Several influential studies have concluded that earnings surprises just to the right or to the left of a hypothesized bright line produce distinct price reactions compared with surrounding earnings surprises because they convey special meaning. In this study, we examine whether previous inferences of asymmetric stock price reactions to bright-line surprises are observed when empirical tests are designed to be consistent with a rational expectations equilibrium.
A project funded by the Institute for the Study of Business Markets to develop an understanding of the current state of business-to-business marketing and a research agenda for the field identified a lack of understanding of how the marketing function can or should best contribute to firms' innovation efforts as the top priority.
We study a longitudinal fit model of adaptation and its association with the longitudinal risk-return relationship. The model allows the firm to adjust its position in response to partial learning about a changing environment characterized by two path-dependent processes—a random walk and a stochastic trend.
Inspired by recent discussions of the systematic costs that external rankings impose on academic institutions, and the undeniable shifts in the landscape of institutional data, a concerted and pragmatic re-evaluation of ranking efforts has begun. In this study, multiple administrators and researchers representing both public and private institutions across the United States weigh in on these issues.
Inspired by recent empirical work on inventory record inaccuracy, we consider a periodic review inventory system with imperfect inventory records and unobserved lost sales. Record inaccuracies are assumed to arrive via an error process that perturbs physical inventory but is unobserved by the inventory manager. The inventory manager maintains a probability distribution around the physical inventory level that he updates based on sales observations using Bayes Theorem. The focus of this study is on understanding, approximating, and evaluating optimal forward-looking replenishment in this environment.
The current study meta-analytically examined the gendered nature of lateral and upward influence attempts. Drawing from gender role theory, we investigated the extent to which the gender of the influence actor affected the use and effectiveness of influence behaviors. The role of a gendered environmental context was also examined.
We study whether asset-class risk dynamics can help explain the predominantly negative stock-bond return relation and movements in the term-structure's slope over 1997-2011.
This study uses learning theory to show how knowledge domains affect product extension decisions and how these product decisions change as firms age. Faced with the choice of new product-markets, a firm might decide to introduce a similar product, by leveraging existing firm knowledge, or to experiment with a less familiar product, which requires new knowledge.
This study asks whether investors learn differently from gains versus losses. I find experimental evidence that indicates that being in the negative domain leads individuals to form overly pessimistic beliefs about available investment options.
We study the use of residual income (RI) valuation methods by U.S. sell-side equity analysts, particularly as compared to DCF. We document that RI valuations are rare — just 1/16th as common as DCF — and that different RI and DCF valuations are not infrequently provided by the same analyst for the same firm in the same report.
This study seeks to inform investment academics and practitioners by describing and analyzing the population of return predictive signals (RPS) publicly identified over the 40-year period 1970–2010. Our supraview brings to light new facts about RPS, including that more than 330 signals have been reported; the properties of newly discovered RPS are stable over time; and RPS with higher mean returns have larger standard deviations of returns and also higher Sharpe ratios.
Competing technologies in emerging industries create uncertainties that discourage supplier investments. Open technology can induce supplier investments, but may also lead to intensified future competition. In this paper, we study competing manufacturers’ open-technology strategies. We show that despite the risk of intensifying future competition, open technologies by competing manufacturers may constitute an equilibrium and can indeed induce supplier investments.
We study a multi-product firm with limited capacity where the products are vertically (quality) differentiated and the customer base is heterogeneous in their valuation of quality. While the demand structure creates opportunities through proliferation, the firm should avoid cannibalization between its own products.
We study a manufacturer's optimal multiple-sourcing strategies when some but not all suppliers face risks of complete supply disruptions. Using an approximate model, we show that the optimal unreliable orders are ranked by a simple and intuitive criterion, and are invariant of minor market size changes. Furthermore, when ordering from one reliable and one unreliable supplier, we show that the total order quantity and its allocation between the two suppliers are independent decisions.
We propose a production-based general equilibrium model to study the link between timing of cash flows and expected returns both in the cross section of stocks and along the aggregate equity term structure.
This study provides general methods to measure and characterize the welfare costs of long-run consumption uncertainty with Epstein and Zin (1989) preferences. I find that long-run uncertainty can create significant welfare costs even when risk aversion is moderate and the short-run consumption volatility low.
By considering banks as portfolios of assets in different locations, we study how real estate shocks get amplified across bank’s business areas while controlling for local demand shocks and bank location–specific factors.
This study analyzes optimal replenishment policies that minimize expected discounted cost of multi-product stochastic inventory systems. The distinguishing feature of the multi-product inventory system that we analyze is the existence of correlated demand and joint-replenishment costs across multiple products.
In this article, we lay out the challenges and research opportunities associated with business-to-business (B2B) buying. These challenges and opportunities reflect four aspects of B2B buying that the Institute for the Study of Business Markets (ISBM: www.isbm.org) has identified through a Delphi-like process: (1) the changing landscape of B2B buying, (2) the increasing sophistication of sellers, (3) the impact of technological changes, and (4) the increasing importance and growth of emerging markets. For each of these four areas, we identify the relevant background, key issues, and pertinent research agendas.
We disentangle and study the relative importance of different risk preferences in explaining extended warranty purchases and the high premia paid for them. Empirical and behavioral research on insurance is at odds with whether diminishing returns (curvature of the utility function), or loss aversion and nonlinear probability weighting lead to observed consumer behavior. This lack of consensus is primarily due to the inability of standard choice data to separate different risk preferences, and the consequent need to rely on strong parametric assumptions.