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Market-Based Solutions to Vital Economic Issues


Kenan Institute 2024 Grand Challenge: Business Resilience
Market-Based Solutions to Vital Economic Issues



This study finds that greater asymmetric timeliness of earnings in reflecting good and bad news is associated with slower resolution of investor disagreement and uncertainty at earnings announcements. These findings indicate that a potential cost of asymmetric timeliness is added complexity from requiring investors to disaggregate earnings into good and bad news components to assess the implications of the earnings announcement for their investment decisions.

Whether fair value accounting should be used in financial reporting has been the subject of debate for many years. A key dimension to this debate is whether fair value earnings can provide information to financial statement users that is helpful in making their economic decisions.

We explore the impact of Knightian uncertainty on contracting within a multi-layered firm. We study a setting where, absent uncertainty, division managers should be paid based on their division performance, but not other divisions' performance.

Since 2001, the number of one-quarter-ahead financial items forecasted by analysts and disseminated via FactSet and I/B/E/S data feeds has risen from 5 to 170+. We show that the income statement, cash flow statement, balance sheet, ratio/other, and KPI forecast surprises related to this dissemination are strongly associated with increases in the information content of earnings announcements.

We examine how abnormal dark market share changes at earnings announcements and find a statistically and economically significant increase in abnormal dark market share in the weeks prior to, during, and following the earnings announcement.

Retailers routinely allow consumers to negotiate a discount off the posted price for big-ticket items such as home appliances and automobiles, and on online platforms such as Amazon and eBay. The profitability of such a strategy, relative to selling only at posted prices, depends on consumers’ willingness to initiate a negotiation and ability to negotiate a discount. In this article, the authors incorporate consumers’ decision of whether to negotiate into a demand model.

Prior studies attribute analysts' forecast superiority over time-series forecasting models to their access to a large set of firm, industry, and macroeconomic information (an information advantage), which they use to update their forecasts on a daily, weekly or monthly basis (a timing advantage).

We investigate the influence of bank competition on agency costs by examining whether earnings management in the form of loan loss provision smoothing increases as the wedge between control rights and cash-flow rights increases.

Because security analysts, who serve as brokers between public firms and investors, arrive at their forecasts by incorporating guidance from managers, there is immense pressure on the managers to meet or beat analyst earnings forecasts; moreover, investors reward (penalize) firms for exceeding (missing) analyst forecasts.

This study presents a semi-parametric spatio-temporal regression model to understand how theater level differentiation affects the performance of independent and affiliate movie theaters. Independent movie theaters are privately owned and managed retail establishments, while affiliate theaters are managed by national-level chains such as AMC and Regal.

We present a survey design that generalizes static conjoint experiments to elicit inter-temporal adoption decisions for durable goods. We show that consumers’ utility and discount functions in a dynamic discrete choice model are jointly identified using data generated by this specific design. In contrast, based on revealed preference data, the utility and discount functions are generally not jointly identified even if consumers’ expectations are known.

Combining a Monte Carlo simulation with a statistical model of player skill and random variation in scoring, we estimate the seeding and selection efficiency of the PGA TOUR's FedExCup, a very complex multi-stage golf competition, which distributes $35 million in prize money, including $10 million to the winner.