Showing papers by "London Business School published in 2010"
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TL;DR: This paper analyzed the relationship between employee satisfaction and long-run stock returns and found that employee satisfaction is positively correlated with shareholders' returns and need not represent managerial slack, even when independently verified by a highly public survey on large firms.
Abstract: This paper analyzes the relationship between employee satisfaction and long-run stock returns. A value-weighted portfolio of the "100 Best Companies to Work For in America" earned an annual four-factor alpha of 3.5% from 1984-2009, and 2.1% above industry benchmarks. The results are robust to controls for firm characteristics, different weighting methodologies and the removal of outliers. The Best Companies also exhibited significantly more positive earnings surprises and announcement returns. These findings have three main implications. First, consistent with human capital-centered theories of the firm, employee satisfaction is positively correlated with shareholder returns and need not represent managerial slack. Second, the stock market does not fully value intangibles, even when independently verified by a highly public survey on large firms. Third, certain socially responsible investing ("SRI") screens may improve investment returns.
1,256 citations
TL;DR: In this paper, a conceptual framework that focuses on the degree of consumer cocreation in new product development (NPD) is presented. And the authors examine the major stimulators and impediments to this process, as well as the impact of cocreations at each stage of the NPD process.
Abstract: The area of consumer cocreation is in its infancy and many aspects are not well understood. In this article, we outline and discuss a conceptual framework that focuses on the degree of consumer cocreation in new product development (NPD). The authors examine (a) the major stimulators and impediments to this process, (b) the impact of cocreation at each stage of the NPD process, and (c) the various firm-related and consumer-related outcomes. A number of areas for future research are suggested.
1,186 citations
TL;DR: In this article, the authors examine the design of experience-centric services, particularly in the context of customer experience management, to promote differentiation and customer loyalty, and propose a set of design guidelines.
Abstract: Service organizations are increasingly managing customer experiences to promote differentiation and customer loyalty. This article examines the design of experience-centric services, particularly t...
819 citations
TL;DR: In this article, the authors show that vector auto regression with Bayesian shrinkage is an appropriate tool for large dynamic models and that large VARs with shrinkage produce credible impulse responses and are suitable for structural analysis.
Abstract: This paper shows that vector auto regression (VAR) with Bayesian shrinkage is an appropriate tool for large dynamic models. We build on the results of De Mol and co-workers (2008) and show that, when the degree of shrinkage is set in relation to the cross-sectional dimension, the forecasting performance of small monetary VARs can be improved by adding additional macroeconomic variables and sectoral information. In addition, we show that large VARs with shrinkage produce credible impulse responses and are suitable for structural analysis. © 2009 John Wiley & Sons, Ltd.
813 citations
TL;DR: Using data on 21 handheld computing systems, it is found that granting greater levels of access to independent hardware developer firms produces up to a fivefold acceleration in the rate of new handheld device development, depending on the precise degree of access and how this policy was implemented.
Abstract: This paper studies two fundamentally distinct approaches to opening a technology platform and their different impacts on innovation. One approach is to grant access to a platform and thereby open up markets for complementary components around the platform. Another approach is to give up control over the platform itself. Using data on 21 handheld computing systems (1990--2004), I find that granting greater levels of access to independent hardware developer firms produces up to a fivefold acceleration in the rate of new handheld device development, depending on the precise degree of access and how this policy was implemented. Where operating system platform owners went further to give up control (beyond just granting access to their platforms) the incremental effect on new device development was still positive but an order of magnitude smaller. The evidence from the industry and theoretical arguments both suggest that distinct economic mechanisms were set in motion by these two approaches to opening.
777 citations
TL;DR: In this paper, the authors provide a simple characterization of the dynamically optimal mean-variance portfolios within a general incomplete-market economy and identify a probability measure that incorporates intertemporal hedging demands and facilitates tractability.
Abstract: We solve the dynamic mean-variance portfolio problem and derive its time-consistent solution using dynamic programming. Previous literature, in contrast, only determines either myopic or precommitment (committing to follow the initially optimal policy) solutions. We provide a fully analytical simple characterization of the dynamically optimal mean-variance portfolios within a general incomplete-market economy. We also identify a probability measure that incorporates intertemporal hedging demands and facilitates tractability. We illustrate this by easily computing portfolios explicitly under various stochastic investment opportunities. A calibration exercise shows that the mean variance hedging demands are economically significant.
419 citations
TL;DR: In this article, the authors used data on securitized subprime mortgages issued in the period 1997-2006 to show that a statistical default model estimated in a low securitization period breaks down in a high securitus period in a systematic manner: it underpredicts defaults among borrowers for whom soft information is more valuable.
Abstract: Statistical default models, widely used to assess default risk, are subject to a Lucas critique We demonstrate this phenomenon using data on securitized subprime mortgages issued in the period 1997--2006 As the level of securitization increases, lenders have an incentive to originate loans that rate high based on characteristics that are reported to investors, even if other unreported variables imply a lower borrower quality Consistent with this behavior, we find that over time lenders set interest rates only on the basis of variables that are reported to investors, ignoring other credit-relevant information The change in lender behavior alters the data generating process by transforming the mapping from observables to loan defaults To illustrate this effect, we show that a statistical default model estimated in a low securitization period breaks down in a high securitization period in a systematic manner: it underpredicts defaults among borrowers for whom soft information is more valuable Regulations that rely on such models to assess default risk may therefore be undermined by the actions of market participants
392 citations
TL;DR: In this paper, the authors discuss the state of the art of models for customer engagement and the problems that are inherent to calibrating and implementing these models, and discuss several organizational issues of analytics for user engagement.
Abstract: In this article, we discuss the state of the art of models for customer engagement and the problems that are inherent to calibrating and implementing these models. The authors first provide an overview of the data available for customer analytics and discuss recent developments. Next, the authors discuss the models used for studying customer engagement, where they distinguish the following stages: customer acquisition, customer development, and customer retention. Finally, they discuss several organizational issues of analytics for customer engagement, which constitute barriers for introducing analytics for customer engagement.
385 citations
TL;DR: The authors survey chief financial officers from 29 countries to examine whether and why firms use lines of credit versus non-operational (excess) cash for their corporate liquidity for hedge against different risks.
376 citations
TL;DR: The authors survey recent research in accounting anomalies and fundamental analysis and suggest a roadmap for research aiming to document the forecasting benefits of accounting information, and provide a new analysis on how an ex ante and ex post treatment of risk and transaction costs affects the accrual and PEAD anomalies.
Abstract: We survey recent research in accounting anomalies and fundamental analysis. We use forecasting of future earnings and returns as our organizing framework and suggest a roadmap for research aiming to document the forecasting benefits of accounting information. We combine this with opinions from the academic and practitioner communities to critically evaluate key clusters of papers about accounting anomalies and fundamental analysis disseminated over the last decade. Finally, we provide a new analysis on how an ex ante and ex post treatment of risk and transaction costs affects the accrual and PEAD anomalies, and offer suggestions for future research.
363 citations
TL;DR: In this paper, the authors demonstrate that individuals consume status-infused products for their reparative effects on the ego and that these high-status goods serve the purpose of shielding an individual's ego from future self-threats.
TL;DR: In this paper, the authors investigate how a subsidiary's past initiatives contribute to its bargaining power, and how headquarters' response through granting attention or monitoring affects the realization of the subsidiary's goals.
Abstract: The phenomenon of subsidiary initiative has received increasing attention in recent years, but the consequences of initiatives and the associated dynamics of headquarters–subsidiary relationships have received much less research attention. Building on resource dependence theory and self-determination theory we argue that two basic goals subsidiary managers pursue are to achieve autonomy vis-a-vis corporate headquarters, and influence over other units. We investigate how a subsidiary's past initiatives contribute to its bargaining power, and how headquarters’ response – through granting attention or monitoring – affects the realization of the subsidiary's goals. Using structural equation modeling, our hypotheses are tested by drawing on a sample of 257 subsidiaries located in three different countries (Australia, Canada and the United Kingdom). Our results show that subsidiaries are not able to increase their influence through initiatives unless they get headquarters’ attention. We also find that subsidiary initiatives have a direct effect on subsidiary autonomy, but the caveat is that initiatives also evoke headquarters monitoring, which in turn decreases the subsidiary's autonomy. In addition to providing insights into how subsidiaries can achieve their goals, the paper also sheds light on the critical role headquarters plays in leveraging initiatives, and the influence of individual subsidiaries in the multinational enterprise.
TL;DR: This paper examined how firms' voluntary disclosure decisions are influenced by product market competition using separate measures to capture different dimensions of competition, and found that competition from potential entrants increases disclosure quantity while competition from existing rivals decreases disclosure quantity, and that competition enhances disclosure quality mainly through reducing the optimism in profit forecasts and reducing the pessimism in investment forecasts.
Abstract: This study examines how firms’ voluntary disclosure decisions are influenced by product market competition Using separate measures to capture different dimensions of competition, I show that competition from potential entrants increases disclosure quantity while competition from existing rivals decreases disclosure quantity I also find that competition enhances disclosure quality mainly through reducing the optimism in profit forecasts and reducing the pessimism in investment forecasts Moreover, I find that the above association is less pronounced for industry leaders, consistent with industry leaders facing less competitive pressures than industry followers
TL;DR: Three field studies using different samples, measures, and designs support the self-regulation impairment view and found that the Abusive Supervision × DJ interaction was mediated by self- regulation impairment variables (ego depletion and intrusive thoughts).
Abstract: Two competing explanations for deviant employee responses to supervisor abuse are tested. A self-gain view is compared with a self-regulation impairment view. The self-gain view suggests that distributive justice (DJ) will weaken the abusive supervision-employee deviance relationship, as perceptions of fair rewards offset costs of abuse. Conversely, the self-regulation impairment view suggests that DJ will strengthen the relationship, as experiencing abuse drains self-resources needed to maintain appropriate behavior, and this effect intensifies when employees receive inconsistent information about their organizational membership (fair outcomes). Three field studies using different samples, measures, and designs support the self-regulation impairment view. Two studies found that the Abusive Supervision × DJ interaction was mediated by self-regulation impairment variables (ego depletion and intrusive thoughts). Implications for theory and research are discussed.
TL;DR: The authors survey recent research in accounting anomalies and fundamental analysis and suggest a roadmap for research aiming to document the forecasting benefits of accounting information, and provide a new analysis on how an ex ante and ex post treatment of risk and transaction costs affects the accrual and PEAD anomalies.
TL;DR: This paper examined whether securitization impacts renegotiation decisions of loan servicers, focusing on their decision to foreclose a delinquent loan and found a significantly lower foreclosure rate associated with bank-held loans when compared to similar securitized loans.
TL;DR: In this paper, the authors explore how legal change affects lending behavior in twelve transition economies of Central and Eastern Europe and find that lending volume increases subsequent to legal change and that Collateral law matters more for develo pment of financial markets as compared to Bankruptcy law.
Abstract: The paper explores how legal change affects lending behavior in twelve transition economies of Central and Eastern Europe. In contrast to previous studies, we use bank level data rather than aggregate data, which allow us to control for countr y level heterogeneity and to analyze the effect of legal change on different types of lenders. Using differences-in-differences methodology to analyze the within country variation of changes in creditor rights protection, we find that lending volume increases subsequent to legal change. Further, we find that Collateral law matters more for develo pment of financial markets as compared to Bankruptcy law. We also find that new entr ants respond more strongly to legal change than do incumbents. In particular, foreign owned banks extend their lending volume substantially more than do domestic banks, be they private or state owned. The same holds when we use foreign green field b anks as proxies for new entrants. These results are robust after controlling for a wid e variety of possibilities.
TL;DR: The authors discuss the benefits of complementing existing accounts of risky decision making under loss with regulatory focus motivational mechanisms and demonstrate the importance of self-regulatory mechanisms for understanding risk-seeking behavior under loss.
Abstract: Four studies demonstrate the importance of self-regulatory mechanisms for understanding risk-seeking behavior under loss. Findings suggest that risk seeking becomes a motivational necessity under 3 conditions: (a) when an individual is in a state of loss; (b) when the individual is in a prevention-focused regulatory state (E. T. Higgins, 1997); and (c) when the risky option alone offers the possibility of eliminating loss. In situations involving loss, prevention motivation but not promotion motivation (whether measured or manipulated) was uniquely associated with behaviors that served the motivation to maintain the status quo. When the risky option offered the sole possibility of returning to the status quo, prevention motivation predicted increased risk seeking. However, when a more conservative option was available that also offered the possibility to return to the status quo, prevention motivation predicted risk aversion. When neither option offered the possibility to return to the status quo, prevention motivation was not associated with risky choice. The authors discuss the benefits of complementing existing accounts of risky decision making under loss with regulatory focus motivational mechanisms.
TL;DR: In this article, a behavioral view of decision making and two distinct decision-making processes, resource conceptualization and resource development, are compared in a simulated decision making environment representing a highly competitive and dynamically complex industry, and the authors argue that heterogeneity in the resources of rival firms arises from the interplay of these two processes.
Abstract: A framework is presented that connects managerial decision making to resource building and firm performance. The framework takes a behavioral view of decision making and distinguishes two distinct decision-making processes. First there is the creative conceptualization of new resource configurations that are intended to deliver competitive advantage. Then there is the painstaking development of resources required to implement strategy. We argue that heterogeneity in the resources of rival firms arises from the interplay of these two processes: resource conceptualization and resource development. Heterogeneity spawns performance differences that can be explained ex ante from characteristics of managerial decision-making processes. We illustrate the approach in a simulated decision-making environment representing a highly competitive and dynamically complex industry. Results from repeated simulation experiments conducted with executive and MBA students show vast differences in performance among firms, even when they started with identical resource positions. In a departure from traditional resource-based literature, we explain how these differences stem from path dependent accumulation of resources and spontaneous variety in the way rivals conceptualize resources. Copyright (C) 2010 John Wiley & Sons, Ltd.
12 Jan 2010
TL;DR: In this paper, the authors present an overview of the biofuel industry and its role in the development of renewable energy technologies, as well as the potential of bioenergy technologies in the transportation sector.
Abstract: Foreword. Preface. Contributors. PART I STRUCTURE OF THE BIOEVERGY BUSINESS. 1 Characteristics of Biofuels and Renewable Fuel Standards ( Alan C. Hansen, Dimitrios C. Kyritsis, and Chia fon F. Lee ). 1.1 Introduction. 1.2 Molecular Structure. 1.3 Physical Properties. 1.4 Chemical Properties. 1.5 Biofuel Standards. 1.6 Perspective. References. 2 The Global Demand for Biofuels: Technologies, Markets and Policies (Jurgen Scheffran). 2.1 Introduction. 2.2 Motivation and Potential of Renewable Fuels. 2.3 Renewable Fuels in the Transportation Sector. 2.4 Status and Potential of Major Biofuels. 2.5 Biofuel Policies and Markets in Selected Countries. 2.6 Perspective. References. 3 Biofuel Demand Realization ( Stephen R. Hughes and Nasib Qureshi ). 3.1 Introduction. 3.2 Availability of Renewable Resources to Realize Biofuel Demand. 3.3 Technology Improvements to Enhance Biofuel Production Economics. 3.4 US Regulatory Requirements for Organisms Engineered to Meet Biofuel Demand. 3.5 Perspective. Acknowledgments. References. 4 Advanced Biorefineries for the Production of Fuel Ethanol ( Stephen R. Hughes, William Gibbons, and Scott Kohl ). 4.1 Introduction. 4.2 Ethanol Production Plants Using Sugar Feedstocks. 4.3 Dedicated Dry-Grind and Dry-Mill Starch Ethanol Production Plants. 4.4 Dedicated Wet-Mill Starch Ethanol Production Plants. 4.5 Dedicated Cellulosic Ethanol Production Plants. 4.6 Advanced Combined Biorefineries. 4.7 Perspective. Acknowledgments. References. PART II DIESEL FROM BIOMASS. 5 Biomass Liquefaction and Gasification ( Nicolaus Dahmen, Edmund Henrich, Andrea Kruse, and Klaus Raffelt ). 5.1 Introduction. 5.2 Direct Liquefaction. 5.3 Biosynfuels from Biosyngas. 5.4 Perspective. References. 6 Diesel from Syngas ( Yong-Wang Li, Jian Xu, and Yong Yang ). 6.1 Introduction. 6.2 Overview of Fischer-Tropsch Synthesis. 6.3 Historical Development of the Fischer-Tropsch Synthesis Process. 6.4 Modern Fischer-Tropsch Synthesis Processes. 6.5 Economics. 6.6 Perspective. Acknowledgements. References. 7 Biodiesel from Vegetable Oils ( Jon Van Gerpen ). 7.1 Introduction. 7.2 Use of Vegetable Oils as Diesel Fuels. 7.3 Renewable Diesel. 7.4 Properties. 7.5 Biodiesel Production. 7.6 Transesteritication. 7.7 Biodiesel Purification. 7.8 Perspective. References. 8 Biofuels from Microalgae and Seaweeds ( Michael Huesemann, G. Roesjadi, John Benemann, and F. Blaine Metting ). 8.1 Introduction. 8.2 Biofuels from Microalgae: Products, Processes, and Limitations. 8.3 Biofuels from Seaweeds: Products, Processes, and Limitations. 8.4 Perspective. References. PART III ETHANOL AND BUTANOL. 9 Improvements in Corn to Ethanol Production Technology Using Saccharomyces cerevisiae ( Vijay Singh, David B. Johnston, Kent D. Rausch, and M.E. Tumbleson ). 9.1 Introduction. 9.2 Current Industrial Ethanol Production Technology. 9.3 Granular Starch Hydrolysis. 9.4 Corn Fractionation. 9.5 Simultaneous SSF and Distillation. 9.6 Dynamic Control of SSF Processes. 9.7 Cost of Ethanol. 9.8 Perspective. References. 10 Advanced Technologies for Biomass Hydrolysis and Saccharification Using Novel Enzymes ( Margret E. Berg Miller, Jennifer M. Brulc, Edward A. Bayer, Raphael Lamed, Harry J. Flint, and Bryan A. White ). 10.1 Introduction. 10.2 The Substrate. 10.3 Glycosyl Hydrolases. 10.4 The Cellulosome Concept. 10.5 New Approaches for the Identification of Novel Glycoside Hydrolases. 10.6 Perspective. References. 11 Mass Balances and Analytical Methods for Biomass Pretreatment Experiments ( Bruce S. Dien ). 11.1 Introduction. 11.2 Analysis of Feedstocks for Composition and Potential Ethanol Yield. 11.3 Pretreatment. 11.4 Enzymatic Extraction of Sugars. 11.5 Fermentation of Pretreated Hydrolysates to Ethanol. 11.6 Feedstock and Process Integration. 11.7 Perspective. Acknowledgments. References. 12 Biomass Conversion Inhibitors and In Situ Detoxification ( Z. Lewis Liu and Hans P. Blaschek ). 12.1 Introduction. 12.2 Inhibitory Compounds Derived from Biomass Pretreatment. 12.3 Inhibitory Effects. 12.4 Removal of Inhibitors. 12.5 Inhibitor-Tolerant Strain Development. 12.6 Inhibitor Conversion Pathways. 12.7 Molecular Mechanisms of In Situ Detoxification. 12.8 Perspective. Acknowledgments. References. 13 Fuel Ethanol Production From Lignocellulosic Raw Materials Using Recombinant Yeasts ( Grant Stanley and Barbel Hahn-Hagerdal ). 13.1 Introduction. 13.2 Consolidated Bioprocessing and Ethanol Production. 13.3 Pentose-Fermenting S. cerevisiae Strains. 13.4 Lignocellulose Fermentation and Ethanol Inhibition. 13.5 Perspective. Acknowledgments. References. 14 Conversion of Biomass to Ethanol by Other Organisms ( Siqing Liu ). 14.1 Introduction. 14.2 Desired Biocatalysts for Biomass to Bioethanol. 14.3 Gram-Negative Bacteria. 14.4 Gram-Positive Bacteria. 14.5 Perspective. Acknowledgments. References. 15 Advanced Fermentation Technologies ( Masayuki Inui, Alain A. Vertes and Hideaki Yukawa ). 15.1 Introduction. 15.2 Batch Processes. 15.3 Fed-Batch Processes. 15.4 Continuous Processes. 15.5 Immobilized Cell Systems. 15.6 Growth-Arrested Process. 15.7 Integrated Bioprocesses. 15.8 Consolidated Bioprocessing (CBP). 15.9 Perspective. References. 16 Advanced Product Recovery Technologies ( Thaddeus C Ezeji and Yebo Li ). 16.1 Introduction. 16.2 Membrane Separation. 16.3 Advanced Technologies for Biofuel Recovery: Industrially Relevant Processes. 16.4 Perspective. Acknowledgments. References. 17 Clostridia and Process Engineering for Energy Generation ( Nasib Qureshi and Hans P. Blaschek ). 17.1 Introduction. 17.2 Substrates, Cultures, and Traditional Technologies. 17.3 Agricultural Residues as Substrates for the Future. 17.4 Butanol-Producing Microbial Cultures. 17.5 Regulation of Butanol Production and Microbial Genetics. 17.6 Novel Fermentation Technologies. 17.7 Novel Product Recovery Technologies. 17.8 Fermentation of Lignocellulosic Substrates in Integrated Systems. 17.9 Integrated or Consolidated Processes. 17.10 Perspective. Acknowledgments. References. PART IV: HYDROGEN, METHANE, AND METHANOL. 18 Hydrogen Generation by Microbial Cultures ( Anja Hemschemeier, Katrin Mullner, Thilo Ruhle, and Thomas Happe ). 18.1. Introduction: Why Biological Hydrogen Production? 18.2. Biological Hydrogen Production. 18.3. Metabolic Basics for Hydrogen Production: Fermentation and Photosynthesis. 18.4. H 2 Production in Application: Cases in Point. 18.5. Perspective. References. 19 Engineering Photosynthesis for H 2 Production from H 2 O: Cyanobacteria as Design Organisms ( Nadine Waschewski, Gabor Bernat, and Matthias Rogner ). 19.1 The Basic Idea: Why Hydrogen from Water? 19.2 Realization: Three Mutually Supporting Strategies. 19.3 The Biological Strategy: How to Design a Hydrogen-Producing (Cyano-) Bacterial Cell. 19.4 Engineering the Environment of the Cells: Reactor Design. 19.5 How Much Can We Expect? The Limit of Natural Systems. 19.6 Perspective. Acknowledgments. References. 20 Production and Utilization of Methane Biogas as Renewable Fuel ( Zhongtang Yu, Mark Morrison, and Floyd L. Schanbacher ). 20.1 Introduction. 20.2 The Microbes and Metabolisms Underpinning Biomethanation. 20.3 Potential Feedstocks Used for Methane Biogas Production. 20.4 Biomethanation Technologies for Production of Methane Biogas. 20.5 Utilization of Methane Biogas as a Fuel. 20.6 Perspective. 20.7 Concluding Remarks. 20.8 Disclaimer. References. 21 Methanol Production and Utilization ( Gregory A. Dolan ). 21.1 Introduction. 21.2 Biomass Gasification: Mature and Immature. 21.3 Feedstocks: Diverse and Plentiful. 21.4 Biomethanol: ICEs, FFVs, and FCVs. 21.5 Case Study: Waste Wood Biorefinery. 21.6 Case Study: Two-Step Thermochemical Conversion Process. 21.7 Case Study: Mobile Methanol Machine. 21.8 Case Study: Scandinavia Leading the Way with Black Liquor Methanol Production. 21.9 Case Study: Methanol Fermentation through Anaerobic Digestion. References. PART V PERSPECTIVES. 22 Enhancing Primary Raw Materials for Biofuels ( Takahisa Hayashi, Rumi Kaida, Nobutaka Mitsuda, Masaru Ohme-Takagi, Nobuyuki Nishikuba, Shin-ichiro Kidou, and Kouki Yoshida ). 22.1 Introduction. 22.2 In-Fibril Modification. 22.3 In-Wall Modifications. 22.4 In-Planta Modifications. 22.5 In-CRES-T Modification. 22.6 A Catalogue of Gene Families for Glycan Synthases and Hydrolases. 22.7 Perspective. Acknowledgments. References. 23 Axes of Development in Chemical and Process Engineering for Converting Biomass to Energy ( Alain A. Vertes ). 23.1 Global Outlook. 23.2 Enhancement of Raw Material Biomass. 23.3 Conversion of Biomass to Fuels and Chemicals. 23.4 Chemical Engineering Development. 23.5 Perspective. References. 24 Financing Strategies for Industrial-Scale Biofuel Production and Technology Development Start-Ups ( Alain A. Vertes and Sarit Soccary Ben Yochanan ). 24.1 Background: The Financial Environment. 24.2 Biofuels Project: Steps in Value Creation and Required Funding at Each Stage. 24.3 Governmental Incentives to Support the Nascent Biofuel and Biomaterial Industry. 24.4 Perspective: What is the Best Funding Source for Each Step in a Company's Development? References. Index.
TL;DR: In this paper, the authors investigate how headquarters' attention affects subsidiary performance and find that subsidiaries which have a high level of strategic choice and receive attention from headquarters perform better than their peers.
Abstract: Drawing on a sample of 283 subsidiaries in three countries, we investigate how headquarters’ attention affects subsidiary performance.
Scholars have recently argued that top management’s attention is the most critical, scarce and sought-after resource in organizations (Haas and Hansen 2001; Bouquet and Birkinshaw 2008). However, the question how headquarters’ attention affects subsidiary companies remains largely unexplored.
Our study shows that subsidiaries which have a high level of strategic choice and receive attention from headquarters perform better than their peers. More specifically, we find that the interactions of subsidiaries’ autonomy, inter-unit power and initiatives with attention increase subsidiary performance.
TL;DR: Zhang et al. as mentioned in this paper found that an inflated moral self mediated the relationship between cleanliness and moral judgment, and that cleanliness, whether induced via physical cleansing or through a visualization task, licensed severe judgment on morally contested issues such as abortion and pornography.
01 Aug 2010
TL;DR: In this paper, the authors investigate the impact of corporate socially responsible (CSR) strategies on security analysts' recommendations and find that firms with higher visibility receive more favorable recommendations for their CSR strategies and that analysts with more experience, broader CSR awareness or those with more resources at their disposal, are more likely to perceive the value of CSR strategy more favorably.
Abstract: Using a large sample of publicly traded US firms over 16 years, we investigate the impact of corporate socially responsible (CSR) strategies on security analysts’ recommendations. Socially responsible firms receive more favorable recommendations in recent years relative to earlier ones, documenting a changing perception of the value of such strategies by the analysts. Moreover, we find that firms with higher visibility receive more favorable recommendations for their CSR strategies and that analysts with more experience, broader CSR awareness or those with more resources at their disposal, are more likely to perceive the value of CSR strategies more favorably. Our results document how CSR strategies can affect value creation in public equity markets through analyst recommendations.
TL;DR: In this paper, the authors present conceptual arguments and empirical evidence about the impact of CMOs on financial performance and identify individual and firm-specific conditions in which CMO contributes more or less to firm value.
Abstract: Recent discussions in academic literature and the business press often paint an unflattering picture of the contributions of chief marketing officers (CMOs) to the financial value of their firms. Some even suggest that CMOs, despite being the marketing leaders in firms, have little or no effect on firm performance. However, formal empirical research on the impact of CMOs on financial performance is scarce. This article presents conceptual arguments and empirical evidence about this controversial issue. The authors suggest that CMOs are far from irrelevant to the financial performance of firms. However, the impact of CMOs on financial performance is highly contingent on the managerial discretion available to them. Focusing on the role of customer power in limiting the managerial discretion available to CMOs, this study identifies individual and firm-specific conditions in which CMOs contribute more or less to firm value. Analyses of abnormal stock returns associated with the appointment of CMOs pr...
Posted Content•
TL;DR: In this article, a significant investment bank fixed effect in the announcement returns of an M&A deal was found, and the interquartile range of bank fixed effects is 1.26%.
Abstract: We document a significant investment bank fixed effect in the announcement returns of an M&A deal. The inter-quartile range of bank fixed effects is 1.26%, compared to a full-sample average return of 0.72%. The results remain significant after controlling for the component of returns attributable to the acquirer. Our findings suggest that investment banks matter for M&A outcomes, and contrast earlier studies which show no positive link between various measures of advisor quality and M&A returns. Differences in average returns across banks are also persistent over time and predictable from prior performance. Clients do not chase past returns, which may explain why persistence exists in M&A performance while it is absent in mutual funds.
TL;DR: In this article, a survey of information technology procurement contracts from 788 Dutch small-and medium-sized enterprises was conducted to analyze the conditions under which the learning effect is most likely to manifest itself.
Abstract: Organizations interacting repeatedly on similar transactions may learn from prior experiences, allowing contracts to be specified in greater detail. In this study, we analyze the conditions under which this learning effect is most likely to manifest itself. We do this by focusing on different parts of a contract as well as differences across transacting parties. Using a survey of information technology procurement contracts from 788 Dutch small- and medium-sized enterprises, we show that the learning effect is stronger for technical than for legal detail in contracts and is stronger for firms with information technology expertise than for firms without such expertise.
TL;DR: In this paper, four experiments tested the prediction that power reduces loss aversion by increasing the expected value of gains and shrinking the negative anticipated value of losses, and found that power increased the anticipated threat associated with a loss.
Posted Content•
TL;DR: In this article, the authors present a market equilibrium model of CEO assignment, pay and incentives under risk aversion and heterogeneous moral hazard, which can be summarized by a single closed-form equation.
Abstract: This paper presents a market equilibrium model of CEO assignment, pay and incentives under risk aversion and heterogeneous moral hazard. Each of the three outcomes can be summarized by a single closed-form equation. In assignment models without moral hazard, allocation depends only on firm size and the equilibrium is efficient. Here, assignment is distorted by the agency problem as firms involving higher risk or disutility choose less talented CEOs. Such firms also pay higher salaries in the cross-section, but economy-wide increases in risk or the disutility of being a CEO (e.g. due to regulation) do not affect pay. The strength of incentives depends only on the disutility of effort and is independent of risk and risk aversion. If the CEO affects the volatility as well as mean of firm returns, incentives rise and are increasing in risk and risk aversion. We calibrate the efficiency losses from various forms of poor corporate governance, such as failures in monitoring and inefficiencies in CEO assignment.
TL;DR: In this paper, a multistage stochastic optimization approach is proposed for the management of an electricity contract portfolio, which accounts for the uncertainties of both electricity prices and loads, and permits the specification of conditional-value-at-risk requirements to optimize hedging across intermediate stages in the planning horizons.
Abstract: When an electricity retailer faces volume risk in meeting load and spot price risk in purchasing from the wholesale market, conventional risk management optimization methods can be quite inefficient. For the management of an electricity contract portfolio in this context, we develop a multistage stochastic optimization approach which accounts for the uncertainties of both electricity prices and loads, and which permits the specification of conditional-value-at-risk requirements to optimize hedging across intermediate stages in the planning horizons. Our experimental results, based on real data from Nordpool, suggest that the modeling of price and load correlations is particularly important. The sensitivity analysis is extended to characterize the behavior of retailers with different risk attitudes. Thus, we observe that a risk neutral retailer is more susceptible to price-related than load-related uncertainties in terms of the expected cost of satisfying the load, and that a risk averse retailer is especially sensitive to the drivers of the forward risk premium.
Journal Article•