Showing papers by "HEC Paris published in 2013"
TL;DR: In this article, the authors explore the reasons for this, using author cocitation analysis to inform their analysis, and show that there are ways to unify the field that rely, paradoxically, on integrating the two contradictory views, while still preserving the assumptions that led to their differences.
Abstract: A critical issue has been absent from the conversation on dynamic capabilities: the two seminal papers represent not only different but contradictory understandings of the construct’s core elements. Here, we explore the reasons for this, using author cocitation analysis to inform our analysis. Our findings suggest that the field is being socially constructed on the basis of two separate domains of knowledge and that underlying structural impediments have impeded dialog across the domains. In light of this evidence, then, we take up the challenge to find a solution to this dilemma. By employing a contingency-based approach, we show that there are ways to unify the field that rely, paradoxically, on integrating the two contradictory views, while still preserving the assumptions that led to their differences. Copyright 2013 John Wiley & Sons, Ltd.
427 citations
TL;DR: In this paper, the authors propose a framework for assessing the marketing potential that social commerce has to offer to firms and discuss the implications for researchers and managers, based on the proposed definition and framework.
353 citations
TL;DR: Xiong et al. as discussed by the authors applied a hedonic regression analysis to a new data set of more than one million auction transactions of paintings and works on paper, and concluded that art has appreciated in value by a moderate 3.97% per year, in real U.S. dollar terms, between 1957 and 2007.
Abstract: This paper investigates the price determinants and investment performance of art. We apply a hedonic regression analysis to a new data set of more than one million auction transactions of paintings and works on paper. Based on the resulting price index, we conclude that art has appreciated in value by a moderate 3.97% per year, in real U.S. dollar terms, between 1957 and 2007. This is a performance similar to that of corporate bonds---at much higher risk. A repeat-sales regression on a subset of the data demonstrates the robustness of our index. Next, quantile regressions document larger average price appreciations and higher volatilities in more expensive price brackets. We also find variation in historical returns across mediums and movements. Finally, we show that measures of high-income consumer confidence and art market sentiment predict art price trends.
This paper was accepted by Wei Xiong, finance.
239 citations
TL;DR: The authors advocate for more tolerance in the manner we collectively address categories and categorization in organizational research and suggest that audiences may tolerate more often than previously thought organizations that blend, span, and stretch categories.
Abstract: We advocate for more tolerance in the manner we collectively address categories and categorization in our research. Drawing on the prototype view, organizational scholars have provided a �disciplining� framework to explain how category membership shapes, impacts, and limits organizational success. By stretching the existing straightjacket of scholarship on categories, we point to other useful conceptualizations of categories � i.e. the causal-model and the goal-based approaches of categorization � and propose that depending on situational circumstances, and beyond a disciplining exercise, categories involve a cognitive test of congruence and a goal satisfying calculus. Unsettling the current consensus about categorical imperatives and market discipline, we suggest also that audiences may tolerate more often than previously thought organizations that blend, span, and stretch categories. We derive implications for research about multi-category membership and mediation in markets, and suggest ways in which work on the theme of categories in the strategy, entrepreneurship, and managerial cognition literatures can be enriched.
221 citations
TL;DR: In this paper, the authors show that the sensitivity of a firm's investment to its stock price is lower when its peers' stock prices informativeness is higher or when demands for its products and their peers' products are more correlated.
Abstract: Peers' valuation matters for firms' investment: a one standard deviation increase in peers' valuation is associated with a 5.9% increase in corporate investment. This association is stronger when a firm's stock price informativeness is lower or when its managers appear less informed. Also, the sensitivity of a firm's investment to its stock price is lower when its peers' stock prices informativeness is higher or when demands for its products and its peers' products are more correlated. Furthermore the sensitivity of firms' investment to their peers' valuation drops significantly after going public. These findings are uniquely predicted by a model in which managers learn information from their peers' valuation.
221 citations
TL;DR: This article examined whether differences in these evaluations' competitive nature generate a performance gender gap, and found that women's performance is first-order stochastically dominated by that of men when the competition is higher, whereas the reverse holds true in less competitive or noncompetitive tests.
Abstract: Using data for students undertaking a series of real-world academic examinations with high future payoffs, we examine whether the differences in these evaluations’ competitive nature generate a performance gender gap. In the univariate setting we find that women’s performance is first-order stochastically dominated by that of men when the competition is higher, whereas the reverse holds true in the less competitive or noncompetitive tests. These results are confirmed in the multivariate setting. Our findings, from a real-world setting with important payoffs at stake, are in line with the evidence from experimental research that finds that females tend to perform worse in more competitive contexts.
171 citations
TL;DR: The authors study how mid-tier accounting firms deal with changes in their institutional environment that resulted in a shift in emphasis from the trustee logic to the commercial logic, while retaining a principal commitment to trustee logic.
Abstract: We study how mid-tier accounting firms deal with changes in their institutional environment that resulted in a shift in emphasis from the trustee logic to the commercial logic. We find that these mid-tier firms selectively adopt practices related to the commercial logic, while retaining a principal commitment to the trustee logic. Interviews with high level informants in these firms show how specific strategic choice opportunities serve as independent critical events framing practice-adoption decisions. Main strategic issues for the mid-tier firms relate to the changing role of the accountant and changes in organizational structure and practices. As these issues fundamentally challenge characteristics of their professional identity, there is internal resistance against this transformation. Non-partnered accountants mainly challenge new roles that upset their extant work routines, whereas partners resist changes affecting their autonomy. These types of resistance directly impact the strategic organizational responses of the accounting firms to institutional pressures.
158 citations
TL;DR: The authors examined whether firms that deviate from an empirically modeled (expected) credit rating engage in earnings management activities, as measured by abnormal accruals and real activities earnings management.
155 citations
TL;DR: This article study the effect of investor horizons on corporate behavior and find that when a firm is undervalued, greater long-term investor ownership is associated with more investment, more equity financing, and less payouts to shareholders.
Abstract: We study the effect of investor horizons on corporate behavior. We argue that longer investor horizons attenuate the effect of stock mispricing on corporate policies. Consistent with our argument, we find that when a firm is undervalued, greater long-term investor ownership is associated with more investment, more equity financing, and less payouts to shareholders. Our results do not appear to be explained by long-term investor self-selection, monitoring (corporate governance), or concentration (blockholdings). Our results are consistent with a version of market timing in which mispriced firms cater to the tastes of their short-term investors rather than their long-term investors.
145 citations
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TL;DR: The authors examined whether firms that deviate from an empirically modeled ("expected") credit rating engage in earnings management activities, as measured by abnormal accruals and real activities earnings management.
Abstract: This paper examines whether firms that deviate from an empirically modeled ("expected") credit rating engage in earnings management activities, as measured by abnormal accruals and real activities earnings management. We find evidence that firms use income-increasing (-decreasing) earnings management activities when they are below (above) their expected ratings. We then test whether such actions are successful in helping these firms move toward their expected credit ratings. The results suggest that firms below or above their expected credit ratings may be able to move toward expected ratings through the use of directional earnings management.
141 citations
TL;DR: In this paper, the authors analyze the investment decisions of a large sample of investors, with the objective to identify the main determinants of their choices, and have important implications for both investors and policy makers.
TL;DR: In this paper, the formation of a firm-faculty partnership is modeled as an endogenous selection process driven by synergy between partners' knowledge-creation capabilities, and the main findings indicate that faculty-firm matching is multidimensional: firms and scientists complement each other in publishing capabilities but substitute each other with patenting skills.
Abstract: University-based technological opportunities are often exploited through joint corporate and academic entrepreneurship activities such as university–industry research collaborations. This paper explores the partner attributes that drive the matching of academic scientists and firms involved in these relationships. The paper models the formation of firm–faculty partnership as an endogenous selection process driven by synergy between partners' knowledge-creation capabilities. The main findings indicate that faculty–firm matching is multidimensional: firms and scientists complement each other in publishing capabilities but substitute each other in patenting skills. Furthermore, firms and scientists with specialized knowledge create more value by teaming with more knowledge-diversified partners. The paper contributes to the literature on university–industry knowledge transfer and, more generally, to the literature on alliance formation.
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TL;DR: In this paper, the authors analyzed the network structure of the credit default swap (CDS) market, using a unique sample of counterparties' bilateral notional exposures to CDS on 642 sovereign and financial reference entities.
Abstract: This paper analyzes the network structure of the credit default swap (CDS) market, using a unique sample of counter-parties’ bilateral notional exposures to CDS on 642 sovereign and financial reference entities. We study the network structure, similarly to the literature on interbank and payment systems, by computing a variety of network metrics at the aggregated level and for several sub-networks. At a reference entity level, we analyze the determinants of some key network properties for large reference entities. Our main results, obtained on a sub-sample of 191 reference entities, are the following. First, the CDS network shows topological similarities with the interbank network, as we document a “small world” structure and a scale-free degree distribution for the CDS market. Second, there is considerable heterogeneity in the network structures across reference entities. In particular, the outstanding debt volume and its structure (maturity, collateralization), the riskiness, the type (sovereign/financial) and the location (European/non-European) of reference entities significantly influence the size, the activity and the concentration of the CDS exposure network. For instance, the network on a high-volatility reference entity is typically more active, larger in size and less concentrated.
TL;DR: In this paper, the authors propose a framework for transformative consumer research focused on felt deprivation and power within the lived experience of poverty, pointing to consumer choice, product/service experiences, consumer culture, marketplace forces, and consumption capabilities as research streams with potential to help alleviate poverty.
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TL;DR: In this paper, the authors use French administrative data and exploit cross-sectional variation in local house-price appreciation as shocks to the value of collateral available to homeowners, and find that an increase in collateral value leads to a higher probability of becoming an entrepreneur.
Abstract: This paper shows that collateral constraints restrict firm entry and post-entry growth, even in the long-run. We use French administrative data and exploit cross-sectional variation in local house-price appreciation as shocks to the value of collateral available to homeowners. We control for local demand shocks by comparing homeowners to two control groups that live in the same region but do not experience collateral shocks: (i) renters and (ii) homeowners with a mortgage outstanding, who - in France - cannot take out a second mortgage on their house. In both comparisons, we find that an increase in collateral value leads to a higher probability of becoming an entrepreneur. Conditional on entry, entrepreneurs with access to more valuable collateral use more debt, start larger firms, and remain significantly larger even six years after creation.
TL;DR: In this article, the authors examine the nature and role of accounting practices in a network of corruption in an influence-market setting, focusing on the Canadian government's Sponsorship Program (1994-2003), a national unification scheme that saw approximately $50 million diverted into the bank accounts of political parties, program administrators and their families, friends and business colleagues.
Abstract: This study examines the nature and role of accounting practices in a network of corruption in an influence-market setting. The study focuses on the Canadian government’s Sponsorship Program (1994–2003), a national unification scheme that saw approximately $50 million diverted into the bank accounts of political parties, program administrators, and their families, friends and business colleagues. Relying on the institutional sociology of Bourdieu, the study demonstrates the precise role of accounting practices in the organization of a corrupt network imbued with a specific telos and certain accounting tasks. The study illustrates how accounting is accomplished and by whom, and it shows how the ‘skillful use’ of accounting practices and social interactions around these practices together enable corruption. In so doing, the study builds on a growing body of work examining criminogenic networks and the contextual, collaborative and systemic uses of accounting in such networks.
TL;DR: In this paper, the authors demonstrate that morally praiseworthy behavior can signal negative information about an agent's character, and that consequentialist decisions such as sacrificing one life to save an even greater number of lives can lead to unfavorable character evaluations, even when they are viewed as the preferred course of action.
TL;DR: In this paper, the authors document the wide dispersion of private equity investment returns and examine performance determinants using a newly constructed database of 7,500 investments worldwide, finding that one in ten investments does not return any money, whereas one in four has an IRR above 50%.
Abstract: We document the wide dispersion of private equity investment returns and examine performance determinants using a newly constructed database of 7,500 investments worldwide. One in ten investments does not return any money, whereas one in four has an IRR above 50%. Quick flips are associated with some of the highest returns. Performance does not appear scalable: Investments held by private equity firms in periods with a high number of simultaneous investments underperform substantially. Results are consistent with the theoretical literature on organizational diseconomies linked to firm structure. Private equity firms’ actions do not appear to be mechanical or easily scalable.
TL;DR: In this paper, the effects of logo similarity and type of logo on brand modernity and brand loyalty were investigated. And the authors showed that the importance of certain logo characteristics in explaining logo attitude and demonstrating the effects on brand newness, brand attitude, and finally, brand loyalty.
TL;DR: The authors found that activating system-justifying motives increased both male and female participants' endorsement of essentialist explanations for gender differences and that this effect is mediated by beliefs in immutability.
Abstract: People have a fundamental motive to view their social system as just, fair, and good and will engage in a number of strategies to rationalize the status quo (Jost & Banaji, 1994). We propose that one way in which individuals may "justify the system" is through endorsement of essentialist explanations, which attribute group differences to deep, essential causes. We suggest that system-justifying motives lead to greater endorsement of essentialist explanations because those explanations portray group differences as immutable. Study 1 employed an established system threat manipulation. We found that activating system-justifying motives increases both male and female participants' endorsement of essentialist explanations for gender differences and that this effect is mediated by beliefs in immutability. In Study 2, we used a goal contagion manipulation and found that both male and female participants primed with a system-justifying goal are significantly more likely to agree with essentialist explanations for gender differences. Study 3 demonstrated that providing an opportunity to explicitly reject a system threat (an alternative means of satisfying the goal to defend the system) attenuates system threat effects on endorsement of essentialist explanations, further suggesting that this process is motivated. Finally, Studies 4a and 4b dissociated the type of cause (biological vs. social) from whether group differences are portrayed as mutable versus immutable and found that system threat increases endorsement of immutable explanations, independent of the type of cause.
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01 Jan 2013TL;DR: In this paper, the authors explore conflicting implications of firm-specific human capital (FSHC) for firm performance and propose an offsetting agency effect: FSHC may facilitate more sophisticated "gaming" of incentives, to the detriment of firm performance.
Abstract: This paper explores conflicting implications of firm-specific human capital (FSHC) for firm performance. Existing theory predicts a productivity effect that can be enhanced with strong incentives. We propose an offsetting agency effect: FSHC may facilitate more sophisticated “gaming” of incentives, to the detriment of firm performance. Using a unique dataset from a multiunit retail bank, we document both effects and estimate their net impact. Managers with superior FSHC are more productive in selling loans but are also more likely to manipulate loan terms to increase incentive payouts. We find that resulting profits are two percentage points lower for high-FSHC managers. Finally, profit losses increase more rapidly for high-FSHC managers, indicating adverse learning. Our results suggest that FSHC can create agency costs that outweigh its productive benefits.
TL;DR: In this paper, the authors analyzed the relation among analyst coverage, earnings management and financial development in an international context, and found that the effectiveness of financial analysts as monitors increases with a country's financial development.
TL;DR: In this article, a bibliometric analysis identifies trends in EMA research publications which show that EMA has developed as a young discipline, but still faces challenges to get better established in mainstream accounting and management research.
Abstract: Purpose – The purpose of this paper is to investigate the body of literature on environmental management accounting (EMA) and provides a quantitative overview of the academic as well as the professional literature constituting the field. By doing so, the paper discusses whether EMA has developed as a discipline.Design/methodology/approach – Based on a database containing 814 (396 of them published in academic journals) publications in English, German and French with a publication date prior to 2012 a bibliometric analysis is conducted. Data on the publications, journals, authors and citations were collected, double‐checked and examined by applying bibliometric measures.Findings – The bibliometric analysis identifies trends in EMA research publications which show that EMA has developed as a young discipline, but is still faces challenges to get better established in mainstream accounting and management research. Although the publication number is growing, a substantial part of the publications have been pu...
TL;DR: In this paper, the authors empirically examined the entry timing implications of firms' intrinsic speed capabilities, which refer to the ability to execute investment projects faster than competitors, and found support for these hypotheses in the Atlantic Basin liquefied natural gas (LNG) industry from 1996 to 2007.
Abstract: Entry timing benefits and costs typically vary with firms' capabilities. In this study, we empirically examine the entry timing implications of firms' intrinsic speed capabilities, which refer to the ability to execute investment projects faster than competitors. We hypothesize that firms with intrinsic speed capabilities face low preemption risks and, thus, can afford to wait longer for uncertainty resolution before deciding to enter new markets. This hypothesis is more applicable when investment is associated with higher levels of commitment and, thus, greater option value of waiting. A direct implication is that late entrants with intrinsic speed capabilities should have greater expected post-entry performance. We find support for these hypotheses in the Atlantic Basin liquefied natural gas (LNG) industry from 1996 to 2007. Copyright © 2013 John Wiley & Sons, Ltd.
TL;DR: In this paper, the authors show that the governance of firms run by former civil servants is relatively worse on many dimensions, and that the value created by acquisitions made by former bureaucrats is lower.
Abstract: This paper provides empirical evidence consistent with the facts that (1) social networks may strongly affect board composition and (2) social networks may be detrimental to corporate governance. Our empirical investigation relies on a unique dataset on executives and outside directors of corporations listed on the Paris stock exchange over the 1992-2003 period. This data source is a matched employer employee dataset providing both detailed information on directors/CEOs and information on the firm employing them. We first find a very strong and robust correlation between the CEO's network and that of his directors. Networks of former high ranking civil servants are the most active in shaping board composition. Our identification strategy takes into account (1) differences in unobserved directors' "abilities" and (2) the unobserved propensity of firms to hire directors from particular networks, irrespective of the CEO's identity. We then show that the governance of firms run by former civil servants is relatively worse on many dimensions. Former civil servants are less likely to leave their CEO job when their firm performs badly. Secondly, CEOs who are former bureaucrats are more likely to accumulate directorships, and the more they do, the less profitable is the firm they run. Thirdly, the value created by acquisitions made by former bureaucrats is lower. All in all, these firms are less profitable on average.
TL;DR: In this article, the authors address the challenges of finding and implementing profitable energy efficiency (EE) projects, a critical foundation for sustainable operations, and identify three major value drivers of EE projects: savings intensity, green image, and project complexity.
Abstract: This study addresses the challenges of finding and implementing profitable energy efficiency (EE) projects, a critical foundation for sustainable operations. We focus on manufacturing enterprises, but many of our findings apply also to the back office of service operations. Our starting point is that, in nearly every industrial enterprise, there are many profitable EE projects that could be implemented but are not. An oft-cited hindrance to implementation is the lack of an internal management framework in which to find, value, and execute these projects. Using a conceptual approach, we rely on proven sustainable operations tools to develop such a framework. We identify three major value drivers of EE projects: savings intensity, “green” image, and project complexity. We then describe a framework for understanding the context of EE projects in industry, with an underlying analytic foundation in optimal portfolio analysis. A case study of a large manufacturing site is used to illustrate emerging best practices—based on Kaizen management principles—for integrating EE project management with operations, engineering, and strategy.
TL;DR: In this article, the authors investigated whether and to what extent this support generalizes to more naturally occurring circumstances and found that financial professionals behave according to prospect theory and violate expected utility maximization.
Abstract: Prospect theory is increasingly used to explain deviations from the traditional paradigm of rational agents. Empirical support for prospect theory comes mainly from laboratory experiments using student samples. It is obviously important to know whether and to what extent this support generalizes to more naturally occurring circumstances. This article explores this question and measures prospect theory for a sample of private bankers and fund managers. We obtained clear support for prospect theory. Our financial professionals behaved according to prospect theory and violated expected utility maximization. They were risk averse for gains and risk seeking for losses and their utility was concave for gains and (slightly) convex for losses. They were also averse to losses, but less so than commonly observed in laboratory studies and assumed in behavioral finance. A substantial minority focused on gains and largely ignored losses, behavior reminiscent of what caused the current financial crisis.
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TL;DR: This article elicited the prospect theory components (utility, probability weighting, and loss aversion) when consequences are expressed as the time dedicated to a specific task or activity, and a similar elicitation was performed for monetary consequences to allow an across-attribute (time/money) comparison of the elicited components (at the individual level).
Abstract: We elicited the prospect theory components (utility, probability weighting, and loss aversion) when consequences are expressed as the time dedicated to a specific task or activity. A similar elicitation was performed for monetary consequences to allow an across-attribute (time/money) comparison of the elicited components (at the individual level). We obtained less concave utility and smaller loss aversion for time than for money. Moreover, while the probability weighting was predominantly inverse S-shaped for both attributes, it was less sensitive to probabilities and more elevated for time than for money. This finding implies more optimism for gains and more pessimism for losses.
TL;DR: In this paper, the authors argue that the increased flexibility of new IAS/IFRS standards and lack of clear guidance in implementing these standards are major factors that explain earnings management changes around IFRS adoption, and they find that firms from countries with less local GAAP flexibility exhibit greater evidence of increases in earnings smoothing following mandatory adoption of IFRS standards in 2005.
Abstract: Prior research provides mixed evidence on whether the transition to IAS/IFRS deters or contributes to greater earnings management (earnings smoothing) The dominant explanation for the conflicting results is self-selection Early voluntary adopters had incentives to increase the transparency of their reporting in order to attract outside capital, and, therefore, earnings management (smoothing) went down after adoption, while those firms that waited until IFRS adoption became mandatory in EU countries lacked incentives for transparent reporting leading to increases in earnings management (smoothing) after IFRS adoption We argue that IAS/IFRS standards changed substantially from the early voluntary adoption period to the mandatory adoption year (2005) Compared to earlier IAS/IFRS standards and many countries’ domestic GAAP standards, we maintain that the IFRS standards that went into effect in 2005 provide greater flexibility of accounting choices because of vague criteria, overt and covert options, and subjective estimates that are allowed under these principle-based standards We argue that this greater flexibility coupled with the lack of clear guidance on how to implement these new standards has led to greater earnings management (smoothing) Consistent with this view, we find an increase in earnings management (smoothing) from pre-2005 to post-2005 for Early Adopters and Late Adopters in countries that allowed early IAS/IFRS adoption, and for Mandatory Adopters in countries that did not allow early IFRS adoption Our major findings hold after eliminating firms more likely to have mechanically-induced increases in earnings smoothing properties as a result of IFRS adoption and across countries with and without concurrent improvements in enforcement of accounting standards We also find that firms from countries with less (more) local GAAP flexibility exhibit greater (less) evidence of increases in earnings smoothing following mandatory adoption of IFRS standards in 2005 Collectively, our results suggest that the increased flexibility of new IAS/IFRS standards and lack of clear guidance in implementing these standards are major factors that explain earnings management (smoothing) changes around IFRS adoption
TL;DR: In this paper, the authors argue that change can turn awry when equity in a community of peers is threatened, and how institutional work can remedy such a situation by restoring a sense of worth in the community.
Abstract: This paper contributes to the analysis of institutional work by looking at situations of perceived injustice that institutional change can create. To this end, the paper mobilizes the work of Boltanski and Thevenot on orders of worth to analyse the consequences for a professional body of a shift in institutional logics towards more accountability. The feeling of injustice experienced - and voiced - by some members of the largest British institute of auditors, the ICAEW, after it set up and operated a quality monitoring unit, serves to illustrate how change can turn awry when equity in a community of peers is threatened, and how institutional work can remedy such a situation by restoring a sense of worth in the community.