Research Colloquia
The Sharing of New Ideas
 The Research Colloquium provides a forum for interaction among faculty, students, and visitors interested in the applications of business and management. The colloquium includes presentations by faculty from UC Irvine and other universities, as well as research institutes.
Colloquia Events are open to the public unless otherwise noted; please see event description for more details.
Past Colloquia
2010-2011 Research Colloquia Events
2009-2010 Research Colloquia Events
(Host: Christine Beckman)
May 2, 2013
"The Innovator’s Dilemma: The Tradeoffs of Behaving in Ways to Generate and Implement Creative Ideas"
SPEAKER: Jennifer Mueller
UNIVERSITY: Associate Professor at University of San Diego, Visiting Scholar at University of Southern California
TIME: 12:00pm - 1:30pm
WHERE: SB 117
ABSTRACT:
Innovation is the generation and implementation of creative (novel and useful) idea, and yet the literatures describing the two components—idea generation and implementation—have developed separately. This is partly because the prior literature has assumed that the two components are complementary, so engaging in processes to promote one component (e.g., idea implementation) should not deter or conflict with the processes required to successfully complete the second component (e.g., idea generation). Yet the current presentation will show a series of laboratory and one field study employing data from 514 employees in an organization which encourages creativity to build theory and provide initial evidence showing that innovators face two central dilemmas. First, when employees behave in ways the literature has shown can promote creative idea generation they incur a reputation cost which deters their ability to implement creative ideas. Second, when employees behave in ways the literature has theorized will likely aid implementation—this promotes a focus on feasibility which activates an overall aversion to novelty and subsequent diminished ability to generate creative ideas. In sum, I develop and empirically test theory showing that organizational actors face both a reputation and novelty aversion cost when they behave in ways to generate and implement creative ideas respectively. The current presentation will provide an initial glimpse of the innovator’s dilemma to ultimately propose a new take on longstanding puzzle in the creativity and innovation literatures, why organizations and the people within them often desire but reject creativity.
_____________________________________________________________________________________________
(Host: Sreya Kolay)
May 3, 2013
"Turn-and-Earn in a Product Line"
SPEAKER: Professor Debu Purohit, Joe B. White Professor of Business Administration
UNIVERSITY: The Fuqua School of Business, Duke University
TIME: 2:30pm - 4:00pm
WHERE: SB 111
ABSTRACT:
When manufacturers do not have sufficient capacity to meet demand and they cannot increase prices, they have to determine other methods to allocate goods among retailers. A common allocation mechanism is based on a retailer's sales history: a retailer that has ordered larger quantities in the past should get a greater allocation than a retailer that has historically ordered smaller quantities. This mechanism is known as a turn-and-earn allocation rule and is commonly used in many industries such as automobiles, microprocessors, video game consoles, etc. The existing literature has considered the effect of turn-and-earn allocation for a case of a manufacturer selling one product. However, when we consider a product line, it is not clear whether the manufacturer is better off basing its allocation on the sales history of the entire product line or basing allocation solely on the sales history of the product in short supply. In particular, a shortage of one product can lead retailers and consumers to move toward other products in the line. This, in turn, can have an effect on the manufacturer's optimal allocation mechanism. We examine this issue by developing a model of a supplier selling two substitutable goods through two retailers. Within this setup, we introduce a general turn-and-earn allocation rule that allows the entire sales history to influence allocation levels. Counter to previous work, we show that certain turn-and-earn rules not only help the manufacturer but they also help the retailer and increase total supply chain profits.
_____________________________________________________________________________________________
(Host: Rajeev Tyagi & Imran Currim)
April 26, 2013
"UC/USC Marketing Colloquium"
SPEAKER: Sreya Kolay (UCI), Ye Li (UCR), Matt Selove (USC), Raphael Tomasdsen (UCLA), Nora Williams (UCSD)
TIME: 12:00pm - 7:30pm
WHERE: MPAA 120
ABSTRACT:
Sreya Kolay (UCI) - Topic: "Optimal Selling Strategies for Sequentially Offered Events"
Ye Li (UCR) - Topic: "Cognitive and Emotional Determinants of Temporal Discounting"
Matt Selove (USC) - Topic: "The Strategic Importance of Predictive Uncertainty in Conjoint Design"
Raphael Tomadsen (UCLA) - Topic: "The Impact of Switching Stores on State Dependence in Brand Choice"
Nora Williams (UCSD) - Topic: "Double Standards in the Use of Enhancing Produts by Self and Others"
_____________________________________________________________________________________________
(Host: Rick So)
April 12, 2013
"Public Forecast Information Sharing in a Market with Competing Supply Chains"
SPEAKER: Professor Hyoduk Shin
UNIVERSITY: Rady School of Management, UC San Diego
TIME: 2:00pm - 3:30pm
WHERE: SB 112
ABSTRACT:
Studying the operational motivation of a retailer to publicly announce his forecast information, this paper shows that by making forecast information publicly available to both his manufacturer and to the competitor, a retailer is able to credibly share his forecast information -an outcome that cannot be achieved by merely exchanging information within the supply chain. We model a market comprised of an incumbent supply chain facing the possible entry of a competing supply chain. In each supply chain, a retailer sources the product from a manufacturer, and the manufacturers must secure capacity prior to the beginning of the selling season. Due to the superior knowledge of the incumbent retailer about the consumer market, he privately observes a forecast signal about consumer demand. We first show that the retailer cannot credibly share this forecast information only with his manufacturer, since regardless of the observed signal, the retailer has an incentive to induce the manufacturer to secure a high capacity level. However, when the information is also shared with the competitor, the incumbent retailer faces the trade-off between the desire to secure an ample capacity level and the fear of intense competition. By making information publicly available, it is possible to achieve truthful information sharing; an incumbent retailer observing a high forecast benefits from the increased capacity level to such an extent that he is willing to accommodate competition to prove his accountability for the shared information. On the other hand, an incumbent retailer with a low forecast is not willing to accommodate competition in exchange for the high level of capacity; thus, he truthfully reveals his low forecast to deter competition. Moreover, we demonstrate that this public information sharing can benefit all the firms in the market as well as consumers. In addition, we show that compared to the advance purchase contract, all the firms except the incumbent manufacturer can be better off using public information sharing with a simple wholesale price contract.
_____________________________________________________________________________________________
(Host: Chris Schwarz)
March 19, 2013
"600 Years of Stock Returns: The Bazacle Company of Toulouse from 1372 to 1946"
SPEAKER: William Goetzmann, Edwin J. Beinecke Professor of Finance and Management Studies & Director of the International Center for Finance
UNIVERSITY: Yale School of Management
TIME: 3:00pm - 4:30pm
WHERE: SB 223
ABSTRACT:
A time series of prices and dividends for the earliest documented corporation in the current era is collected and analyzed for what it reveals about the required rate of return for equity investment over several centuries. The capital appreciation of share prices over six centuries was near zero but highly volatile. The yield over the firm’s lifespan was relatively consistent at 5.5%. Tests of the yield as a measure of expected return suggest that it reflected variation in macroeconomic risks and forecasted long horizon total returns.
____________________________________________________________________________________________
(Host: Christine Beckman)
March 28, 2013
"Intergroup competition as a double-edged sword: How sex composition regulates the effects of competition on group creativity"
SPEAKER: Greg Oldham, Professor, J. F. Jr. and Jessir Lee Seinsheimer Chair of Business
UNIVERSITY: Stephen M. Ross School of Business
TIME: 12:00pm - 1:30pm
WHERE: SB 117
ABSTRACT:
Integrating social role theory with insights from social identity theory, we extend a contingency perspective on intergroup competition proposing that having groups compete against one another is stimulating to the creativity of groups composed largely or exclusively of men but detrimental to the creativity of groups composed largely or exclusively of women. We tested this idea in two laboratory experiments and in one field study. Study 1 showed that competition had the expected positive effects on the creativity of groups composed of all men but did not produce the predicted negative effects on the creativity of groups composed of all women. Study 2 extended the earlier findings and showed that the anticipated effects of competition on group creativity emerged at the higher end of the competition spectrum and also emerged in sex heterogeneous groups. This study also found that a measure of group collaboration mediated the joint effects of competition and sex composition on group creativity. Finally, Study 3 replicated the results of Study 2 in a field setting involving R&D teams. We discuss the implications of these findings for theory and practice.
(Host: Siew Hong Teoh)
March 15th, 2013
SPEAKER: Lisa Koonce
UNIVERSITY: University of Texas at Austin
TIME: 1:30pm - 3:00pm
WHERE: SB112
ABSTRACT:
Market participants frequently evaluate a firm’s ability to meet or beat their earnings expectations over time. Although research reports that firms that consistently beat their earnings expectations are rewarded with a market valuation premium, most firms are inconsistent in their benchmark performance. We use multiple experiments to test the idea that investors, evaluating firms with inconsistent benchmark performance, use a counting heuristic to discriminate among firms. Our results provide strong support for the hypothesis that investors distinguish among firms by counting the number of misses and beats they experience over some time period. This simple counting heuristic is used even though investors also have available (and use) information about the magnitude of the firms’ earnings. We also find that investors draw conclusions about a firm’s future prospects and management credibility from the frequency of its benchmark beats and misses. Our study has implications for researchers and firm managers.
(Host: Libby Weber)
March 15th, 2013
SPEAKER: Haiyang Li
UNIVERSITY: Jesse H. Jones Graduate School of Business, Rice University
TIME: 2:00pm - 3:30pm
WHERE: SB117
ABSTRACT:
In this study we propose that external innovation search and collaborative innovation function as substitutes in firms’ product innovation in emerging markets which are characterized with a lack of market-supporting institutions and high search cost. This substitute effect will become weaker as market-supporting institutions are better developed and search costs are reduced. With a sample of manufacturing firms in China, we find empirical support for these arguments. These findings demonstrate that external innovation search and collaborative innovation are two distinctive innovation choices and their roles in product innovation are constrained by institutional development in emerging markets.
(Host: Chris Schwarz)
March 14th, 2013
"Contracting with Synergies"
SPEAKER: Alex Edmans, Assistant Professor of Finance
UNIVERSITY: The Wharton School, University of Pennsylvania
TIME: 10:00am - 11:30am
WHERE: SB 117
ABSTRACT:
This paper studies the effor of synergies on a principal's choice of effor levels and wages for her agents. We model synergies as the extent to which effor by one agent reduces his colleague's marginal cost of effort. It may be optimal to "over-work" and "over-incentivize" a synergistic agent, due to the spillover efforts on his colleagues. This effort can rationalize equity grants to rank-and-file employees even if they have little direct effort on productivity, and a high pay differential between CEOs and divisional managers. An agent's pay and effort depend not only the synergies that he exerts (parameters specific to him) but also the synergies exerted by his colleagues (parameters outside his control). An increase in the synergy between two agents can lead to the third agent being excluded from the team, even if his productivity is unchanged. This result has implications for optimal team composition and firm boundaries.
(Host: Shivendu Shivendu)
March 8, 2013
"Innovation, Openness & Platform Control"
SPEAKER: Marshall Van Alstyne, Associate Professor/Dean's Research Fellow, Information Systems
UNIVERSITY: School of Management, Boston University
TIME: 10:00am - 11:30pm
WHERE: SB 117
ABSTRACT:
To build a business platform, how do you manage the ecosystem to promote growth? Closed systems can have difficulty attracting developers. Open systems can have difficulty making money. We develop an analytic model to examine the optimal level of openness and the optimal duration of property rights for platforms such as those of Apple, Google, Facebook, or Microsoft. We consider two periods of sequential innovation and the subsidies that the platform owner provides to developers in order to increase innovation for that platform. Intuitions are also shaped by dozens of hours with executives at platform firms. Platform Envelopment, Firms in one platform market can use bundling strategies to enter and take over adjacent markets. This can happen without significant technological innovation. Envelopers capture market share by foreclosing an incumbent’s access to users; in doing so, they harness the network effects that previously had protected the incumbent. This strategy can also be used to forecast where competition is likely to emerge in seemingly unrelated markets.
(Host: Christine Beckman)
February 27, 2013
"Toward an Emplaced and Eventful Organizational Theory"
SPEAKER: Chris Marquis, Associate Professor of Business Administration
UNIVERSITY: The Paul Merage School of Business
TIME: 12:00pm -1:30pm
PLACE: SB 117
ABSTRACT:
One paper (Tilcsik and Marquis ASQ 2013) develops an institutionally-oriented theoretical framework to unpack how and why major events within communities affect organizations in the context of corporate philanthropic contributions. To test this framework, we examine how mega-events (the Olympics, the Super Bowl, political conventions) and natural disasters (such as floods and hurricanes) affected the philanthropic spending of locally headquartered Fortune 1000 firms between 1980 and 2006. A second paper, (Marquis and Tilcsik, Working Paper) also in the context of corporate philanthropy of Fortune 1000 firms examines how the influence of community varies over time and depends on the how the firms' community and industry characteristics intersect.
(Host: Libby Weber)
February 22, 2013
"Cash is Surprisingly Valuable"
SPEAKER: Richard Bettis, Ellison Distinguished Professor of Strategy and Entrepreneurship
UNIVERSITY: University of North Carolina, Kenan-Flagler Business School
TIME: 3:00pm - 4:30pm
WHERE: SB 117
ABSTRACT:
Politicians, journalists and social activists are often highly critical of U.S. firms for holding too much cash. Cash holdings are stockpiled free-cash flow and incur substantial opportunity costs from the perspectives of economics. However, behavioral and strategic theory highlight the benefits of cash holdings as fungible slack resources facilitating adaptive advantages. We use the countervailing forces embodied in these two approaches to hypothesize and test a quadratic functional relationship of returns to cash measured by Tobin’s q. We also build and test a related novel hypothesis of scale-dependent returns to cash based on the competitive strategy concept of strategic deterrence. Tests for both of these hypotheses are positive and show that positive returns to cash continue far beyond transactional needs.
(Host: Libby Weber)
February 15, 2013
"Ties That Bind? The Differential Ability Of De Alio And De Novo Firms To Leverage External Relationships When Confronted With A Disruptive Technology"
SPEAKER: Glenn Hoetker, Dean's Council Distinguished Scholar and Associate Professor, Sandra Day O'Connor College of Law Affiliate Professor
UNIVERSITY: Arizona State University
TIME: 2:00pm - 3:30pm
WHERE: SB 112
ABSTRACT:
We examine the impact of a firm’s pre-entry experience in strategic renewal on its post-entry dynamic capability to confront disruptive technological changes, with a focus on their relative ability to manage external relationships. Building on prior work that highlights differences in transformational experience and integrative knowledge possessed by de alio firms—diversifying firms into the focal industry—and de novo firms—firms that are born in the focal industry context, we hypothesize that de alio firms will be more likely to switch to the disruptive technology than de novo firms. Further, we examine the moderating effect of pre-entry experience on the firms’ ability to manage external relationships, and hypothesize that de alio firms are also better able to leverage their external relationships when confronted with disruptive change than de novo firms. We propose to test these hypotheses in the context of the wireless telecommunications industry when the analog incumbents were faced with the disruptive digital technology. Preliminary results suggest that de alio firms are better able to transition to disruptive technology than de novo firms. Further, we find that while de alio firms with more supplier relationships are more likely to transition to the disruptive technology than de novo firms, there is no significant difference between the two in managing the inertial effects of having longer relationships with suppliers.
(Host: Christine Beckman)
February 14, 2013
"The Network Dynamic of Absorptive Capacity: Distinguishing selection from assimilation"
SPEAKER: Alessandro Lomi, Professor of Economics & Communication Sciences
UNIVERSITY: The University of Lugano, Switzerland
TIME: 10:30am - 12:00pm
WHERE: SB 111
ABSTRACT:
According to one vision of network evolution organizations are more likely to establish network ties with partners having similar operational experiences. A second vision suggests that interdependent organizations connected by network ties are more likely to assimilate each other’s knowledge and develop progressively more similar portfolios of internal activities. In this paper we reframe the notion of absorptive capacity as a micro-relational mechanism to investigate which one of these two visions best characterizes the co-evolution of interorganizational networks and organizational structures in a regional community of health care organizations. We estimate newly developed stochastic actor-oriented models which specify how interorganizational networks affect organizational decisions to change the portfolio of internal organizational activities by adding or abandoning clinical activities. At the same time, the model allows examination of how the common affiliation to internal activities affects decisions to change network ties defined in terms of patient sharing relations between partner hospitals. We find that interorganizational network ties through which information and resources flow are more likely to be established and less likely to be dissolved between organizations sharing the same activities. We also find, however, that organizations linked by network ties are not significantly more likely to develop similar activities. Considered together these results suggest that absorptive capacity operates more strongly through social selection rather than social influence mechanisms activated by vicarious learning. We discuss some of the implications of the study for the evolution of interorganizational fields and communities.
(Host: Libby Weber)
February 8, 2013
"Learning by Exporting: The Contingent Role of Capability"
SPEAKER: Charles Dhanaraj, Associate Professor of Management, Schmenner Faculty Fellow
UNIVERSITY: Indiana University
TIME: 3:00pm - 4:30pm
WHERE: SB 112
ABSTRACT:
Exporting can be a significant source of competitive advantage and we explore in this study how a firm’s prior capability influences its learning by exporting (LBE). We explore in this study how learning by exporting (LBE) is contingent upon a firm’s ex-ante R&D capability. We argue that there are two concurrent processes operating in opposite directions, absorptive capacity and diminishing returns to R&D investments. Below the minimum efficient scale of R&D, firms with superior ex-ante R&D capability gain more from exporting relative to an inferior firm, owing to superior absorptive capacity. However, above the minimum efficient scale of R&D, inferior firms gain more than superior firms due to the dominance of diminishing returns to R&D investments. Using a novel dataset of Indian generic drug producers, we empirically demonstrate that the extent to which a firm's ex-ante capability moderates LBE depends on where the focal firm lies along the capability spectrum. We show that firms with intermediate R&D capability benefit the most from export participation relative to firms with high and low R&D capability. We present some key implications for research, practice, and policy.
(Host: Siew Hong Teoh)
February 8, 2013
"On Persistence and Pricing of Industry-Wide and Firm-Specific Earnings, Cash Flows, and Accruals"
SPEAKER: Karen Nelson, Professor of Accounting
UNIVERSITY: Rice University
TIME: 1:30pm - 3:00pm
WHERE: SB 116
ABSTRACT:
Economic theory suggests that the industry-wide component of firm performance is more persistent than the firm-specific component. This paper tests whether investors fail to fully appreciate the relatively higher (lower) persistence of industry-wide (firm-specific) earnings. Consistent with predictions, we find that the industry-wide component of earnings is a significant predictor of future stock returns. We show that this form of mispricing is distinct from the accrual anomaly (Sloan 1996). A hedge portfolio trading strategy that exploits signals from both industry fundamentals and accounting accruals generates abnormal returns in excess of either strategy alone. Additional evidence suggests that the market underreacts (overreacts) to industry-wide cash flows (firm-specific accruals), but correctly prices both industry-wide accruals and firm-specific cash flows.
(Host: Chris Bauman)
February 1, 2013
"The Penn State Scandal: An Autoethnographic Journey"
SPEAKER: Linda Treviño, Distinguished Professor of Organizational Behavior and Ethics
UNIVERSITY: Smeal College of Business, Pennsylvania State University
TIME: 12:00pm - 1:30pm
WHERE: SB 117
ABSTRACT:
In November, 2011, everything changed at Penn State, the author's institution of 25 years, when a former assistant football coach was indicted (and later convicted) for being a serial child sexual abuser. Some of the abuse had occurred on campus. In addition, two university administrators (now 3 - the former President) were charged with lying to the grand jury and failing to report abuse. Those trials have not yet been held. Former legendary football coach Joe Paterno, an iconic figure at Penn State (and beyond) was implicated for not doing more than report up the chain of command what he had heard from a graduate assistant. Two months later he died of lung cancer. He was 85. The narrative that developed in the media was one of an institutional cover-up. The Freeh report (commissioned by the university board) supported that narrative and the NCAA imposed severe sanctions in summer, 2012. The author, a leader in the study of organizational ethics and ethical leadership for 25 years was on sabbatical and immediately immersed herself in the ongoing saga. She kept a journal and worked with colleagues to launch multiple research projects related to the scandal. She will talk about these research projects and her ongoing autoethnographic journey, including what she has learned about ethical decision making from this experience.
(Host: Libby Weber)
January 21, 2013
"Constrained Delegation: Allocation of Decision rights and Resources in Firms That Compete Across Multiple Industries"
SPEAKER: Javier Gimeno, Professor of Strategy, Aon Dirk Verbeek Chaired Professor in International Risk and Strategic Management, Academic Director, INSEAD European Competitiveness Initative
UNIVERSITY: INSEAD
TIME: 10:00am - 11:30am
WHERE: SB 306
ABSTRACT:
This paper explores the influence of intrafirm competitive spillovers on the design of headquarters-subsidiary relationships. Focusing on multi-industry firms, we argue that these firms delegate most business-level decisions to subsidiaries, but adapt to multimarket competition by limiting the subsidiaries’ action space for resource commitments through constraints on the scope of decisions that can be made and constraints on available resources –a phenomenon that we refer to as constrained delegation. Accordingly, the extent of multimarket contact in a given market (1) is associated with lower subsidiary discretion in decisions pertaining to resource commitments, and (2) counteracts the tendency of internal capital markets to provide financial resources to subsidiaries that have low market share and operate in high growth industries. Regression results, based on the population of majority-owned subsidiaries of groups operating in France between 1997 and 2004, and supplementary checks are strongly congruent with the predictions. This study, a first to explore empirically the impact of multimarket contact on internal organizational choices of multi-industry firms, suggests that organizational choices are endogenous to the competitive context and that organization design and competitive dynamics should not be seen as distinct processes.
(Host: Mingdi Xin)
January 18, 2013
"Bounded Rationality: In Search of a Definition, with an Application"
SPEAKER: Roy Radner, Leonard N. Stern School Professor of Business and Professor of Economics, Information Systems, and Environmental Studies
UNIVERSITY: NYU Stern School of Business
TIME: 10:30am - 12:00pm
WHERE: SB 112
ABSTRACT:
In the term "bounded rationality,” the word “bounded” is apparently an adjective modifying the work “rationality.” In this talk I adopt the view that the term "bounded rationality” is concerned with how "smart" decision-makers deal with “bounded cognition,” i.e., cognitive limitations that preclude fully rational procedures in the sense of (say) L. J. Savage. This is in the spirit of the work of H. A. Simon, J. Marschak, and also, to some extent, Savage himself. Thus I see the topic as a subfield, but only a proper subfield, of what has come to be called "behavioral economics" (or the equivalent in psychology and sociology). I shall here confine my attention to situations with a single decision-maker, leaving it to other occasions to deal with games, markets, and evolution. After a brief review of the Savage paradigm, I review in that context the problems raised by various aspects of bounded cognition, and various suggested models of corresponding behavior. A few of these models seem promising as being relevant to some concept of “rationality,” but none successfully addresses the cognitive limitation of the “failure of logical omniscience.”
As an example, I present a model of dynamic monopoly pricing for a good that displays network effects. In contrast with the standard use of a rational-expectations equilibrium to model demand for a network good, we model consumers as boundedly rational, and unable either to pay immediate attention to each price change, or to make accurate forecasts of the adoption of the network good. Our analysis shows that the seller's optimal price trajectory has the following structure: the price is low when the user base is below a target level, is high when the user base is above the target, and is set to keep user base stationary once the target level has been attained. We show that this pricing policy is robust to a number of extensions, which include the product's user base evolving over time, and consumers basing their choices on a mixture of a myopic and a "stubborn" expectation of adoption. Our results differ significantly from those that would be predicted by a model based on rational-expectations equilibrium, and are more consistent with the pricing of network goods observed in practice.
(Host: Siew Hong Teoh)
December 14, 2012
"What Have We Learned About Earnings Management? Correcting Disinformation about Discontinuities"
SPEAKER: David Burgstahler, Julius A. Roller Professor of Accounting
UNIVERSITY: Michael G. Foster School of Business, University of Washington
TIME: 1:30pm - 3:00pm
WHERE: SB 112
ABSTRACT:
Earnings distributions commonly exhibit statistically significant discontinuities at prominent performance benchmarks. Discontinuities at zero earnings are widely interpreted as evidence of earnings management to avoid a loss, and discontinuities at zero earnings change or zero earnings surprise as evidence of management to avoid an earnings decrease or negative earnings surprise, respectively. In contrast, two recent papers by Durtschi and Easton (2005, 2009, hereafter DE) assert that discontinuities are instead explained by some combination of prior researchers' choice(s) of sample selection and scaling as well as a systematic relation between the sign of earnings and market prices. Resolution of the conflicting interpretations of discontinuities is important because 1) it affects how investors, regulators, and scholars view earnings management and 2) it demonstrates the importance of a close linkage between theory and research design choices. We evaluate the three alternative explanations proposed by DE. We point out that DE provide no evidence that their explanations create discontinuities, but only evidence showing that their modified research designs eliminate discontinuities. We demonstrate why the research designs used by DE eliminate discontinuities and show that alternative designs using the same data show highly significant discontinuities. Finally, we outline key characteristics of the extensive body of discontinuity evidence that are consistent with the theory that earnings are managed but inconsistent with most artifactual explanations for discontinuities.
(Host: Libby Weber)
December 14, 2012
"Input-Level Spillovers: Investor Reactions to Chemical Accidents"
SPEAKER: Nandini Rajagopalan, Captain Henry Simonson Chair in Strategic Entrepreneurship & Professor of Management and Organization
UNIVERSITY: Marshall School of Business, University of Southern California
TIME: 2:00pm - 3:30pm
WHERE: SB 223
ABSTRACT:
We build on signaling theory to develop and test an empirical model of input-level spillover effects. We find that after an environmental accident at one firm with a toxic chemical, firms who are not responsible for that accident suffer declines in their market value in proportion to their toxic chemical usage. Further, these negative investor reactions are amplified for non-responsible firms that lack third-party certification, are geographically close to the responsible organization, and share high input relatedness with the responsible organization. Finally, we also find that ex-ante regulatory sanctions against that chemical strengthen the negative investor reactions while the presence of input-level associations weakens them.
(Host: Siew Hong Teoh)
November 30, 2012
Honoring One's Word: CEO Integrity and Accruals"
SPEAKER: Shane Dikolli, Associate Professor
UNIVERSITY: The Fuqua School of Business, Duke University
TIME: 1:30pm - 3:00pm
WHERE: SB 306
ABSTRACT:
In this study, we propose a linguistic-based measure of CEO integrity, defined as honoring one’s word, based on CEOs' excessive use of causation words. We validate our linguistic-based integrity measure using the results of a proprietary survey given to CEOs and their employees that includes the employees’ perceptions of their CEOs' integrity. We document a negative association between (1) the extent of causation words in CEO survey responses; and (2) employees’ perceptions of the extent to which their CEOs honor their word, suggesting the linguistic-based score captures the construct of integrity. After validating the measure, we derive CEO integrity scores for a large archival sample by measuring unexpected use of causation words in the annual shareholder letter. Because accruals are “placeholders for cash flows”(Wahlen et al., 2010), we use accruals to represent a CEO’s word regarding cash flows of the firm. We test the prediction that the financial reports of firms with high-integrity CEOs will exhibit better accruals quality. We document the influence of CEO integrity on financial reporting by showing a positive association between our linguistic-based integrity score and both an accrual-based and a market-based measure of accruals quality.
(Host: Chris Schwarz)
November 30, 2012
Post-Retirement Benefits Plan, Leverage, and Real Investment
SPEAKER: Sohnke M. Bartram, Professor
TIME: 10:30am - 12:00pm
WHERE: SB 117
ABSTRACT:
This paper shows that defined benefit pension and health care plans are important for firm leverage and real investment around the world. While consolidating off-balance sheet post-retirement plans typically increases effective leverage by 32%, firms reduce their level of regular debt by only 23 cents for every dollar of projected benefit obligation, yielding overall higher total leverage of plan sponsors by 24% compared to similar firms without post-retirement plan. Substitution rates between regular debt and post-retirement obligations are lower in countries with weaker employment laws and protection, more labor market freedom, pension guarantee funds, stricter rule of law as well as larger private bond market capitalization and private credit. Since post-retirement benefit obligations have more flexible terms than regular debt, they can be used to investigate the effect of financial flexibility on real investment. The results show that post-retirement benefit obligations are positively related to R&D, which generates growth options, and negatively related to capital expenditures, which exercises growth options. Compared to an otherwise similar firm without a post-retirement plan, the average plan sponsor has 5% less capital expenditures and 12% more research and development. The results are robust to other dimensions of financial policy, such as debt maturity, dividends, preferred stock, convertible debt, and leverage that also affect real investment.
(Host: Siew Hong Teoh)
November 19, 2012
Management Earnings Forecasts and Forward-Looking Statements
SPEAKER: Zahn Bozanic, Assistant Professor of Accounting & MIS
UNIVERSITY: Fisher College of Business, The Ohio State University
TIME: 11:30am - 1:00pm
WHERE: SB 116
ABSTRACT:
Firms provide a significant amount of forward-looking disclosure to investors, but only a small fraction of that disclosure is provided in the form of quantitative earnings forecasts. We use textual analysis to examine managers’ disclosures of forward-looking statements, looking at both earnings-related and non-earnings-related prospective statements. We find that earnings-related forward-looking statements are similar to traditionally-studied (i.e., First Call) earnings forecasts, in terms of both determinants and investor response. However, we show that the vast majority of forward-looking statements (~80%) do not refer directly to earnings or earnings components and, more importantly, are significantly different from earnings-related statements. For example, while managers are less likely to issue earnings forecasts when uncertainty is high, they issue more non-earnings-related forward-looking statements when uncertainty is high. This suggests that, contrary to results in prior literature, managers may actually respond to increased investor demand for information by issuing more forward-looking statements, but do so in ways that prior research has overlooked. In short, the well-documented attributes of quantitative earnings forecasts cannot be extended to most forward-looking statements.
(Host: Siew Hong Teoh)
November 9, 2012
R&D Reporting Rule and Firm Efficiency
SPEAKER: Ram Venkataraman, Assistant Professor
UNIVERSITY: Cox School of Business, Southern Methodist University
TIME: 1:30pm - 3:00pm
WHERE: SB 112
ABSTRACT:
US GAAP (SFAS 2) requires immediate expensing of R&D. Critics contend that the rule prompts myopic managers to cut R&D to manage short-term profits, which could lead to longer-term adverse consequences for firms. Other observers argue that little rigorous evidence exists in support of this claim. We exploit a setting in Germany when the accounting for R&D changed from immediate expensing to partial capitalization when Germany adopted IFRS in 2005. This setting enables a firm to act as its own control, mitigating concerns regarding self-selection and correlated omitted firm attributes. We employ an econometric technique called Stochastic Frontier Analysis to generate firm-specific efficiency estimates. We find that efficiency of German firms improved significantly in the post-IFRS period relative to the pre period. In contrast, we find no evidence of efficiency gain for a control sample of German companies that have never reported R&D. Our results are robust to a battery of sensitivity tests. Our analyses suggest that partial capitalization under IFRS is the likely catalyst for the improvement in efficiency.
(Host: Chris Schwarz)
October 30, 2012
The Media and the Diffusion of Information in Financial Markets: Evidence from Newspaper Strikes
SPEAKER: Joel Peress, Associate Professor
UNIVERSITY: INSEAD
TIME: 11:30am - 1:00pm
WHERE: SB 223
ABSTRACT:
This paper investigates the causal impact of the media in financial markets by exploiting exogenous newspaper blackouts resulting from national strikes in several countries. Trading volume falls 12% on strike days. Stock return volatility is also reduced by 7%, but only cross-sectionally and within the day. These effects are stronger for small firms. Moreover, the power of lagged stock returns for predicting current returns of small firms vanishes on media strike days, consistent with newspapers propagating fundamental news from the previous day. These findings demonstrate that the media influence the stock market by increasing the speed with which information diffuses across investors, and is impounded into stock prices.
(Host: Chris Schwarz)
October 19, 2012
Stock Options as Lotteries
SPEAKER: Brian Boyer, Professor
UNIVERSITY: Brigham Young University
TIME: 2:00pm
WHERE: SB 223
ABSTRACT:
We find strong evidence of a negative cross-sectional relationship between ex-ante total skewness and risk-adjusted returns on individual equity options, consistent with the predictions of recent theoretical asset-pricing models. The alphas of option portfolios with high ex-ante skewness in some cases are less than -50 percent per week, even though the alphas of the underlying stocks are insignificant from zero. We demonstrate that the negative relationship between ex-ante skewness and option returns is not subsumed by moneyness. Simulations further indicate that our findings are also robust to various statistical features of option returns such as non-normality, non-linearity, and peso problems. Our results suggest that the ability of intermediaries to effectively hedge short positions in individual options deteriorates with ex-ante skewness. Intermediaries are therefore compensated for bearing unhedgable risk when accomodating the relatively high investor demand for lottery-like options.
(Host: Siew Hong Teoh)
October 19, 2012
IPO Pricing Mechanisms and Financial Reporting Quality
SPEAKER: Bin Ke, Professor of Accounting
UNIVERSITY: Nanyang Technological University
TIME: 1:30pm - 3:00pm
WHERE: SB 116
ABSTRACT:
We examine how different IPO pricing mechanisms affect the financial reporting quality of IPO firms in a representative weak investor protection country. We show that IPO firms’ financial reporting quality is higher when IPO offering prices are determined by market forces (referred to as the market-based approach) rather than by securities regulators (referred to as the government-based approach). However, we find no evidence that the market-based approach leads to greater inflation of IPO offering prices than the government-based approach.
(Host: Christine Beckman)
May 15, 2012
How Anticipated Employee Mobility Affects Acquisition Likelihood: Evidence From a Natural Experiment
SPEAKER: Lee Fleming, Professor
UNIVERSITY: University of California, Berkeley
TIME: 11:30am – 1:00pm
WHERE: SB 112
ABSTRACT:
Extant M&A research has focused on how acquiring firms may use acquisitions to source human talents from target companies. In this study, we argue that acquirers incorporate expectations about employee mobility into decisions regarding whether to bid for a firm, suggesting a negative relationship between the expected employee mobility in a firm and the likelihood of the firm becoming an acquisition target. We exploit a natural experiment in Michigan wherein an inadvertent change in the enforcement of non-compete agreements provides an observable, exogenous source of variation in employee mobility. Using a difference in-differences approach, we find causal evidence that constraints on employee mobility in Michigan raise the likelihood that a Michigan firm becomes an acquisition target. We also find that the effect is stronger when a firm is more exposed to the negative consequences of employee mobility, such as when a firm employs more knowledge workers in its work force and when a firm faces greater in-state competition; by contrast, the effect is weaker when a firm is protected by a stronger intellectual property regime that mitigates the consequences of employee mobility.
(Host: Joanna Ho)
May 14, 2012
Price Discovery in the Corporate Bond Market: The Informational Role of Short Interest
SPEAKER: Paul A. Griffin, Professor of Management
UNIVERSITY: University of California, Davis, Graduate School of Management
TIME: 1:30pm – 3:00pm
WHERE: SB 116
ABSTRACT:
This paper identifies a precursory role of short sellers in conveying adverse information to
the corporate bond market. In the context of earnings announcements, this occurs because
short traders benefit from useful information prior to a news announcement and perform a
more rigorous analysis of the announcement itself. We also find that the role of short interest
strengthens for companies with speculative grade bonds, weak corporate governance, and
negative earnings surprises. These findings support the theoretical prediction of Diamond and
Verrecchia (1987) that higher-levels of short interest convey unpublicized adverse information
thereby contributing to price discovery in securities markets.
(Host: Libby Weber)
April 23, 2012
Abnormal Dividends and Executive Turnover in China's Listed Firms in 1997-2010 - The Effect of Within-Tenure Settling Up
SPEAKER: Yan (Anthea) Zhang, Professor of Strategic Management
UNIVERSITY: Rice University
TIME: 10:00am – 11:30am
WHERE: SB 117
ABSTRACT:
China’s stock market has grown dramatically in the time period of 1997-2010. The number of firms listed in Shanghai and Shenzhen Stock Exchanges increased from 720 in 1997 to 2,063 in 2010. The combined market capitalization was US$4 trillion as of December 2010 (US$2.7 trillion for Shanghai Exchange and US$1.3 trillion for Shenzhen Exchange). In this study, we examine how abnormal dividends may affect the likelihood of executive turnover in China’s listed firms. Abnormal dividends, defined as the differences of a firm’s actual dividends and dividends warranted by the conditions of the firm, its industry and time period, reflects the firm’s executives’ discretional over (under)-dividend payouts to shareholders. Building upon Fama’s (1980) within-tenure settling up argument, we propose that accumulate abnormal dividends over the course of an executive’s tenure may affect shareholders’ satisfaction with the executive, which in turn influences the likelihood of the executive’s turnover. With data on firms listed in China’s Shanghai and Shenzhen Stock Exchanges in 1997-2010, we find that both current abnormal dividends and accumulated abnormal dividends reduce the likelihood of the board chairman’s and the CEO’s turnover. As expected, the effects of accumulated abnormal dividends are stronger than the effects of current abnormal dividends. Moreover, we find that accumulated abnormal dividends weaken the effects of poor firm performance on the likelihood of the chairman’s and the CEO’s turnover in state-owned firms (SOEs), but not in non-SOEs. We obtain consistent results if focusing only on firms that had IPOs in the window of 1997-2010. These results suggest that executives of under-performing SEOs may save their jobs by paying more dividends. Our results are robust to alternative measurements and model specifications. Our study contributes to the executive turnover literature by examining the effect of dividend payouts and by incorporating the within-tenure settling up effect. Our results also contribute to a better understanding of firms’ dividend policies and executive turnover in an under-studied context—China’s listed firms.
(Host: Denis Trapido)
March 19, 2012
The Importance of Tie Content: A sociostructural view of negative ties in organizations
SPEAKER: Giuseppe Labianca, Gatton Endowed Associate Professor of Management
UNIVERSITY: University of Kentucky, Gatton School of Business and Economics
TIME: 12:00pm – 1:30pm
WHERE: SB 116
ABSTRACT:
Much of the social network research program in management has been built on the study of positive ties between individuals. While negative ties – ongoing relationships where at least one party dislikes or is intentionally harming another -- are rarer, they can be potentially more explanatory in terms of understanding what is happening in organizational behavior. I examine the relationship between direct and indirect positive and negative ties and individuals' outcomes in a number of different organizational settings. In the first study, I show a relationship with individual performance in an organizational setting (a life sciences organization). In the second study, I examine the evolution of behavioral control and peer performance ratings in an elite military academy setting. In the third study, I'll discuss the creation of a proposed new measure of political independence that incorporates both positive and negative ties simultaneously. The goal is to push a social ledger approach to network analysis that intentionally considers direct and indirect positive and negative ties when attempting to explain outcomes.
(Host: Joanna Ho)
March 16, 2012
On Self-Enforcing Clawback Provisions in Executive Compensation
SPEAKER: Mingcherng Deng, Assistant Professor (CSOM Accounting Department)
UNIVERSITY: Carlson School of Management, University of Minnesota
TIME: 1:30pm – 3:00pm
WHERE: SB 223
ABSTRACT:
In this paper, we argue that clawback provisions may alleviate a manager?s ex ante incentive
to misreport private information, but exacerbate her ex-post incentive to conduct earnings man-
agement. When the accounting veri?ability is high, making earnings management more costly,
we show clawback provisions can completely eliminate the manager?s incentive to misreport
ex-ante. But if the accounting veri?ability is low, the optimal clawback provisions stipulate a
reduction in second-period compensation in the event of a ?nancial restatement. Such a compen-
sation reduction may be exacerbated when the accounting signal becomes more informative or
conservative. Nonetheless, ?rms still bene?t from implementing clawback provisions, although
the manager can costlessly manipulate accounting signals ex post. This result may explain why
some companies voluntarily develop policies to incorporate clawback provisions, in spite of the
detrimental effect of earnings management.
(Host:Christine Beckman)
March 15, 2012
Perscriptions for Network Strategy: Does evidence of network effects in cross-section support them?
SPEAKER: Joel A. C. Baum, Associate Dean
UNIVERSITY: Rotman School of Mgmt
TIME: 12:00pm – 1:30pm
WHERE: SB 112
ABSTRACT:
Joel A. C. Baum (Tononto), Robin Cowan (Maastricht/Strasbourg), and Nicolas Jonard (Luxembourg)
While intuitively appealing (and common), drawing network strategy implications from empirical evidence of network performance effects in pooled cross-section is not necessarily warranted. This is because network positions can influence both the mean and variance of firm performance. Strategic prescriptions are warranted if empirically observed network effects reflect increases in mean firm performance. If network effects reflect increases in firm performance variance, however, such prescriptions are warranted only if the increase in the odds of achieving high performance are sufficient to compensate for the concomitant increase in the odds of realizing poor performance. Our simulation study, designed to examine network performance effects in both pooled cross-section and within-firm over time under a wide range of conditions, counsels caution in drawing implications for network strategies.
(Host:Joanna Ho)
March 12, 2012
Externalities of Public Firm Disclosures: Evidence from Private Firms' Investment Decisions
SPEAKER: Nemit Shroff, Assistant Professor of Accounting
UNIVERSITY: MIT Sloan School of Management
TIME: 1:30pm – 3:00pm
WHERE: SB 117
ABSTRACT:
Public firms provide a large amount of information through their financial statements as well as through voluntary disclosures. In addition, information intermediaries, such as financial analysts and the business press, publicly analyze, discuss and disseminate public firms’ disclosures. Therefore, the presence of public firms in an industry is likely to enhance the information environment in that industry. Given the importance of incorporating industry knowledge in capital investment decisions, we examine whether the presence of public firms in an industry affects the investment decisions of private firms. We hypothesize and find that private firms are more responsive to their investment opportunities when they operate in industries with greater public firm presence. Further, we predict and find that the relation between public firm presence and the responsiveness of private firms’ investment to their investment opportunities is greater when public firms’ financial statements are of higher quality, when there is greater public firm voluntary disclosure, and when more financial analysts are covering public firms in the industry. Collectively, our results suggest that public firms generate positive externalities by facilitating more efficient private firm investment.
Host: Christine Beckman)
March 1, 2012
Weathering the Storm: Negative slack, identity and resilience in entrepreneurial firms
SPEAKER: Ted Baker, Associate Professor
UNIVERSITY: North Carolina State University College of Management
TIME: 12:00pm – 1:30pm
WHERE: SB 116
ABSTRACT:
In this inductive field study of thirteen resource-constrained textile firms attempting to deal with both the severe decline in the US textile and garment industry and the global financial crisis and recession, we discover strong effects of entrepreneurs’ individual-level identity structures on organization level resilience. We develop grounded typologies of entrepreneurial identity and of entrepreneurial resilience and induce a process model demonstrating how entrepreneurs’ sense of “who I am” and “who I want to be” shapes their firms’ patterns of resilient behaviors. Our model provides the groundwork for understanding variations in patterns of disbanding the firm or keeping it going among ventures facing similar sets of challenges. Our results challenge and extend traditional notions of resilience from organizational theory, traditional notions of identity from the entrepreneurship literature and strongly held presumptions about the motivations of entrepreneurs from the entrepreneurship, strategy and economics literatures. Our findings regarding sources of entrepreneurial identity demand integration between long-competing strands of theory from sociological and psychological social psychology.
(Host: Siew Hong Teoh)
February 28, 2012
Analyst Interest, Market visibility, and Stock Returns
SPEAKER: Michael Jung, Assistant Professor of Accounting
UNIVERSITY: New York University - Leonard N. Stern School of Business, Kaufman Management Center
SPEAKER: M.H. Franco Wong
UNIVERSITY: University of Toronto, Rotman School of Managment
SPEAKER: X. Frank Zhang
UNIVERSITY: Yale University, School of Management
TIME: 1:30pm - 3:00pm
WHERE: SB 116
ABSTRACT:
Economic theory suggests that market visibility–the extent to which market participants are aware of a firm–affects firm value and cost of capital. Recent empirical evidence supports the theory and even suggests visibility explains stock returns more than firm fundamentals. However, prior studies have relied on ex post measures, or lagging indicators of visibility, because the visibility construct is inherently unobservable. In this study, we use analyst interest–the number of analysts who participate on a firm’s earnings conference call–as an ex ante measure of market visibility. We show that changes in analyst interest from the prior quarter are positively related to future changes in analyst coverage, institutional ownership, firm growth, and stock returns. Cross sectional analyses indicate that the marginal effect of analyst interest is strongest for low visibility firms. As our ex ante measure predicts commonly-used ex post market visibility proxies, it serves as an early indicator of market visibility and offers a one-step-ahead advantage in analyzing stock market dynamics.
(Host: Christine Beckman)
February 23, 2012
Where Do Lawsuits Come From? The Role of Spatial Distribution of Principals and Legal Mediating Agents
SPEAKER: Maxim Sytch
UNIVERSITY: Stephen M. Ross School of Business
TIME: 12:00pm – 1:30pm
WHERE: SB 112
ABSTRACT:
This study investigates the origins of interorganizational litigation. It explores how the spatial distribution of principals (companies) and mediating agents (intellectual property litigation firms) can facilitate and sustain patent infringement lawsuits among companies. Spatial propinquity is hypothesized to determine the nature of interaction and social relationships between the principal’s and the mediating agent’s employees, which can subsequently affect the mediating agent’s involvement in identifying opportunities for the principal to engage in litigation. This study’s context is the patterns of spatial distribution of 405 U.S. biotechnology and pharmaceutical companies (the principals) and the population of 365 intellectual property (IP) litigation firms (the mediating agents) and their 2,255 U.S. regional offices. It relates these patterns to the companies’ involvement in patent infringement disputes from 1999 to 2006. Additionally, this study uses evidence from thirty-six semi-structured interviews with legal practitioners. Results suggest that proximity to IP litigation firms increases the number of lawsuits a company files, even when accounting for the endogeneity in law firms’ location choices. Greater proximity to the IP litigation firm retained for a given lawsuit also lengthens that lawsuit’s duration, although this effect is moderated by the characteristics of the local institutional environment in which the company is located.
(Host: Libby Weber)
February 17, 2012
Technology Shocks in Multi-Sided Markets: The Impact of Craigslist on Local Newspapers
SPEAKER: Feng Zhu, Assistant Professor of Management and Organization
UNIVERSITY: USC Marshall School of Business
TIME: 2:00pm – 3:30pm
WHERE: SB 112
ABSTRACT:
We investigate the impact of Craigslist, a website providing classified-advertising services, on local newspapers’ pricing strategies. We exploit temporal and geographic variation in Craigslist’s entry to show that newspapers with greater reliance on classified-ad revenue experience a larger drop in classified-ad rates after Craigslist’s entry. The impact of Craigslist’s entry propagates to the subscriber and display-ad sides of these newspapers: Relative to other newspapers, they experience an increase in subscription prices, a decrease in circulation shares, and a decrease in display-ad rates. We also show that newspapers respond to Craigslist's entry to the classified-ad side of the market by increasing content differentiation on the subscriber side of the market. This effect is particularly pronounced in markets with readers with different tastes in news types.
(Host: Connie Pechmann)
February 2, 2012
Virality, Word-of-Mouth, and Drivers of Social Transmission
SPEAKER: Jonah Berger, James G. Campbell Assistant Professor of Marketing
UNIVERSITY: The Wharton School, University of Pennsylvania
TIME: 3:30pm – 5:00pm
WHERE: SB 112
ABSTRACT:
Why are some products talked about more than others? What makes certain online content viral? While people often share opinions and information with others, and such transmission has important consequences for diffusion and sales, much less is known about why people talk about and share certain things rather than others. In this presentation, I will cover some recent projects examining characteristics of products, brands, and information that are linked to transmission. The first uses data on six months of New York Times articles (as well as a number of experiments) to investigate what types of article make the most emailed list. Controlling for where the articles actually appear, we examine how psychological characteristics of content (e.g. how surprising it is or how much emotion it evokes) are linked to virality. The second project uses data on over 300 buzz marketing campaigns (as well as a controlled field experiment) to examine characteristics of products and campaigns that generate more word-of-mouth. In addition to presenting results from each project, comparing the findings from each helps shed light on important differences between online and offline social transmission.
(Host: Libby Weber)
January 20, 2012
Home Court Advantage: Compensating Wage Differentials and Rent Appropriation in the NBA
SPEAKER: Russell Coff, Professor of Management & Human Resources
UNIVERSITY: University of Wisconsin-Madison
TIME: 2:00pm - 3:30pm
WHERE: SB 112
ABSTRACT:
The compensating differentials literature offers logic that pay is expected to be higher for undesirable jobs. The fact that employees may make tradeoffs between the desirability of a job or work environment and the amount of pay required to hold them in place is of great strategic significance. This willingness to make tradeoffs means that such non-pecuniary benefits may allow other stakeholders, such as shareholders, to capture more rents. But do employees routinely give up financial compensation when they receive non-pecuniary gains? While the compensating wage differentials literature offers some evidence that it occurs (consider the classic example of pay rates for sanitation workers), it has not been examined in the context of competitive advantage where many professionals may especially enjoy their work. To what extent are employees willing to take pay cuts based on the presence of non-pecuniary factors?
We examine this in the context of the National Basketball Association. Using team-level data from every regular season game spanning 2000-2009, combined with measures of firm performance, including wins, playoff performance, and attendance, we estimate a variety of specifications where firm performance relative to rivals is a function of the exchange value of team members’ skill portfolio and several proxies for individual mobility constraints. Counter to the compensating wage differentials literature, results indicate that players often do not take pay reductions when there are important non-pecuniary gains. In this way, the financial compensation understates the rent that such individuals actually appropriate. Analysis confirms that players recognize this value since a substantial premium is required to lure them away from their hometown teams – they need to be compensated for the utility lost by moving away. Accordingly, the theory of competitive advantage needs to be augmented to account for these, often hidden, sources of value creation that influence the total amount of rent generated as well as how it is allocated to the various stakeholders.
(Host: Zheng Sun)
November 15, 2011
Portfolio Choice with Illiquid Assets
SPEAKER: Professor Mark Westerfield, Assistant Professor of Finance and Business Economics
UNIVERSITY: University of Southern California
TIME: 10:30am – 12:00pm
WHERE: SB 122
ABSTRACT:
We investigate how the inability to continuously trade an asset affects portfolio choice. We extend the standard Merton model to include an illiquid asset that can only be traded at infrequent, stochastic intervals. Because consumption is financed through liquid wealth only, the presence of illiquidity leads to increased and state-dependent risk aversion. Illiquidity leads to under-investment in both the liquid and illiquid risky asset, relative to the standard Merton (1969) case. We demonstrate that the effect of illiquidity can be quantitatively large, because in contrast to transaction costs models, the shadow cost of illiquidity is unbounded. The presence of liquidity risk distorts the allocation of the liquid and illiquid assets even when liquid and illiquid asset returns are uncorrelated and the investor has log utility.
(Host: Zheng Sun)
October 28, 2011
A Glass Half Full: Contrarian Trading in the Flash Crash
SPEAKER: Jialin Liu, Assistant Professor of Finance
UNIVERSITY: Columbia University Graduate School of Business
TIME: 2:00 – 3:30 pm
WHERE: SB 112
ABSTRACT:
Stocks with better past returns crash more than other stocks on May 6, 2010. I find evidence that this is related to such stocks being unattractive to contrarian buyers. This suggests the importance of contrarian investors in stabilizing price fluctuations. However, the glass is half full---that the contrarian investors shun certain types of stocks limits the extent of price stability that relies heavily on this and other similar types of trading strategies. Stocks with better past returns exhibit more negative co-skewness, which holds in almost every month since the 1960s and for past return horizons ranging from one month to three years. This has interesting implications for risk premia associated with short-term reversal, medium-term momentum, and long-run reversal portfolios.
(Host: John Turner)
October 26, 2011
Multi-period Assortment Planning for Short-Lived Products
SPEAKER: Felipe Caro, Assistant Professor
UNIVERSITY: UCLA Anderson School of Management
TIME: 3:30 – 5:00 pm
WHERE: SB 223
ABSTRACT:
The assortment planning literature has centered on single-period problems that fit well products like groceries but are less useful when variety over time is a key sales driver. In this talk we incorporate a time dimension to assortment planning and we present two models that deal with new product introduction.
The first model deals with the assortment packing problem (APP) in which a planner must decide, in advance, the release date of each product in a given collection over a selling season. A fundamental aspect of the problem is that each product is short-lived in the sense that, once introduced, its attractiveness lasts only a few periods and vanishes over time. The planner's objective is to determine when to introduce each product to maximize the total profit over the selling season.
In the second model we take a portfolio approach to study dynamic assortment strategies for a retailer with limited shelf space. The retailer can choose among basic and fashion items with low and high risk (and return) respectively. An important feature is the vogue that the retailer tries to follow, which we explicitly model as a stochastic process.
The objective is to maximize the long-term value of the retail business by dynamically adjusting the menu of products on display.
The APP model is joint work with Victor Martínez-de-Albéniz (IESE) and Paat Rusmevichientong (USC) while the portfolio model is joint work with René Caldentey (NYU).
(Host: Zheng Sun)
October 24, 2011
Can Noise Create the Size and Value Effects?
SPEAKERS: Jun Liu, Assistant Professor with Tenure and Jason Hsu, Chief Investment Officer
UNIVERSITIES: UCSD Rady School of Management and UCLA
TIME: 10:30 am – 12:00 pm
WHERE: SB 116
ABSTRACT:
Small-capitalization and value stocks are likely to predominantly have negative noise, while large-capitalization and growth stocks are likely to have positive noise, if prices contain random noise. Negative price noise implies that small-capitalization and value stocks are more likely undervalued and thus have higher expected return than justified by risk, while the large-capitalization and growth stocks are more likely overvalued. We formally verify and explore this intuition by using a standard noise-in-price model.
We compute in closed form and match quantitatively the level of and the cross-sectional variations in the expected stock return documented in Fama and French (1992). Our model is parsimonious with essentially only one adjustable parameter, the volatility of the price noise. Our study suggests that a modest amount of noise in prices can create size and value effects.
Blume and Stambaugh (1983) assume small-cap stocks have higher noise volatility and show that they have higher expected return because of Jensen's inequality. This channel is shut o® in our paper because we assume all stocks have the identical return distribution thus the same noise volatility. Small-cap stocks in our paper are defined to be ones with low market capitalization and they generate higher expected returns because of the negative realization of random price noise.
(Host: Libby Weber)
October 21, 2011
The Influence of Intellectual Property Protection on the Geography of Trade in Knowledge-Intensive Goods
SPEAKER: Anita McGahan, Professor and Rotman Chair in Management
UNIVERSITY: Rotman School of Management, University of Toronto, Canada
TIME: 1:00 – 2:30 pm
WHERE: SB 112
ABSTRACT:
This paper examines the impact of legal institutions for patent enforcement on the diffusion of knowledge-based products. The context is the implementation of the TRIPS (trade-related intellectual property) agreement of the World Trade Organization (WTO), which required member countries to adopt and enforce laws to protect intellectual property (IP). One stated goal of TRIPS was to promote “the transfer and dissemination of technology,” particularly from high-income to poorer countries. Using the United Nations Comtrade data, we analyze trade flows from 1995 to 2009 for 158 WTO countries to investigate how the diffusion of knowledge-based products changed with TRIPS implementation. In particular, we examine changes in trade across different sectors that vary in the importance of knowledge and IP as well as across countries of different income levels. We find that, relative to sectors that rely less on IP, exports of biopharmaceuticals and information and communications technology (ICT) products increased following the implementation of TRIPS. This result holds across all country income levels. In addition, we find an increase in ICT imports in developing countries. However, contrary to the TRIPS goal of transferring knowledge from rich to poor, the increase in importation of knowledge-based goods – particularly of biopharmaceuticals – was lower in poorer countries than in high-income countries. Furthermore, post-TRIPS biopharmaceutical imports into developing countries increased less than ICT imports. Overall, the results demonstrate that exports of IP-intensive products responded vigorously to the implementation of legal protections on trade, but that imports from high-income countries into developing countries – and consequently the dissemination of knowledge into poorer settings – was sensitive to other factors that affected receptiveness to these goods. These findings suggest that the patent system alone may not be sufficient for promoting knowledge diffusion from high-income to developing countries. Keywords: TRIPS; International trade; Intellectual Property Rights; Biopharmaceuticals; ICT; Industry Clusters.
* Thanks to Michael E. Porter for providing us with access to the International Cluster Competitiveness Project (ICCP) data on cluster definitions. Imtan Hamden-Livramento, Walter Park and Juan Ginarte generously shared their data on country-level patent protection. We are grateful for comments and suggestions to Anne Boring, Iain Cockburn, Phillip McCalman, Matthew Slaughter, participants in the NBER Biopharmaceuticals Location Conference, and seminar participants at the Fox School of Business and Universidad Carlos III. Copyright © 2008, 2011, Mercedes Delgado, Margaret Kyle and Anita McGahan. All rights reserved.
(Host: Jone Pearce)
October 20, 2011
Callings and Meaning at Work: From Cages to Cubicles
SPEAKER: Stuart Bunderson
UNIVERSITY: Washington University, St. Louis
TIME: 12:00 – 1:30 pm
WHERE: SB 117
ABSTRACT:
In an earlier study of work meaning in the zookeeping profession (Bunderson & Thompson, 2009, ASQ), we identified and elaborated a "neoclassical" view of work as a calling -- a view that mirrors classical conceptualizations of calling in its emphasis on occupational place, destiny, and duty. We found that a neoclassical calling is both binding and ennobling, that it fosters identification and meaning as well as duty and sacrifice. In this presentation, I will briefly summarize our earlier work and will then discuss our recent theoretical and empirical efforts to examine the relevance of a neoclassical calling for a more mainstream profession -- the profession of management.
(Host: John Turner)
October 17, 2011
Siting Decision Failures - How Can You Avoid Them?
SPEAKER: Richard Szanto
UNIVERSITY: Corvinus University of Budapest (Hungary)
TIME: 12:00 – 1:00 pm
WHERE: SB 223
ABSTRACT:
From the late 1970s a growing attention has been paid to siting (location) decision problems both by researchers and practitioners. Myriads of unwanted (many times noxious) facilities were rejected by local communities and other stakeholders in the past decades, and public opposition campaigns were often successful.
This phenomenon is often characterized by the expression of NIMBY (Not in my backyard) or LULU (locally unwanted land use). People opposing the unwanted facilities often consider them extremely risky; however the “objective level” of risk of these facilities (such as power plants or waste incinerators) is usually under the official limit values. “Traditional” multi-criteria decision making models often fail to provide the optimal location in these cases, since the human factors are often neglected during the decision making process.
In the framework of the qualitative research design a comparative case study was elaborated with three individual cases in the Hungarian cement industry. All the companies involved had serious difficulties in dealing with a siting conflict, and these cases lasted for years. The cement industry divides people regarding its environmental performance, and firms are constantly under attack by NGOs, and local inhabitants. Their environmental problems are well-known to the public and to themselves as well, hence they are flagships of corporate environmental programs – both in Hungary and abroad.
By coding my research interviews I revealed several key categories of siting conflicts. These are diverse risk perceptions, the role of risk communication, compensation, distrust among the actors and public participation.
(Host: Zheng Sun)
October 11, 2011
Winners in the Spotlight: Media Coverage of Fund Holdings as a Driver of Flows
SPEAKER: David Solomon, Assistant Professor of Finance and Business Economics
UNIVERSITY: University of Southern California
TIME: 8:30 – 10:00 am
WHERE: SB 112
ABSTRACT:
We show that media coverage of mutual fund holdings affects how investors allocate money to funds. Controlling for fund performance, fund holdings with high past returns attract extra flows only for stocks recently featured in the media. In contrast, holdings that were not covered in major newspapers do not affect flows. We present evidence that media coverage tends to amplify investors’ chasing of past returns rather than facilitate the processing of useful information in fund portfolios. Fund managers exploit this behavior by purchasing media-covered past winners at reporting dates, a strategy most prevalent among poorly performing funds. Our evidence suggests that media coverage can exacerbate investor biases and that it is the primary mechanism that makes window-dressing effective.
Don Beall Center for Innovation & Entrepreneurship
(Host: Christine Beckman)
October 6, 2011
No Exit: Failure to Exit Under Uncertainty
SPEAKER: Anne Marie Knott, Professor of Strategy
UNIVERSITY: Olin School of Business, Washington University
TIME: 1:30 – 3:00 pm
WHERE: SB 117
RSVP: Maria E. Gonzalez-Tan (Email: mgonzal9@uci.edu)
ABSTRACT:
N/A
Don Beall Center for Innovation & Entrepreneurship
(Host: Christine Beckman)
September 27, 2011
Creating and Maintaining Institutions Through the Production and Perpetuation of Ignorance
SPEAKER: Kenji Klein, Doctoral Student in Organization & Management
UNIVERSITY: The Paul Merage School of Business, UC Irvine
TIME: 12:00 – 1:30 pm
WHERE: SB 116
LUNCH RSVP: Maria E. Gonzalez-Tan (Email: mgonzal9@uci.edu)
ABSTRACT:
Institutional scholars have long argued that the inability of actors to conceptualize alternatives to dominant institutional arrangements plays a key role in the maintenance of those arrangements, yet little is known about how actors come to be unable to conceptualize alternatives to such arrangements. This paper addresses that gap through historical analysis of the origins and perpetuation of marijuana prohibition. This analysis reveals the way in which institutionalization depends upon the ongoing disruption and suppression of knowledge, communities, and material artifacts that undermine the taken-for-granted status of dominant institutions. It also suggests conditions under which the taken-for-granted status of dominant institutions becomes vulnerable to erosion. Implications for research on institutional work and power in institutional processes are discussed. A case is made for the relevance of the study of ignorance and forgetting in organizational processes to supplement the extensive literature on knowledge and learning.
|