The autonomous car began as an opportunity that required breaking all kinds of limits: engineering, navigation, adjusting to traffic conditions, distinguishing objects, predicting what those objects might do, reacting in time, calculating quickly and juggling a vast number of ever-changing variables. The developers used more and more computer power to address these needs. But the initial bounding limit turned out to be very fundamental; rule-based computers don’t have pattern power.
AI has become close to bewildering in its promises, met and unmet, its terms and tools, acronyms, “use” case examples of wild successes countered by duds and disappointments. There’s an overall lack of clear pointers for business leaders to shape the direction, priorities and pace of their organization’s AI activities. Over the past two years, we have explored the widening AI space; what stood out in our reviews is that there is today a lack of management perspective on AI.
Using a novel database on venue short sales and market design characteristics, we ask: Where do short sellers exploit their information advantage?
Gentrifying cities increasingly are adopting inclusive and equitable development policies, strategies, tools, and regulatory practices to minimize, if not altogether eliminate, the demographic and economic dislocations that often accompany their growing attractiveness as ideal places to live, work, and play for a creative class of young people and well-resourced retirees who are predominantly white. Creating greater opportunities for historically under-utilized businesses to grow and prosper through enhanced local government contracting and procurement is one mechanism through which gentrifying cities are trying to generate greater equity and shared prosperity.
Governments often subsidize startups with the goal of spurring entrepreneurship using tax incentives. Exploiting the staggered implementation of angel investor tax credits in 31 U.S. states from 1988 to 2018, we find that these programs increase the number of angel investments and average investment size.
Marketing academics are keenly aware of the seismic shifts in today's marketing environment caused by digital (dis)intermediation. In this article, we discuss four types of digital (dis)intermediation, and how they affect branding activities of incumbents and new firms.
We directly test the reliability and relevance of investee fair values reported by listed private equity funds (LPEs). In our setting, disaggregated fair value measurements are observable for funds’ investees; and investee accounting fundamentals are also publicly disclosed. We find that LPE fair value measurements reflect equity book value and net income in a manner consistent with stock market pricing of listed companies.
We investigate tax planning by privately-held corporations. Privately-held firms are commonly believed to face lower costs of tax planning relative to publicly-held firms, and thus are believed to engage in greater tax planning.
We examine how firms’ accounting quality affects their reaction to monetary policy. The balance sheet channel of monetary policy predicts that the quality of firms’ accounting reports plays a role in transmitting monetary policy by affecting information asymmetries between firms and capital providers.
This study finds that greater asymmetric timeliness of earnings in reflecting good and bad news is associated with slower resolution of investor disagreement and uncertainty at earnings announcements. These findings indicate that a potential cost of asymmetric timeliness is added complexity from requiring investors to disaggregate earnings into good and bad news components to assess the implications of the earnings announcement for their investment decisions.
We study multi-period sales-force incentive contracting where salespeople can engage in effort gaming, a phenomenon that has extensive empirical support. Focusing on a repeated moral hazard scenario with two independent periods and a risk-neutral agent with limited liability, we conduct a theoretical investigation to understand which effort profiles the firm can expect under the optimal contract. We show that various effort profiles that may give the appearance of being sub-optimal, such as postponing effort exertion (“hockey stick”) and not exerting effort after a bad or a good initial demand outcome (“giving up” and “resting on laurels,” respectively) may indeed be induced optimally by the firm.
We document evidence of a positive association between public firm presence and import competition. Using cross-sectional differences in the expected costs of the Sarbanes-Oxley Act as an instrument for changes in public firm presence after the Act, we find evidence that public firm presence cause changes in import competition. Subsequent mechanism tests suggest that this effect arises because U.S. securities regulation requires public firms to prepare and make publicly available audited financial reports. Although these reports are purportedly for the benefit of investors, our mechanism tests suggest that foreign competitors also make use of the performance and investment information disclosed in these reports to compete with U.S. firms.
Designing modern call centers requires an understanding of callers’ patience and abandonment behavior. Using a Cox regression analysis, we show that callers’ abandonment behavior may differ based on their contact history, and changes across their different contacts.
We investigate the extent to which loan officers generate individual effects on the design and performance of syndicated loan deals. We construct a novel database containing the identities of 6,821 loan officers involved in structuring syndicated loan deals. This data allow us to exploit movement of loan officers across banks to disentangle loan officer effects from bank fixed effects and estimate loan officers’ influence on both lending terms and loan performance. We find that loan officers have a significant influence on loan terms and loan performance that is incremental to bank and borrower characteristics.
Consumers’ brand associations are essential to the development of effective marketing strategies. Understanding consumers’ brand associations enables firms to determine their brand’s positioning and informs new product development and marketing mix design. A rich and abundant source for consumers’ brand associations is user-generated-content (UGC).
Networks of serial entrepreneurs, investors, and their affiliated companies play a critical role in driving entrepreneurial behavior, investor focus, and innovation hot spots within specific industry sectors and are critical for shaping the character of robust regional economies.
On Jan. 3, 2019, Bristol-Myers Squibb Co. announced its proposed acquisition of Celgene Corp. for approximately $74 billion. The Federal Trade Commission issued requests for additional information and documentary materials to the companies on March 25, 2019, that were “focused on marketed and pipeline products for the treatment of psoriasis.”
In order to address the FTC’s concerns, BMS plans to divest Celgene’s Otezla (apremilast) drug, which is a phosphodiesterase-4 inhibitor indicated for the treatment of moderate to severe psoriasis and psoriatic arthritis. Psoriasis is an autoimmune disease with multiple subtypes, with large skin plaques being the most common manifestation.
In the run up to the financial crisis, the essential functions financial intermediaries played seemed to become less important. Commercial and industrial loans, as well as residential mortgages, the quintessential banking products, were securitized and sold.
A core idea in competitive strategy is that a firm’s ability to capture value depends on the creation of value: maximizing the gap between willingness to pay and cost. This value can depend on or be enhanced through complementarity, where the willingness to pay for an offering is increased in the presence of another offering. Substitutability is assumed to have the opposite effect.
CEO successions represent critical junctures for firms. Although extant research explores the performance consequences resulting from different succession types, what remains underexplored is what happens when the firm rehires a former CEO (e.g., a “boomerang CEO”).
The pricing of prescription drugs comes under persistent public scrutiny, yet limited empirical evidence details the determinants of these price levels. This study provides a price function specification for newly launched drugs, with marginal cost and pricing power components.
I investigate the exit outcomes of start-ups backed by government VCs (GVCs) and private VCs (PVCs), using a sample of 8,106 start-ups in China funded by VCs between 1991 and 2013 and exit information updated in 2018. I find that start-ups backed by GVCs are less likely to exit through domestic Initial Public Offerings (IPOs), oversea IPOs, and M&As. GVC backed start-ups are also less likely to list on the intermediate public market before companies go to IPOs.
Employee cynicism is on the rise, and thus is increasingly part of the social fabric in modern workplaces. In this paper, we investigate whether interactions with cynical others may produce undesirable effects on employee energy.
While much has been written about the resource mobilization process of new ventures, surprisingly the literature does not distinguish between new ventures founded by a single founder and new ventures founded by co-founders. The literature that does exist suggests that solo-founded ventures should experience greater resource constraints than co-founded ventures and so exhibit lower performance. However, empirical research is silent on the conditions under which solo-founded ventures might perform as well or better than co-founded ventures. We address this gap by exploring the question of “under what conditions do solo-founded ventures perform as well as or better than co-founded ventures?”
This article investigates patent citations made to published patent applications. Although citations to patent publications are conceptually indistinguishable from citations to granted patents, they are omitted from all standard measures. We find that publication citations are a large and growing portion of patent citations, and that they differ statistically from citations to granted patents on several important dimensions. We conclude that omitting publication citations is likely to generate biased measures, and that standard measures of patent citations should be corrected. We release our computer code and corrections for future use.
Using a novel dataset on global private equity investments in 19 industries across 52 countries, we find that labor productivity, employment, profitability, and capital expenditures increase for publicly-listed companies in the same country and industry as private equity investments. Our results show that positive externalities created by private equity firms are absorbed by other companies within the same industry.
Why do young firms pay less? Using confidential microdata from the US Census Bureau, we find lower earnings among workers at young firms. However, we argue that such measurement is likely subject to worker and firm selection. Exploiting the two-sided panel nature of the data to control for relevant dimensions of worker and firm heterogeneity, we uncover a positive and significant young-firm pay premium. Furthermore, we show that worker selection at firm birth is related to future firm dynamics, including survival and growth. We tie our empirical findings to a simple model of pay, employment, and dynamics of young firms.
We examine how product market competition affects the disclosure of innovation. Theory posits that product market competition can cause firms to increase their disclosure of innovation to deter competitors. Consistent with this reasoning, we find that patent applicants in more competitive industries voluntarily accelerate their patent disclosures, which are credibly disclosed via the United States Patent and Trademark Office.
Recent health policy efforts have attempted to promote constructive conversations regarding cost-effectiveness by increasing transparency for both patients and physicians. Spurred by access and cost challenges resulting from increasing pharmaceutical prices, the Centers for Medicare & Medicaid Services (CMS) proposed a rule that would require direct-to-consumer prescription drug advertisements to include the list price for a typical 30-day course of therapy, according to their weighted average cost. This Viewpoint discusses implementing price transparency for health care products and services where physicians spend an increasing proportion of their time—in electronic health records (EHRs).
Despite recognizing the importance of events, researchers have rarely explored the influence of broader societal events on employee experiences and behaviors at work. We integrate perspectives on events and social identities to develop a cross-level theoretical model of the spillover effects of mega-threats, which we define as negative, large-scale, diversity-related episodes that receive significant media attention.
Artificial intelligence, or AI, enhancements are increasingly shaping our daily lives. Financial decision-making is no exception to this. We introduce the notion of AI Alter Egos, which are shadow robo-investors, and use a unique data set covering brokerage accounts for a large cross-section of investors over a sample from January 2003 to March 2012, which includes the 2008 financial crisis, to assess the benefits of robo-investing. The man versus machine comparison allows us to shed light on potential benefits the emerging robo-advising industry may provide to certain segments of the population, such as low income and/or high risk averse investors.
Across the globe, every workday people commute an average of 38 minutes each way, yet surprisingly little research has examined the implications of this daily routine for work-related outcomes. Integrating theories of boundary work, self-control, and work-family conflict, we propose that the commute to work serves as a liminal role transition between home and work roles, prompting employees to engage in boundary management strategies.
When the human mind is free to roam, its subjective experience is characterized by a continuously evolving stream of thought. Although there is a technique that captures people’s streams of free thought—free association—its utility for scientific research is undermined by two open questions: (a) How can streams of thought be quantified? (b) Do such streams predict psychological phenomena?
We utilize the time period over which banking authorities discussed, adopted, and implemented Basel III to examine the financial reporting and operational decisions firms use to respond to proposed regulation. Our primary finding is that the banks affected by this proposal made strategic financial reporting changes and altered their business models prior to the regulation being enacted.
Organizational, economic, and technology forces are encouraging organizations to experiment with new ways to develop their strategic priorities (Chesbrough & Appleyard, 2007). One such new approach is Open Strategy (OS), an approach that increasingly relies on the use of online digital platforms. OS refers to the process by which an organization’s strategy for the future is developed in a planned or inadvertent manner with more transparency for all stakeholders and/or inclusion of different stakeholders compared to conventional strategy-making processes (Hautz et al., 2017; Mack & Szulanski, 2017; Whittington et al., 2011).
The selection of novel ideas is vital to the development of truly innovative products. Firms often turn to idea crowdsourcing challenges, in which both ideators and the seeker firms participate in the idea selection process. Yet prior research cautions that ideators and seeker firms may not select novel ideas. To address the links between idea novelty and selection, this study proposes a bi-faceted notion of idea novelty and probes the role of task structure.
Some contemporary new product introductions feature attribute auto-dynamics — the property that enables a product to adapt its attributes automatically in response to changing customer, product-system, or environmental (CSE) conditions. In addition to explicating auto-dynamics, the authors propose a typology of attribute auto-dynamics, based on close examinations of 273 U.S. utility patents published between 2001 and 2017. Attribute auto-dynamics offers an efficient mapping design, applicable to changing conditions and product attribute states, that indicates a four-part (contingent, distinctive, associative, and generative) typology.
This paper studies the emergence of debt financing by private equity funds. Using confidential data on U.S. buyout funds, we document the increasing use of subscription lines of credit (SLCs) as an additional source of capital.
The effectiveness of cancer screening and adherence to cancer screening guidelines can be inhibited by long wait times for screening appointments. We develop a queueing network model of screening for a disease within a population of patients with imperfect adherence to screening guidelines to characterize the relationship between the screening request frequency rate and the wait time for screens. We first use our model to derive the capacity needed by a given system or the population size a given system can serve to guarantee a certain service level.
We examine the effect of MiFID II, which mandated the unbundling and separate pricing of analyst research in Europe beginning in 2018. We find that the requirements of MiFID II were associated with a reduction in analyst following for European firms relative to US firms, with decreases in coverage greatest for firms that were larger, older and less volatile, and had greater coverage and more accurate consensus forecasts. Remaining analysts follow fewer firms and issue fewer forecasts, consistent with increased focus, and appear to increase their efforts on the firms they continue to cover.
We develop a database of all empirical research related to operations management in the journals Management Science, Manufacturing and Service Operations Management (M&SOM), and Production and Operations Management (POM) from the beginning of 1999 to the end of 2016. This database includes 236 empirical papers. We analyze the set of empirical papers to look for longitudinal trends and other bibliometric patterns. In particular, we show that (a) empirical research as a whole is gaining in popularity as measured by the publication rates in these three journals, (b) empirical papers in M&SOM are more likely to get citations than nonempirical papers, and (c) researchers are now more commonly using instrumental variables and are more likely to consider endogeneity challenges in their research design.
In today’s world of interconnected and "always-on" information, companies that succeed are those that compete by leveraging the advantage of strategic control points. A strategic control point is a part of a market where, if controlled by one party, it can be used to leverage power elsewhere. This can occur throughout the supply chain, in a related business, or even in an unrelated market.
This paper provides evidence on the determinants and economic outcomes of updates of accounting systems (AS) over a 24-year time-span in a large sample of U.S. hospitals.
We consider a decentralized supply chain consisting of a retailer and a supplier that serves forward-looking consumers in two periods. In each period, the supplier and the retailer dynamically set the wholesale and retail price to maximize their own profits. The consumers are heterogeneous in their evaluations of the product and are strategic in deciding whether and when to buy the product, choosing the option that maximizes their utility, including waiting for a price markdown.
A growing body of rigorous academic literature empirically demonstrates that high-skilled immigrants provide a range of long-lasting and material benefits to the U.S. economy through entrepreneurship and innovation. Recent research has quantified the impact of foreign-born founders on key economic indicators such as firm creation, job creation and overall business innovation. Likewise, a growing body of literature documents how skilled immigrants have more broadly facilitated technological innovation.
Perceived integrity of managers affects employee attitudes. Yet its impact on employee behavior and organizational performance is unknown. Addressing this gap, we examine the effect of perceived integrity in leadership on both subjective firm performance and objective employee productivity.
We consider the anesthesiologist staff planning problem for operating services departments in large multi-specialty hospitals. In this problem, the planner makes monthly and daily decisions to minimize total costs.
A detailed treatment of aggregation and capital heterogeneity substantially improves the performance of the investment CAPM. Firm-level predicted returns are constructed from firm-level accounting variables and aggregated to the portfolio level to match with portfolio-level stock returns. Working capital forms a separate productive input besides physical capital. The model fits well the value, momentum, investment, and profitability premiums simultaneously and partially explains positive stock-fundamental return correlations, the procyclical and short-term dynamics of the momentum and profitability premiums, as well as the countercyclical and long-term dynamics of the value and investment premiums. However, the model falls short in explaining momentum crashes.
We investigate whether institutional ownership (IO) plays a role in transmitting systemic risk through banks. We find robust evidence suggesting that IO is positively associated with future systemic risk. We find this relationship is stronger during economic downturns at the economy-wide level, as well as for banks demonstrating greater capital needs. Our results also suggest a trading mechanism through which active, and transient institutions in particular, play a role in propagating systemic risk.
What makes an asset institutional-quality? This paper proposes that one reason is the existing concentration of delegated investors in a market through a liquidity channel.
