We examine the consequences of corporate tax enforcement for business activity. Employing two different empirical approaches—a regional design and a firm-level design—we document that corporate tax enforcement is negatively associated with business activity. This association is economically significant and is robust to tests that mitigate concerns regarding endogeneity and measurement.
Economic recoveries can be slow, fast, or involve double dips. This paper provides an explanation based on the dynamic interactions between bank lending standards and firm entry selection. In the model, bank lending standards refer to both how banks screen borrowers with unknown quality and whether well-qualified borrowers are credit rationed, and firm entry selection refers to the mechanism through which financing conditions select firms of different quality to enter the lending market.
Many managers today are spending more and more time working cross-functionally. For example, a recent Corporate Executive Board survey of over 20,000 employees found that 60-70% reported working in groups that involve individuals from other internal functional areas or other external stakeholders. Similarly, a Best Companies for Leadership survey, jointly sponsored by Businessweek.com and the Hay Group, found that more than 96% of managers in the top 20 performing global companies agreed with the statement, "My organization operates in a highly matrixed structure," where one of the main goals behind matrix structures is to pull together representatives from different functional groups to make decisions.
We are now in the age of Big, and, seemingly, ever Bigger Data. The current public discussion focuses on the avalanche of data, due to fact that nearly all written (and other) materials are now available in a digital format, which simplifies their accessibility, extraction, classification, and analysis. Even more so, the adoptions of online digital platforms create new and ever-larger data quantities every day. While created for other purposes the potential for scientific socio-economic research appears simultaneously extremely promising and extremely uncertain – very much like answers in search of good questions.
There has been renewed advocacy for restrictions on international financial flows in the wake of the recent financial crisis. Motivated by this trend, we explore the extent to which cross-border flows affect real economic activity. Unlike previous research efforts that focus on aggregated capital flows, we exploit novel data on forced trading by global mutual funds as a plausible source of exogenous flow shocks. Such forced trading is known to generate large liquidity and price effects, but its real impacts have not been studied extensively. We find that both country- and firm-level investment growth rates are significantly affected by these exogenous capital shocks, and that their effect is more pronounced for firms whose marginal investment decisions are more equity-reliant.
We examine firm disclosure choice during the initial public offering (IPO) roadshow presentation to understand the informativeness of a management presentation designed to attract investors. Although firms submit a comprehensive registration filing during the IPO, managers also prepare a roadshow presentation, which is shorter and typically allows managers more autonomy to select the information released and how it is discussed. We find that IPO roadshows have significantly more positive, less negative, and less uncertain language than the SEC filing.
Firms are increasingly launching initiatives with explicit social mandates. Often the business case for these initiatives is justified through one critical aspect of human capital management: employee retention. Although prior empirical studies have demonstrated a link between such corporate social initiatives and intermediate employee-related outcomes like motivation and identification with the firm, the relationship between employee participation in these initiatives and retention outcomes has not been investigated.
Research on resource dependence typically takes a static view in which actions and outcomes are determined structurally, but not as responses to the actions of the counterparty in an exchange relation. By contrast, this study addresses a question of power dynamics by examining whether mergers of organizations trigger responses from their common exchange partners. We predict that common exchange partners respond by withdrawing from the relationship and that their responses vary with the availability of alternatives, the value of the relationship, and the relationship history. Using data on advertising agencies, we show that mergers of agencies do trigger reactions from their common clients, and the reactions differ with agency and client characteristics. Extending existing theory and evidence, our results suggest that firms respond to the dynamics of exchange relationships and not only to their structure.
The interaction between market orientation and facets of the environment is theoretically compelling and is hence the primary interaction studied in market orientation literature. Yet empirical literature offers mixed findings regarding these interaction effects.
Examining the strategy formation process is central to understanding why some firms in entrepreneurial settings create competitive advantage and succeed while others do not. While existing work shows the value of learning from experience or having a holistic understanding of how the pieces fit together, there is limited empirical research that fuses the two streams. We first review the extant literature on strategy formation in entrepreneurial settings by organizing around this fundamental tension between strategizing by “doing” versus “thinking.” We then describe recent work that blends the two and conclude with a future research agenda.
The multigenerational survival rate for family-owned businesses is not good. Lack of a shared vision for the family enterprise and weak next-generation leadership are often cited as two of the leading reasons for the failure of family firms to successfully transition from one generation of family ownership to the next. The climate of the business-owning family has also been suggested as important to the performance of the family enterprise. Despite these commonly held tenets, there is a lack of rigorous quantitative research that explores the relationships among these three factors.
Investing in economic capabilities that enhance firms' ability to innovate and compete on the world stage has become an important national and local policy focus. This type of investment occurs in specific communities and jurisdictions, often providing the foundation for regional economic development.
We explore the theoretical relation between earnings and market returns as well as the properties of earnings frequency distributions under the assumption that managers use unbiased accounting information to sequentially decide on real options their firms have and report generated earnings truthfully, with the market pricing the firm based on those reported earnings. We generate benchmarks against which empirically observed earnings‐returns relations and aggregate earnings distributions can be evaluated.
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.
On April 1-2, 2016, the Energy Center at the Kenan-Flagler Business School, University of North Carolina at Chapel Hill convened a conference on “Global Frac’ing, What has to Change for it to be a Game Changer?” It was an invitation only event with attendance limited to industry experts, leading consultants and responsible government officials. Attendees and speakers came from the U.S., UK, Poland, Mexico and Canada. This report summarizes the main points which emerged from the speaker presentations and subsequent discussion. It does not attempt to be a comprehensive treatment of Global Frac’ing. Rather, it raises four sets of questions and presents the conclusions which developed. The Executive Summary provides an overview of these conclusions. The appendices share details on two matters much discussed – what would be a model regulatory regime for unconventional development, and what would constitute a model fiscal regime?
Prior research examines practitioner, investor, and executive perceptions of corporate tax planning. However, little is known about how the typical U.S. consumer views corporate tax planning. We examine consumers’ perceptions of corporate tax planning using both survey and experimental methods.
The COVID-19 pandemic and the nationwide civil unrest spawned by the recent spate of senseless killings of unarmed African Americans have illuminated what executive development professionals have been telling private and public sector leaders and managers for quite some time. We are living in an era of increasing volatility, uncertainty, complexity and ambiguity—a VUCA World. “Certain-uncertainty” is the new normal in today’s society and economy.
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.
Organizations learn and adapt their aspiration levels based on reference points (prior aspiration, prior performance, and prior performance of reference groups). The relative attention that organizations allocate to these reference points impacts organizational search and strategic decisions.