Strategy formation is central to why some firms succeed in entrepreneurial settings while others do not. Prior research suggests that executives effectively form strategies through actions to learn about novel opportunities, and thinking to develop a holistic understanding of the complex set of activities that must fit together.
To enhance our understanding of emerging markets, we study a data set from the Casablanca stock exchange containing all the transaction records over a long span. The exchange was included in 1996 in the International Finance Corporation (IFC) data base roughly 3 years after important market reforms.
Over the last two decades, executive compensation research has focused primarily on equity-based pay and incentives emanating from executives' firm-specific equity portfolios, while generally ignoring cash-based bonus plans as a second order effect. Exploiting access to new data sources, there has been a revival of interest by accounting researchers in more deeply understanding the value adding roles played by bonus plans.
Tax audits are a necessary component of the tax system, but policymakers and others have expressed concerns about their potentially adverse real effects. Understanding the causal effects of tax audits has been hampered by lack of data and because typically tax audits are not randomly assigned. We use administrative data from random tax audits of small businesses to examine the real effects of being subject to a tax audit.
It is common wisdom that practice makes perfect. And, in fact, we find evidence that when given a choice between practicing a task and reflecting on their previously accumulated practice, most people opt for the former. We argue in this paper that this preference is misinformed. Using evidence gathered in ten experimental studies (N = 4,340) conducted across different environments, geographies, and populations, we provide a rich understanding of the conditions under which the marginal benefit of reflecting on previously accumulated experience is superior to the marginal benefit of accumulating additional experience.
General Partners (GPs) in private equity face a trade-off between focusing their skills and effort on fewer investments to earn higher returns, or investing more broadly to reduce risk through diversification. Using a novel, deal-level dataset of 5,925 global investments from 1999 to 2016, we show that these portfolio considerations are important for understanding fund-level private equity returns.
Effective policymakers must balance the demands of formulating a corporate tax system that spurs economic activity while promoting a “level playing field” across firms. However, tax systems have become more complex over time, increasing firms’ difficulty in understanding and complying with tax regulations. We explore the role of corporate tax system complexity in both objectives, using an international sample and measuring tax system complexity based on the average time firms spend to comply with the country’s tax regulations. Examining both capital and labor investment, we document two key findings. First, firm-level investment is less sensitive to changes in corporate income tax rates when tax system complexity is higher, suggesting that such complexity can undermine the ability of tax policy to stimulate investment. Second, the impact of complexity on the sensitivity of investment to the tax rate varies significantly across firms, with domestic-owned, smaller, and private firms being more negatively affected by tax system complexity.
Heuristics play an important role in organizational decision-making. Although management and organizational scholars have contributed significantly to our understanding of heuristics in organizations over the past seven decades, the literature has become fragmented over time. Three parallel streams of research—(1) heuristics and biases, (2) fast-and-frugal heuristics, and (3) simple rule heuristics—have emerged with somewhat conflicting views on the origins, use, and implications of heuristics.
Heuristics play an important role in organizational decision-making. Although management and organizational scholars have contributed significantly to our understanding of heuristics in organizations over the past seven decades, the literature has become fragmented over time. We review and synthesize the literature and put forward an integrative process model of heuristics in organizations.
This roundtable discussion kicks off the Kenan Institute’s “Business of Healthcare: Adapting to an Aging Economy” conference taking place the following day. The conversation will focus on the dual-pronged economic challenge posed by aging Baby Boomers – who are living longer into retirement than any generation before – and the opioid epidemic which is affecting both younger generations’ life spans and their ability to attain and keep employment.
A recent article by AARP compares the tax landscape in North Carolina with surrounding states, and discusses how North Carolina tax breaks for older residents fall short of those offered by other states, such as South Carolina. The article quotes Jim Johnson, director of Education, Aging, and Economic Development for the Kenan Institute, on what older Americans consider when choosing where to spend their retirement years.
Courtney Edwards, associate director of the Kenan Institute-affiliated UNC Tax Center, offered up her expertise in a recent WalletHub article highlighting the best U.S. states for retirement this year. "Taxes are an important consideration for so many decisions individuals make and should not be overlooked when deciding where to retire," Edwards said.
The COVID-19 financial downturn will have short- and long-term effects on personal and consumer finance, as explored by a panel of Kenan Institute-convened experts during a press briefing held yesterday. The full recording of this briefing—along with a deeper-dive analysis on the specific implications of the downturn on personal retirement income by Kenan Institute Executive Director Greg Brown—is available in this week’s Kenan Insight.
This paper examines how tax uncertainty created by highly aggressive tax planning affects a firm's investment decisions. The tax uncertainty that we study arises from tax choices of such inadequate merit that the firms themselves believe that they will lose if audited. Consistent with a simple model that we develop, we find that investments in fixed assets and research and development are increasing, at a decreasing rate, in the tax savings from these aggressive plans.
The Tax Cuts and Jobs Act (TCJA) of 2017 significantly changed how business income is taxed. To what extent have these changes affected tax planning decisions and the economy? Join the UNC Tax Center and the Urban-Brookings Tax Policy Center as experts in accounting, taxation and economics offer their perspectives.
On Sunday, March 31, 2019, five other Kenan Scholars and I took part in a high ropes course event at the UNC Outdoor Recreation Center. Not only was the physical experience an event in itself, but so was the pre-event planning process. It ended up being much harder than I expected and taught me several lessons.
Last month our home state of North Carolina was named “America’s Top State for Business” by CNBC (see the full ranking here). It wasn’t long after when some commentators pointed out that Oxfam had recently ranked N.C. as the worst state for workers. The extreme juxtaposition of rankings made me wonder if this was a coincidence or if there are systematic factors that make states good for businesses and bad for workers. Perhaps “right-to-work” laws, lax worker protection regulation or regional wage differences attract businesses looking to take advantage of areas with weak labor bargaining power. This in turn leads to business growth and thus job migration to states that are less desirable for individual workers. At the end of the day, economic planning should have the best interest of residents in mind when crafting business policy, so it seems worth unpacking what drives the rankings.
We analyze large-scale establishment-level data to evaluate how county-level commercial property taxes influence business location decisions. We find that the propensity to favor lower-taxed counties is increasing in the tax differential between adjacent counties, and is decreasing in the distance to the border.
On March 11, 2020, the World Health Organization declared COVID-19 a global pandemic. Within two months, nearly half a million people fled hard-hit New York City. Will they return once the crisis has passed? In this Kenan Insight, we explore how the ongoing pandemic is raising questions about the future attractiveness of large cities as places to live and do business.
Workplaces are under pressure to be more inclusive due to public demands and rapidly changing demographics in the U.S. workforce. These commitments to diversity, equity and inclusion (DEI) aren't just moral, they're crucial to business prosperity. In this Kenan Insight, we explore strategies for startups to employ and explain why starting early is key to success.