Past research has shown that founders bring important capabilities and resources from their prior employment into their new firms and that these intergenerational transfers influence the performance of these ventures. However, we know little about whether organizational practices also transfer from parents to spawns, and if so, what types of practices are transferred? Using a combination of survey and registrar data and through a detailed identification strategy, we examine these two previously unaddressed questions.
This article utilizes a unique database (PLACE, the PLatform for Advancing Community Economies) to explore relationships between founders’ prior work experiences and the outcomes of their entrepreneurial 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.
On Wednesday, March 3, Ford Foundation President Darren Walker joined UNC Kenan-Flagler Business School Dean Doug Shackelford for an exclusive virtual discussion. Walker discussed leading the $14 billion philanthropy, focusing on the impact of the COVID-19 pandemic, the nation's reckoning around systemic racism and how business plays an essential role in the public good.
We study the microstructure of the U.S. housing market using a novel data set comprising housing search and bargaining behavior for millions of interactions between sellers and buyers. We first establish a number of stylized facts, the most prominent being a nearly 50--50 split between houses that sold below final listing price and those that sold above final listing price. Second, we compare observed behavior with predictions from a large theoretical housing literature.
We examine whether the contribution of firm-level accounting earnings to the informativeness of the aggregate is tilted towards earnings with specific financial reporting characteristics. Specifically, we investigate whether considering the smoothness of firm-level earnings increases the informativeness of aggregate earnings for future real GDP, and if so, whether macroeconomic forecasters use this information efficiently. Using recently-developed mixed data sampling methods, we find that the aggregate is tilted towards firms with smoother earnings and that this composition of aggregate earnings outperforms traditional weighting schemes.
Financial intermediaries often provide guarantees resembling out-of-the-money put options, exposing them to undiversifiable tail risk. We present a model in the context of the U.S. life insurance industry in which the regulatory framework incentivizes value-maximizing insurers to hedge variable annuity (VA) guarantees, though imperfectly, and shift risks into high-risk and illiquid bonds. We calibrate the model to insurer-level data and identify the VA-induced changes in insurers' risk exposures.
For the first time since the tumult of the global financial crisis, the Federal Reserve lowered interest rates by 25 basis points on July 31. The decision was controversial along a multitude of dimensions.
The economy continues to rank as voters’ top issue leading up to the historic 2020 U.S. presidential election – coming as no surprise given the ongoing recession and unprecedented economic turmoil driven by COVID-19. But as we begin to see some indicators rebound and others stagnate, what is the true state of the economy – and what should our elected officials and other leaders be doing to improve it?
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.
Stephen Arbogast, Director of the Energy Center at the Kenan-Flagler Business School, offers an in-depth explanation of supply dynamics in global energy markets--and why oil and gas prices have been so chaotic.
On Monday, Sept. 24, a standing room-only crowd gathered at the Kenan Center in Chapel Hill to participate in a fireside chat with Krishnamurthy Subramanian, the 17th chief economic advisor to the government of India. The program was led by UNC Kenan-Flagler Business School professors Anusha Chari and Christian Lundblad.
The increasingly open flow of goods and services has fundamentally altered the world economy and global power balances. It is also reshaping the American political system and our economic geography, providing clear and lasting benefits for some and negative impacts for others. This Kenan Institute's Global Trade, Global Trade-Offs conference convened thought leaders from the business community, government and academia to explore the core questions of the impact of international trade on society, the changing nature of work and economic productivity.
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.
This paper presents an easy-to-use measure of patent scope that is grounded both in patent law and in the practices of patent attorneys. We validate our measure by showing both that patent attorneys’ subjective assessments of scope agree with our estimates, and that the behavior of patenters is consistent with it.
In spite of widespread buzz about corporate sustainability, research shows that, for many companies, sustainability is still mostly a public relations exercise. UNC Kenan-Flagler Assistant Professor of Strategy and Entrepreneurship and Center for Sustainable Enterprise Faculty Director Olga Hawn discusses new research from colleagues Caroline Flammer (Boston University Questrom), Bryan Hong (NYU Stern) and Dylan Minor (Northwestern University Kellogg) which found that companies that adopt corporate social responsibility contracting have a greater and more pervasive focus on sustainability, are better able to track their ESG (environmental, social and governance) performance and are more likely to achieve their social and environmental goals.
Are divestitures really just the “flip side” of acquisitions? Both divestiture and acquisition are important processes for firm scope change. Frequently, these processes are considered to be “two sides of the same coin” wherein a divestiture is simply an acquisition performed “in reverse.” In contrast to this perspective, the authors submit that these two corporate strategic processes have fundamental differences in their motivations, implementation, and ramifications.
On Saturday, March 21, the Small Business Investor Alliance released a survey focusing on the effect COVID-19 is having on small businesses across the U.S. Kenan Institute Executive Director Greg Brown and UNC Kenan-Flagler Business School Ph.D. candidate Matteo Binfarè provided data analysis.
A central idea in the feedback seeking literature is that there should be a positive relationship between self-efficacy and the likelihood of seeking feedback. Yet empirical findings have not always matched this theoretical claim. Departing from current theorizing, we argue that high self-efficacy may sometimes decrease feedback seeking by making people undervalue feedback and that perspective taking is an important factor in determining whether or not this occurs.
This study contributes to the growing strategic corporate social responsibility (CSR) literature by examining the intersection of acquisition studies and international expansion research and highlighting the unexplored impact of media coverage of CSR and corporate social irresponsibility (CSI) in shaping completion and duration outcomes of cross-border acquisitions.