Although the level of power held by the marketing department can determine key organizational outcomes, including firm performance, this power often is modest and, in many firms, diminishing. To address this apparent disconnect, the authors propose that the board of directors is a critical but overlooked driver of marketing department power.
Why do investments in certain places yield jobs, growth, and prosperity while similar investments made in seemingly identical places fail to produce the desired results? Starting with the observation that innovation clusters spatially across a broad spectrum of industries, my work seeks to understand the mechanisms and institutions that promote the creation of useful knowledge. In my conceptualization, entrepreneurs, as the agents who recognize opportunity, mobilize resources, and create value, are key to the creation of institutions and the building of capacity that will sustain regional economic development.
This study examines whether key characteristics of analysts’ forecasts—timeliness, accuracy, and informativeness—change when investor demand for information is likely to be especially high, i.e., during periods of high uncertainty. Findings reveal that when uncertainty is high, analysts’ forecasts are more timely but less accurate. However, analysts’ forecasts are also more informative to the market, which is consistent with investors’ demand for timely information, even if it is less accurate.
We study the foreign externalities of the recent U.S. tax reform, commonly known as the Tax Cuts and Jobs Act (TCJA). Specifically, we examine foreign firms’ stock returns around key tax reform events. We find significant heterogeneity in market responses by country, industry, and firm.
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.
We study the impact of widespread adoption of work-at-home technology using an equilibrium model where people choose where to live, how to allocate their time between working at home and at the office, and how much space to use in production. A key parameter is the elasticity of substitution between working at home and in the office that we estimate using cross-sectional time-use data.
AI. CRISPR. mRNA. Key components of the rapidly expanding alphabet soup of technologies driving a boom in healthcare innovation. In this Kenan Insight, we explore why the 2021 Trends in Entrepreneurship Report names emerging technology in the healthcare industry as a key trend, along with some of the challenges that come with fast-moving technological advancements.
Following state-level legal changes that increase labor dismissal costs, firms increase their innovation in new processes that facilitate the adoption of cost-saving production methods, especially in industries with a large share of labor costs in total costs. Firms with high innovation ability exhibit larger increases in process innovation and capital-labor ratios, an effect driven by both increases in capital investment and decreases in employment. By facilitating the adjustment of the input mix when conditions in input markets change, innovation ability allows firms to mitigate value losses and is a key driver of their performance.
Reliably detecting insider trading is a major impediment to both research and regulatory practice. Using account-level transaction data, we propose a novel approach. Specifically, after extracting several key empirical features of typical insider trading cases from existing regulatory actions, we then employ a machine learning methodology to identify suspicious insiders across our full sample.
Global risk and risk aversion shocks have distinct distributional impacts on capital flows with salient consequences for tail risk in emerging markets. Open-end mutual fund trading provides a key mechanism linking shocks facing global investors to extreme capital flow realizations. The effects are heterogeneous across asset classes and fund types.
Although the level of power held by the marketing department can determine key organizational outcomes, including firm performance, we show that this power has been decreasing since 2007. To address this apparent disconnect, we propose that the board of directors is a critical but overlooked antecedent of marketing department power. In particular, we demonstrate that directors’ exposure through board service at other firms (i.e., board-interlocked firms) affects the marketing department’s power in the firms on whose boards they also serve (i.e., focal firms).
Firms' payout decisions respond to expected returns: everything else equal, firms invest less and pay out more when their cost of capital increases. Given investors' demand for firm payout, market clearing implies that the dynamics of productivity and payout demand fully determine equilibrium asset prices and returns. We use this logic to propose a payout-based asset pricing framework and we illustrate the analogy between our approach and consumption-based asset pricing in a simple two-period model. Then, we introduce a quantitative payout-based asset pricing model and calibrate the productivity and payout demand processes to match aggregate U.S. corporate output and payout empirical moments. We find that model-implied payout yields and firm returns go a long way in reproducing key attributes of their empirical counterparts.
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.
Private labels (PL), also known as store brands or private brands, account for hundreds of billions of dollars in consumer packaged goods sales every year. PLs build store loyalty, improve margins and have been a key factor in changing the balance of power between retailers and national brand (NB) manufacturers. Thus, retailers around the world have a stake in pushing their own store brands. Yet, while PLs enjoy great success in Western, and increasingly Central, Europe, their performance is much more muted in the world's largest market, the United States, and in emerging markets. Why is that the case?
Although the power held by the marketing department can determine key organizational outcomes, including firm performance, this power seemingly has been decreasing. To address this apparent disconnect, the authors propose that the board of directors is a critical but overlooked antecedent of marketing department power (MDP).
Brands and branding are key to achieving competitive advantage in global markets. Yet, brands and their managers are facing new challenges and opportunities in light of numerous trends and disruptions that are changing the landscape of marketing in an international context. The climate crisis, a pandemic, and deglobalization winds—marked by China–West trade tensions, wars, and other trade-related disruptions, to name a few—are challenging branding around the world.
While failure and success have important implications for individual and organizational performance, not all failure and success are equally significant in influencing performance. A key, but unexamined, element is one's expectation of the outcome.
We study the problem of dynamically assigning jobs to workers with two key aspects: (i) workers gain or lose familiarity with jobs over time based on whether they are assigned or unassigned to the jobs, and (ii) the availability of workers and jobs is stochastic. This problem is motivated by applications in operating room management, where a fundamental challenge is maintaining familiarity across the workforce over time by accounting for heterogeneous worker learning rates and stochastic availability.
This paper investigates fire sales of downgraded corporate bonds induced by regulatory constraints imposed on insurance companies. As insurance companies hold over one-third of investment-grade corporate bonds, the collective need to divest downgraded issues may be limited by a scarcity of counterparties. Using insurance company transaction data, we find that insurance companies that are relatively more constrained by regulation are more likely to sell downgraded bonds. Bonds subject to a high probability of regulatory-induced selling exhibit price declines and subsequent reversals. These price effects appear larger during periods when the insurance industry is relatively distressed and other potential buyers' capital is scarce.
Dr. Jim Johnson, director of the Kenan Institute-affiliated Urban Investment Strategies Center, was recently featured in a WRAL-TV report and website article on what he sees as a major problem facing society – the declining role of men. Johnson points to poor performance in grade school, high incarceration rates and discrimination as some of the factors leading to the change. Johnson says the effects will have wide implications, including a decrease in the eligibility pool of marriageable men.