how non-fundamental volatility affects payoffs. When volatility increases payoffs, players may endogenously disagree: some under-react to public news, while others overreact.

• KEYWORD(S):
• strategy and entrepreneurship

9/1/2020 — This report catalogs work by the Kenan Institute of Private Enterprise, in conjunction with the North Carolina CEO Leadership Forum, to distill insights from top academic researchers, business leaders and policy experts on how the economy is changing and what this means for the future of North Carolina. We describe seven forces currently reshaping the U.S. (and in some cases, global) economy.

• KEYWORD(S):
• covid-19
• economic outlook
• finance
• global business

9/1/2020 — In May 2020, UNC Kenan-Flagler Business School and the Kenan Institute of Private Enterprise established the North Carolina CEO Leadership Forum to provide private sector leaders with a venue to comment on the opportunities and challenges facing the North Carolina economy in the wake of the COVID-19 pandemic. As the pandemic has distorted business activity in the short term, it has also created new long-term growth opportunities for North Carolina. Next week, the Kenan Institute and the forum will publish the research white paper Seven Forces Reshaping the Economy. The full paper details seven major economic and business trends, or forces, the COVID-19 pandemic has produced that will permanently alter both the U.S. and North Carolina economies. This summary outlines those forces, the opportunities available to North Carolina and policy recommendations the state should consider to capitalize on a rapidly changing economy.

• KEYWORD(S):
• covid-19
• economic outlook
• global business
• strategy and entrepreneurship

9/1/2020 — This report catalogs work by the Kenan Institute of Private Enterprise, in conjunction with the North Carolina CEO Leadership Forum, to distill insights from top academic researchers, business leaders and policy experts on how the economy is changing and what this means for the future of North Carolina. We describe seven forces currently reshaping the U.S. (and in some cases, global) economy.

• KEYWORD(S):
• covid-19
• economic outlook
• global business
• north carolina
• strategy and entrepreneurship

8/24/2020 — There is growing recognition that justice enactment is a complex activity and that managers face significant contextual and situational roadblocks when attempting to enact justice. However, research has not fully examined how managers, in the course of their jobs, can (a) identify and respond to justice-related issues and (b) assemble and synthesize relevant information required to act in a manner consistent with justice rules.

• KEYWORD(S):
• organizational behavior

8/20/2020 — The authors provide an overview of the main accomplishments of private equity since the emergence of leveraged buyouts in the 1980s, and of the challenges now facing the industry—challenges that have been encountered before during three major growth waves and two full boom-and-bust cycles.

• KEYWORD(S):
• finance
• private equity
• strategy and entrepreneurship

8/19/2020 — This is the first part of a two-part post discussing the current state of health reform and where we should go from here. Part I examines the effects of the ACA and progressive reform initiatives. Part II will outline a market-driven path forward.

• KEYWORD(S):
• healthcare

8/18/2020 — History informs us that some people, especially the wealthy, typically flee cities in responseto pandemics and other major catastrophes.  Media accounts and preliminary empiricalresearch suggest that the response to the COVID-19 pandemic is no exception. Nearly a halfmillion people reportedly fled hard-hit New York City within two months of the World HealthOrganization declaring the coronavirus disease a global pandemic.Some coronavirus pandemic refugees headed to nearby suburbs, others headed to second homes and vacation spots in other states, and still others moved back home to live with parents.

• KEYWORD(S):
• future of work
• migration

8/18/2020 — Immigrants are once again the targets of draconian policymaking. It is during the COVID-19 pandemic this time. Through a series of presidential proclamations and other executive branch maneuvers, the Trump Administration is attempting to leverage a host of so-called migration management tools to ban entry and force some immigrant to leave the country—all under the guise of containing the spread of the coronavirus and protecting American jobs.

• KEYWORD(S):
• immigration
• inclusion
• migration

8/18/2020 — The COVID-19 pandemic and the nationwide civil unrest spawned by the recent spate of senseless killings of unarmed African Americans have illuminated what executive development professionals have been telling private and public sector leaders and managers for quite some time. We are living in an era of increasing volatility, uncertainty, complexity and ambiguity—a VUCA World. “Certain-uncertainty” is the new normal in today’s society and economy.

• KEYWORD(S):
• covid-19
• inclusive development

8/17/2020 — Brick-and-mortar (B&M) retailers must enhance the customer in-store experience to better compete with online retailers. Fitting rooms in B&M stores play a critical role in the customer experience as a venue to experience products and examine alternatives. High traffic in fitting rooms, however, obstructs the customer’s ability to choose a product. In this paper, we (1) examine the impact of fitting room traffic on store performance using archival data, (2) identify phantom stockouts as a plausible mechanism for this impact, and (3) provide a potential solution and quantify the magnitude of its impact using two field experiments.  

• KEYWORD(S):
• operations

8/15/2020 — Despite extensive empirical evidence of the economic and financial benefits of green buildings, energy retrofit investments in existing buildings have not reached widespread adoption.This paper empirically estimate returns to energy retrofit investments for multifamily and commercial buildings in New York City, using a novel database of actual audit report recommendations and permitted renovation work extracted using natural language processing.

• KEYWORD(S):
• energy

8/4/2020 — Collective action is critical for successful market formation. However, relatively little is known about how and under what conditions actors overcome collective action problems to successfully form new markets. Using the benefits of simulation methods, we uncover how collective action problems result from actor resource allocation decisions interacting with each other and how the severity of these problems depends on central market- and actor-related characteristics.

• KEYWORD(S):
• strategy and entrepreneurship

8/1/2020 — We model the joint dynamics of intraday liquidity, volume, and volatility in the U.S. Treasury market, especially through the 2007--09 financial crisis and around important economic announcements. Using various specifications based on Bauwens & Giot (2000)'s Log-ACD(1,1) model, we find that liquidity, volume and volatility are highly persistent, with volatility having a lower short-term persistence than the other two. Market liquidity and volume are important to explaining volatility dynamics but not vice versa. In addition, market dynamics change during the financial crisis, with all variables exhibiting increased responsiveness to their most recent realizations.

• KEYWORD(S):
• economics
• finance

8/1/2020 — In December 2019, the University of North Carolina at Chapel Hill (UNC) Center for the Business of Health (CBOH) began a research partnership with Sharecare, a leading digital health company founded by technology entrepreneur, Jeff Arnold, to assess the economic value of changing various health behaviors via mobile health (mHealth) interventions.

• KEYWORD(S):
• healthcare
• patient

7/31/2020 — The coronavirus pandemic of 2020 exemplifies a worst-case scenario for federal, state, and local disaster preparedness planning and illustrates some of the United States’ fundamental public health infrastructure flaws. While stay-at-home orders and economic shutdowns initially depressed disease spread, they harmed businesses and organizations, threatened individuals’ livelihoods, and negatively impacted community well-being. National standards for COVID-19 management tools and protocols were not available when needed, and state, local, and federal guidance differed, and often conflicted, in ways that confused the public and created economic uncertainty.

• KEYWORD(S):
• healthcare

7/30/2020 — Since January 2020, Coronavirus Disease 2019 (COVID-19) has infected more than 4.5 million Americans, resulting in over 150,000 deaths; reconfigured our domestic lives and the world economy; and overwhelmed the United States’ (U.S.) public health and health care delivery capabilities. As individuals, institutions, and municipalities struggled to quickly integrate public health best practices into economic activities and social priorities, the virus exposed fault lines in our nation’s health care system(s). The government’s initial response was disjointed, which led to critical delays, confusion, and, ultimately, hindered collaboration. As a result, medical institutions and providers were, and still are in some cases, unable to obtain adequate personal protective equipment (PPE), provide and administer sufficient and timely testing to identify and track the disease, and secure sufficient medical equipment to care for infected individuals.

• KEYWORD(S):
• healthcare

7/29/2020 — The United States is pursuing a vaccine for COVID-19 with a bottom-up, mission-based private-public industrial policy.

• KEYWORD(S):
• healthcare

7/28/2020 — We document what fraction of the housing stock in US cities is affordable to different family types. Rather than looking at what fraction of their income people actually pay in rent in each city, which reflects a mix of households’ ability to pay and supply conditions, we look at the extent to which the housing stock is affordable using discrete housing expenditure share cutoffs and the distribution of rents in the American Community Survey from each city.

• KEYWORD(S):
• affordable housing
• economic development policy

7/28/2020 — We contend that the decision between public and private ownership can be understood in a cost-benefit framework where firms trade-off the governance benefits of private ownership with the potentially lower capital costs of public ownership. Consequently, ownership structure can be understood by examining the governance model that maximizes firm value. We discuss the conditions under which firms maximally benefit from private ownership, and argue that the “governance engineering” by private equity sponsors can ultimately explain the continued rise of private markets to the detriment of public markets.

• KEYWORD(S):
• private equity
• venture capital

7/27/2020 — We compare several approaches for generating a prioritized list of products to be counted in a retail store, with the objective of detecting inventory record inaccuracy and unknown out-of-stocks. We consider both "rule-based" approaches, which sort products based on heuristic indices, and "model-based" approaches, which maintain probability distributions for the true inventory levels updated based on sales and replenishment observations.

• KEYWORD(S):
• retail
• strategy and entrepreneurship

7/13/2020 — We estimate the causal effects of employee-friendly scheduling practices on store financial performance at the US retailer Gap, Inc. The randomized field experiment evaluated a multi-component intervention designed to improve dimensions of work schedules – inconsistency, unpredictability, inadequacy, and lack-of-employee control – shown to undermine employee well-being and productivity.

• KEYWORD(S):
• management
• operations
• retail
• technology

7/12/2020 — In stark contrast with liquid asset returns, I find that commercial real estate idiosyncratic return means and variances do not scale with the holding period, even after accounting for all cash flow relevant events. This puzzling phenomenon survives controlling for vintage effects, systematic risk heterogeneity, and a host of other explanations. To explain the findings, I derive an equilibrium search-based asset-pricing model which, when calibrated, provides an excellent fit to transactions data.

• KEYWORD(S):
• commercial real estate
• private equity

7/8/2020 — This research paper develops a substantial, large-scale database of building energy use, energy audit reports, land use, and financial characteristics in New York City to empirically model the hurdle rate for energy retrofit investments, using actual audit data per permitted renovation work.

• KEYWORD(S):
• commercial real estate

7/7/2020 — We propose a method for decomposing private fund portfolio performance into effects from timing, strategy selection, geographic focus, sizing of fund allocation, and fund selection attributes.

• KEYWORD(S):
• investments
• private equity

7/7/2020 — The Tax Cuts and Jobs Act of 2017 established a new program called “Opportunity Zones” that created tax advantages for investment locating in Census tracts with relatively low income or high poverty. Importantly, only 25% of eligible tracts in each state could be designated as an Opportunity Zone. We use detailed establishment-level data and a difference-in-difference (DiD) approach to identify the designation of a tract as an Opportunity Zone on job creation.

• KEYWORD(S):
• economic development policy
• inclusive development
• inequality
• opportunity zones

7/7/2020 — We examine the effect of paying higher wages on firm performance during the 2008 financial crisis. To identify variation in wages, we rely on heterogeneity in the timing of long-term wage agreements for a sample of UK firms. We instrument for firms signing long-term agreements overlapping with the crisis by the presence of a contract signed in 2006 or earlier and expiring before September 2008. Treated firms paid higher wages but also realized greater labor productivity relative to control firms. These findings are consistent with the intuition that opportunity cost differentials between treated and control firms induce employees to exert higher effort.

• KEYWORD(S):
• finance
• organizational behavior

7/6/2020 — Customer reviews are essential to online marketplaces. However, reviews typically vary; ratings of a product or service are rarely the same. In many service marketplaces, including the ones for solar panel installations, supply-side participants are active. That is, a seller must make a proposal to serve each customer. In such marketplaces, it is not clear how (or if) the dispersion in customer reviews affects the seller activity level and number of matches in the marketplace.

• KEYWORD(S):
• operations

7/1/2020 — We document what fraction of the housing stock in US cities is affordable to different family types. Rather than looking at what fraction of their income people actually pay in rent in each city, which reflects a mix of households’ ability to pay and supply conditions, we look at the extent to which the housing stock is affordable using discrete housing expenditure share cutoffs and the distribution of rents in the American Community Survey from each city.

• KEYWORD(S):
• real estate

6/24/2020 — Time series regression analysis relies on the heteroskedasticity- and auto-correlation-consistent (HAC) estimation of the asymptotic variance to conduct proper inference. This paper develops such inferential methods for high-dimensional time series regressions.

6/24/2020 — We study Granger causality testing for high-dimensional time series using regularized regressions. To perform proper inference, we rely on heteroskedasticity and autocorrelation consistent (HAC) estimation of the asymptotic variance and develop the inferential theory in the high-dimensional setting. To recognize the time series data structures we focus on the sparse-group LASSO estimator, which includes the LASSO and the group LASSO as special cases.

• KEYWORD(S):
• finance

6/22/2020 — Using a convolutional neural networks approach to process the images, this study reviews Airbnb listings in two cities and derives a descriptive model of image technical features, content, and other property attributes (e.g., price, textual information, characteristics) to predict demand at the property level.

• KEYWORD(S):
• real estate

6/21/2020 — Many business-to-business (B2B) selling situations involve outside sales (OS) representatives (reps) interfacing with customers and inside sales (IS) rep largely supporting OS reps. Put differently, OS reps are linchpins, while IS reps generally have auxiliary roles. Perhaps for this reason, the economic value of IS reps for the B2B IS-OS selling process has received little systematic investigation. The authors propose an approach that quantifies the incremental value of IS using observational data that are commonly available in organizational customer relationship management systems.

• KEYWORD(S):
• finance

6/12/2020 — Using #BlackLivesMatter as a case study, this research documents the tensions and harms associated with trademarking online social movement hashtags.

6/11/2020 — We undertake the first empirical analysis of profit shifting by U.S. firms during foreign tax holidays.

• KEYWORD(S):
• international tax

6/7/2020 — This paper provides the first large-sample analysis of buyout and venture capital fund values over their lifetimes. Specifically, we examine interim fund investment multiples (TVPIs), internal rates of return (IRRs), and direct-alphas based on the current reported net asset values (NAVs) at each quarter of a fund’s life.

• KEYWORD(S):
• private equity

6/5/2020 — We quantify the net effect of recent U.S. tax reform on the tax rates of public U.S. corporations and find they decreased by 7.5 to 11.4 percentage points on average following tax reform. Further, we separately examine the effect of tax reform on purely domestic firms and multinational firms because some key provisions only affect multinational firms.

• KEYWORD(S):
• federal tax
• international tax

6/3/2020 — The Peak Performance simulation is an experiential learning process designed to help learners and medical professionals develop communication and interpersonal skills that are critical in today’s health care settings. The skills practiced in this simulation have a direct impact on our interactions with patients, how we work with colleagues, and our capacity to lead others.

• KEYWORD(S):
• healthcare