Research
The research centers and institutes at the DeGroote School of Business rank among the world’s best, and our students — both graduate and undergraduate — reap the benefits of these first-class facilities while they learn from some of the country’s finest researchers and educators.
DeGroote faculty have studied extensively nationally and internationally, bringing their wide variety of experiences and backgrounds to the School of Business success story.
There is a need, and an opportunity, for rigorous and broad-based interdisciplinary research that investigates the creation of value in an enterprise. Such areas include traditional valuation metrics as well as new approaches to the valuation of the development of human capital, product development and innovation, brand development, reputation, customer development, societal and environmental impact, leadership and crisis management. The Institute will provide future and, indeed, current business professionals with the techniques and expertise to understand and assess more fully, business strategies and the tangible and intangible assets that contribute to their value.
The former AIC Institute for Strategic Business Studies in 2007 issued a call for proposals to faculty to conduct scholarly research into the content and process of defining, creating and measuring value in an enterprise. Perspectives and methodologies that go beyond traditional business valuation models and are not anchored in any one specific discipline were encouraged. Recent working papers by DeGroote School of Business faculty and PhD students along this line of research are provided below.
Working Paper Series in Strategic Business Valuation
Michael Lee-Chin & Family Institute for Strategic Business Studies Working Paper Series
This working paper series presents original contributions focused on the theme of creation and measurement of value in business enterprises and organizations.
All Working Papers
Social Capital and Equity Prices
Anand Jha , Amanjot Singh, and Qian Yang | 2024-01 | Download the PDF
Social capital refers to “networks, norms, and trust that facilitate action and cooperation for mutual benefit” (Putnam, 1995). We propose a novel firm-level time-varying social capital measure based on firms’ 10-K filings that captures the firm’s operational exposure to social capital and examine its impact on equity prices […]
Social Acceptance of Small Modular Reactors [Abstract. Full version available from the authors]
Anton Shevchenko and Goran Calic | 2023-05 | Download the PDF
This study explores the complex process of how audiences perceive a novel technology by focusing on small modular reactors (SMRs), a promising nuclear energy technology. Contrary to the idea that acceptance is merely based on technical attributes, this research emphasizes the role […]
Seeing the Whole: Configurational Cognition and New Venture Resource Mobilization [Abstract. Full version available from the authors]
Goran Calic , François Neville, Santi Furnari, and C.S. Richard Chan | 2023-04 | Download the PDF
Research is scant on how multiple venture attributes combine as “whole packages” of signals (or cognitive configurations) in resource holders’ eyes, shaping a venture’s ability to mobilize resources. Drawing on a Qualitative Comparative Analysis of 1,395 crowdfunding campaigns […]
On Why Women‐Owned Businesses Take More Time to Secure Microloans
Goran Calic , Moren Lévesque, and Anton Shevchenko | 2023-03 | Download the PDF
Examining gender differences in business financing reveals important dimensions on which women- and men-owned businesses differ. Although considerable progress has been made in understanding gender differences in mobilizing resources, the role of time in business financing remains […]
Collaborating to Innovate: Balancing Strategy Dividend and Transactional Efficiencies
Nehal Elhelaly and Sourav Ray | 2023-02 | Download the PDF
When a firm collaborates with its suppliers, it expands its access to external know-how, and thus, can enhance its innovation outcomes. However, such partnerships also expose it to various transactional hazards including knowledge spillovers and opportunism appropriations. The trade-offs are also underscored by whether the collaboration complements […]
Blame it on the Weather: Market Implied Weather Volatility and Firm Performance
Joon Woo Bae, Yoontae Jeon, Stephen Szaura, and Virgilio Zurita | 2023-01 | Download the PDF
We introduce a novel measure of weather risk implied from weather options’ contracts. IVOL captures risks of future temperature oscillations, increasing with climate uncertainty about physical events and regulatory policies. We find that shocks to weather volatility increase the likelihood of unexpected costs: a one-standard deviation change in WIVOL increases […]
Franchising Structure Changes and Shareholder Value: Evidence from Store Buybacks and Refranchising
Anna Sadovnikova, Manish Kacker, and Saurabh Mishra | 2022-09 | Download the PDF
Drawing on agency theory and transaction cost analysis, this study investigates the impact of refranchising and buybacks of downstream retail units by franchising firms on shareholder value (i.e., stock returns). It further evaluates the contingency role of firm and industry factors in shaping this impact. An event study analysis over the years 2001-2020 confirms […]
Are Firms as Liquid as they Appear in Annual Reports?
Abdul-Rahman Khokhar, Jiaping Qiu, and Mohammad M. Rahaman | 2022-08 | Download the PDF
We find that firms report significantly higher cash holdings in the fourth fiscal quarter, followed by subsequent reversal. Such a phenomenon cannot be explained by traditional determinants of cash holdings, calendar year-end effect, or the choice of fiscal-year-end quarter. We identify real and timing apparatuses that firms employ to maneuver such a cash hike within […]
Firm Foreign Activity and the Geography of Exchange Rate Risk [update of wp 2022-02]
Amir Akbari and Francesca Carrieri | 2022-07 | Download the PDF
Globally-focused firms are the key drivers of foreign exchange rate (FX) risk. These firms have higher FX exposure to the risk from the currency of a closer country, in line with the gravity effect, and during the home currency depreciation. Furthermore, those in countries more dependent on the export sector and in the periphery of […]
Social Distancing and Local Bias
Yi Liu and Justin Jin | 2022-06 | Download the PDF
This study investigates the effect of social distancing on the local bias of institutional investors. Using SafeGraph’s Social Distancing Metrics data and SEC’s EDGAR 13F filings, we find that stay-at-home duration ratio decreases institutional investors’ local holdings and firms’ institutional ownership in the U.S. We also exploit the lockdown orders across various states during the […]
Local Labor Market Concentration and Capital Structure Decisions
John (Jianqiu) Bai, Massimo Massa, Chi Wan, and Yan Wang | 2022-05 | Download the PDF
Using the near universe of online job postings from 2007 to 2019, we construct a firm level metric of local labor market concentration. We find that firms hiring in more concentrated labor markets tend to have higher financial leverage. The positive relation between labor market concentration and financial leverage is more pronounced when the firm […]
On the Nature of Managerial Work in a Transitional Society: The Case of Estonia at the Point of Transition
Vishwanath Baba and Ruth Alas | 2022-04 | Download the PDF
We examine Estonia as a society transitioning from state socialism to market capitalism at the point of transition. We interviewed Chief Executive Officers, Vice Presidents, General Managers, Project Managers, and Functional Managers working in a variety of industries. We show that during transition, management practice has realigned itself toward capitalist values, adopted a modern management […]
Green Acquisitions: Are They Just Low-Hanging Green Fruit? [Abstract. Full version available from the authors]
Yuyan Wei and Devashish Pujari | 2022-03 | Download the PDF
Increasingly, corporations are expanding their green business portfolios by acquiring green technologies, brands, and firms to respond to sustainability trends. However, little is known regarding the financial impact of such a green strategy. This study uses the event study method to examine stock market reactions to green acquisition announcements. We find that the stock market […]
Firm Foreign Activity and Exchange Rate Risk [replaced by wp 2022-07]
Amir Akbari and Francesca Carrieri | 2022-02 | Download the PDF
Globally focused firms are the drivers of foreign exchange rate (FX) risk. Among the risk of the G10 currencies, the comovements with the largest currencies are the most important of the postulated risk factors. Firms’ exposure to FX risk is time-varying, is larger with respect to the home currency, and responds to fluctuations in the […]
Pricing Power: Measures, Trends and Influences on Firm Value
Yang Pan, Thomas S. Gruca, and Lope Rego | 2022-01 | Download the PDF
Pricing power is highly prized by investors, pursued by managers and almost totally ignored by marketing academics. One potential reason may be a lack of validated measures of pricing power. In this study, we examine two pricing power metrics: a new enterprise-level measure of price elasticity and the industry-adjusted Lerner Index. Both measures can be […]
Chilling Effects of Patent Trolls
Feng Chen, Yu Hou, Jiaping Qiu, and Gordon Richardson | 2021-11 | Download the PDF
We find that, when a firm is sued by non-practicing entities (NPEs), the likelihood of its technology peers being sued increases in the subsequent year. Defendants’ technology peers experience significant market value losses around the lawsuit filing date. Moreover, defendants’ technology peers respond to NPE litigation risk by increasing R&D investments to develop workaround technologies. […]
Channel Governance through Brand Equity: How Brand Equity Shapes Distribution Channel Structure
Mohammad B. Kayed, Manish Kacker, Ruhai Wu, and Farhad Sadeh | 2021-10 | Download the PDF
The relationship between brand equity and channel governance is recognized in practice and is of particular interest to senior managers. However, research in marketing on this topic is limited and practitioners and scholars seem divided on the nature of this relationship. To guide practice and enrich scholarship on this issue, we investigate the causal impact […]
Evidence Management System: Toward a design theory for research practice communication platform
Bellray Eapen and Vishwanath V. Baba | 2021-09 | Download the PDF
The ultimate purpose is to promote evidence-based management. The immediate purpose is to capture, maintain, and deliver evidence that comes out of both management research and management practice. To do so, we offer an evidence management system design that is versatile to include humans and intelligent systems as its potential users. Our design theory proposes […]
Marketing Executives’ Turnover and Firm Performance
Sash Vaid, Michael Ahearne, and Ryan Krause | 2021-08 | Download the PDF
This research takes a disruption-adaptation perspective to understand influence of marketing executives’ turnover (MET) on firm performance. The authors draw on marketing (and sales) executive exits at U.S. public firms between 2004 and 2016. MET measures presence (or absence) of annual turnover of one or more executives, accounting for changes (due to exits) to marketing […]
Retail Pricing Format and Rigidity of Regular Prices
Sourav Ray, Avichai Snir, and Daniel Levy | 2021-07 | Download the PDF
We study different notions of sale and regular prices, and their variability with store pricing-formats. We use data from three large stores with different pricing-formats (EDLP/Hi-Lo/Hybrid) that are located within 1-km radius. Importantly, the data contain both the actual transaction prices and the actual regular prices as displayed on the store shelves. We combine these […]
Two Faces of Product Market Competition and Tax Avoidance
Rui Li, Jiaping Qiu, Chi Wan, Mengying Wang, and Yan Wang | 2021-06 | Download the PDF
This paper investigates the effect of product market competition on a firm’s tax avoidance behavior. We develop a theoretical model showing that a greater product market competition could increase the managerial incentive of tax avoidance due to a “threat-of-punishment” effect but decrease shareholders’ incentive of tax avoidance due to a “value-of-tax-saving” effect, resulting in an […]
Does Ownership Concentration Affect Corporate Bond Volatility?
Yan Wang and Ying Wang | 2021-05 | Download the PDF
This paper analyzes the relation between ownership concentration and corporate bond volatility. We show that more concentrated mutual fund ownership is associated with higher volatility of corporate bonds. This relation is stronger among more illiquid bonds, during periods of heightened bond market illiquidity, and among bonds held by corporate bond funds that invest in more […]
Does Citizens’ Financial Literacy Relate to Bank Financial Reporting Transparency?
Justin Jin, Kiridaran Kanagaretnam, Yi Liu, and Maoyong Cheng | 2021-04 | Download the PDF
In this study, we examine the relationship between financial literacy and bank financial reporting transparency for a sample of banks from the U.S. Following prior literature, we employ discretionary loan loss provisions (DLLP) as our primary measure of bank reporting transparency. We argue that the financial literacy of their customers can influence bank managers’ behaviors […]
Determinants and Predictability of Commodity Producer Returns
Qiao Wang and Ronald Balvers | 2021-03 | Download the PDF
We derive stock returns for firms producing nonrenewable commodities employing the investment-based asset pricing approach. By identifying the appropriate time-varying discount rate the investment-based approach allows an alternative test of the Hotelling Valuation Principle. The empirical results support the principle and enable predicting returns from sorting firms into quintiles by expected return, producing a 16-20 […]
Banks’ Loan Charge-Offs and Macro-Level Risk
Justin Y. Jin, Mary L. Z. Ma, Victor Song, and Mengyang Guo | 2021-02 | Download the PDF
Prior studies document that delayed loan loss provisions can worsen financial stability by triggering a capital inadequacy concern. We extend prior literature and investigate how the treatment of loan charge-offs (LCOs) in financial statements is tied to macro-level risk in the U.S. banking industry. We hypothesize and find that nondiscretionary LCOs are positively linked to […]
Non-Traditional Banking Activities and Bank Financial Reporting Quality
Mengyang Guo, Justin Jin, Yi Liu, and S.M. Khalid Nainar | 2021-01 | Download the PDF
We examine whether and how non-traditional banking activities affect the quality of banks’ financial reporting. We find that a bank’s ratio of non-interest income (derived from nontraditional activities) to total operating income is positively and significantly associated with the magnitude of discretionary loan loss provisions, our proxy for financial reporting quality.
Organizational Memory and Bank Accounting Conservatism
Justin Yiqiang Jin, Yi Liu, S.M. Khalid Nainar | 2020-09 | Download the PDF
This paper is the first to investigate the impact of banks’ organizational memory of past history on the conservatism of accounting policy. Specifically, we investigate two types of bad time history: banks’ undercapitalization and the failures of other banks during financial crises. Using a large sample of U.S. banks over the period 1997-2013, we find […]
On the Meanings of Presenteeism: A Conceptual and Theoretical Extension
Nosheen Sarwat, Vishwanath V. Baba | 2020-08 | Download the PDF
In this study, we explore the meanings of presenteeism and extend the literature on presenteeism to its full conceptual potential. In addition to the value loss usually associated with presenteeism, we explore potential value gain in terms of creativity and innovation. We offer a theoretical model of presenteeism that separates negative presenteeism from positive presenteeism […]
The Bright Side of Financial Fragility
Massimo Massa, David Schumacher, Yan Wang | 2020-07 | Download the PDF
We highlight an important but overlooked characteristic of financial fragility: “fragile” stocks are more liquid because they are sensitive to non-fundamental liquidity shocks. This makes them less sensitive to corporate actions with price impact and therefore affects firms’ incentives to engage in those actions. We show that fragile firms have lower share repurchases but invest […]
Productivity Gaps and Global Systematic Risk Exposure: Pricing Country-Industry Portfolios
Punit Anand, Ronald J. Balvers | 2020-06 | Download the PDF
Shocks transmitted from productivity leaders to lagging economies are systematic sources of risk. Global technology and knowledge diffusion leads to predictable patterns in productivity dynamics across countries and industries. Technology gaps determine the level of exposure to the systematic productivity shocks. Firms in a country-industry with larger technology gaps relative to the world leader are […]
Labor-Capital Substitution and Capital Structure: Evidence from Automation
Jiaping Qiu, Chi Wan, Yan Wang | 2020-05 | Download the PDF
This paper presents evidence that the exposure to automation technologies has a positive impact on a firm’s financial leverage. The effects are more pronounced in firms with greater labor costs, routine task intensity, firing costs, and union coverage. The results are robust when we instrument a firm’s exposure to automation technologies using the robotics adoption […]
Conflict and Performance in Channels: A Meta-Analysis
Kamran Eshghi, Sourav Ray | 2020-04 | Download the PDF
Channel conflict is a critical business concern and has long been of great interest to researchers. In this paper, we report a comprehensive meta-analysis of the empirical literature spread over more than five decades between 1960 and 2020, with “channel conflict” as the focal construct and investigate the conflict- performance link. We find, in the […]
Wage Rigidity and Debt Financing: Evidence From Labor Contract Renewal During the Financial Crisis
Jiaping Qiu, Yue Zhang | 2020-03 | Download the PDF
This paper studies the differential impacts of the 2008 financial crisis on the financing policies and real activities of firms with flexible labor contracts and those with binding labor contracts. We find that flexible-contract firms significantly reduced their labor costs during the crisis, while binding-contract firms lacked such flexibility. Compared to flexible-contract firms, binding-contract firms […]
Performance Implications of Using Signaling and Screening for Expanding Interfirm Business Networks: Evidence from Franchising
Farhad Sadeh, Manish Kacker | 2020-02 | Download the PDF
Entrepreneurial business firms such as franchisors can enhance their network performance by attracting high-quality partners and preventing low-quality partners from joining the network. We draw on agency and transaction cost theories and the substantive literature on voluntary information disclosure to develop a theoretical framework that examines the consequences of using signaling and screening mechanisms for […]
Determinants and Consequences of Intellectual Capital Efficiency in the U.S. Banking Industry
Justin Y. Jin and Wenting Wang | 2020-01 | Download the PDF
This study investigates the determinants and consequences of intellectual capital efficiency in the U.S. banking industry. We find that banks’ individual institutional memory of bad times reduces their intellectual capital efficiency. We also find that intellectual capital efficiency restricts banks’ risk-taking behaviors and enhances their accounting conservatism. Finally, we find that intellectual capital efficiency helps […]
Antecedents of Locus of Causality Attributions for Destructive Acts in Distribution Channels
Hadi Eslami, Manish Kacker, and Jonathan D. Hibbard | 2019-06 | Download the PDF
Destructive acts in distribution channels are actions by firms that have a significant adverse impact on the viability or functioning of channel members. Understanding an affected channel member’s locus of causality attributions for a destructive act can help the initiating firm determine when, where and how to proactively mitigate the adverse consequences of the act. […]
Welcome to the Gray Zone: Shades of Honesty and Earnings Management
Pascale Lapointe-Antunes, Kevin Veenstra, Kareen Brown, and Heather Li | 2019-05 | Download the PDF
We examine the influence of face-based judgments of CFO/CEO honesty on earnings management for the largest publicly traded companies in America. After controlling for incentives and opportunities to manage earnings, CFOs and CEOs perceived to be less honest engage in higher levels of both accruals and real earnings management. The beneficial impact of perceived honesty […]
Credit Risk Spillovers and Cash Holdings [update of 2018-06]
Jin Lei, Jiaping Qiu, Chi Wan, and Fan Yu | 2019-04 | Download the PDF
This paper examines how credit risk spillovers affect corporate financial flexibility. We construct separate empirical proxies to disentangle the two channels of credit risk spillovers — credit risk contagion (CRC), which increases industry peers’ distress likelihood; and product market rivalry (PMR), which strengthens rivals’ competitive position. We show that firms facing greater CRC hold more […]
The Effect of Labor Cost on Innovation
Amrita Nain, Yan Wang | 2019-03 | Download the PDF
Using minimum wage changes as an exogenous shock to the cost of low-skill labor, we show that corporate innovative output declines after the shock, especially in industries dependent on unskilled labor. The substitutability between technology and unskilled labor plays a key role in the response of innovative output to minimum wage shocks. We identify technology […]
Gender and Beauty in the Financial Analyst Profession: Evidence from the U.S. and China [update of 2017-06]
Congcong Li, An-Ping Lin, Hai Lu, Kevin Veenstra | 2019-02 | Download the PDF
We examine how gender and beauty affect the likelihood of being voted as an All-Star in the financial analyst profession in both the U.S. and China. We find that female analysts are more likely to be voted as All-Star analysts in the U.S., but good-looking female U.S. analysts are less likely to be voted as […]
Beauty and Academic Career [update of 2018-01]
Yanju Liu, Hai Lu, Kevin Veenstra | 2019-01 | Download the PDF
We examine the impact of beauty on the academic career success of tenure-track accounting professors at top business schools in America, and show that beauty plays a significant role. Specifically, after controlling for gender, ethnicity, publication history, work experience, and quality of alma mater, more attractive professors obtain better first school placements post-PhD and are […]
Banks’ Funding Structure and Earnings Quality
Justin Yiqiang Jin, Kiridaran Kanagaretnam, and Yi Liu | 2018-07 | Download the PDF
Using a sample of U.S. public and private banks, we examine the implications of banks’ funding strategies for banks’ earnings quality. We find that the ratio of core deposits to total liabilities (CDL), our proxy for bank reliance on retail deposits over wholesale funds, is negatively and significantly associated with the magnitude of earnings management […]
Credit Risk Spillovers and Cash Holdings
Jin Lei, Jiaping Qiu, Chi Wan, and Fan Yu | 2018-06 | Download the PDF
This paper examines how credit risk spillovers affect corporate Financial Flexibility and bank loan contracting. We construct separate empirical proxies to disentangle the two channels of credit risk spillovers — credit risk contagion (CRC), which increases industry peers’ distress likelihood; and product market rivalry (PMR), which strengthens rivals’ competitive position. We show that firms facing […]
Technology and Return Predictability
Jiaping Qiu, Jin Wang, and Yi Zhou | 2018-05 | Download the PDF
This paper finds significant predictability in stock returns across technology-linked firms. Using patent-holding information to identify firms’ technological linkage, we show that a long–short equity trading strategy sorted on lagged returns of technology-linked firms yields monthly alphas of around 105 basis points. The findings are robust to a number of specifications and are not driven […]
A Theory of Actionability: Complementing Rigour and Relevance in Management Research
Farimah HakemZadeh and Vishwanath V. Baba | 2018-04 | Download the PDF
Our purpose is to contribute to the debate on how to close the gap between management research and practice and to offer a solution. We analyze the literature investigating the research-practice gap including evidence-based management, mode 1 and 2 knowledge generation, design science approaches, and action research. We argue that in order to narrow the […]
Home Capital Group – The High Cost of Dishonesty
Kareen Brown, Kevin Veenstra | 2018-03 | Download the PDF
This instructional case presents the problems that began in the summer of 2015 when Home Capital Group (HCG) announced it had cut ties with 45 mortgage brokers for falsifying figures on mortgage applications regarding the earnings of prospective home purchasers in Canada. The case details the subsequent investigation by the Ontario Securities Commission in 2017 […]
Simulation and Big Data: In Search of Causality in Big Data-Related Managial Decision Making
Maggie M. Cheng, Chenxing Li, Rick D. Hackett | 2018-02 | Download the PDF
The unprecedented availability of digitized human behavioral data offers new research opportunities for discovering hidden patterns in Big Data that may not be apparent in smaller samples. At the same time, there are potential pitfalls associated with Big Data analytics in the absence of also working to identify causal relationships among the constructs thought to […]
Beauty and Academic Career
Yanju Liu, Hai Lu, Kevin Veenstra | 2018-01 | Download the PDF
We examine the impact of beauty on the academic career success of tenure-track accounting professors at top business schools in America, and show that beauty plays a significant role. Specifically, after controlling for gender, ethnicity, publication history, work experience, and quality of alma mater, more attractive professors obtain better first school placements post-PhD and are […]
Cross-Country Competitive Effects of Cross-Listings
Sergei Sarkissian, Yan Wang | 2017-08 | Download the PDF
This paper studies the cross-country competitive effects of foreign listings on U.S. exchanges. We show that incumbent U.S. firms respond strongly negatively to foreign listings and weakly positively to foreign delistings. The performance decline of U.S. firms is related to the competitive advantages that foreign firms receive from placing their shares in the United States […]
Designing a Global Digital Currency
Ronald Balvers, Bill McDonald | 2017-07 | Download the PDF
The notion of a global currency is a debate set aside in the past decade as the abstraction saw little potential for realization in a world with heterogeneous governments unwilling to sacrifice seigniorage for optimal design. The technical capability of creating digital currencies, independent of governments, resurrects the discussion and begs the questions of practical […]
Beauty Premium? Evidence from Institutional Investors’ Voting for All-Star Analysts
Congcong Li, An-Ping Lin, Hai Lu, Kevin Veenstra | 2017-06 | Download the PDF
This study examines whether institutional investors’ voting for All-Star financial analysts is affected by analyst beauty. Using a sample of 1,135 U.S. analysts and controlling for analyst performance, we document that beauty, on average, does not affect the outcome of All-Star analyst voting. However, a beauty premium emerges in those sectors where there is high […]
The Relationship between Initial and Ongoing Fees in Franchising: A Meta-Analysis
Farhad Sadeh, Manish Kacker | 2017-05 [replaces 2016-03] | Download the PDF
Mechanisms and rationales for revenue sharing have been the subject of many theoretical and empirical studies on contracting. Franchisors typically derive economic profits (for the rights they grant to franchisees) through revenue sharing contracts. Franchising is a popular form of retailing in a wide range of product and service markets, plays a significant role in […]
Performance Impact Of Distribution Expansion: A Review And Research Agenda
Jonathan D. Hibbard, Manish Kacker, Farhad Sadeh | 2017-04 | Download the PDF
The emergence of new technologies, shifting consumer needs and growth in competition have made the expansion of distribution a business imperative for many firms. In this chapter, we review the empirical marketing literature on the performance consequences of distribution expansion and offer an agenda for future research. In doing so, we consider two dimensions of […]
Social Capital and Bank Stability
Justin Yiqiang Jin, Kiridaran Kanagaretnam, Gerald J. Lobo, Robert Mathieu | 2017-03 | Download the PDF
Using a sample of public and private banks, we study how social capital relates to bank stability. Social capital, which captures the level of cooperative norms in society, is likely to reduce opportunistic behavior (Jha and Chen 2015; Hasan et al. 2016) and, therefore, act as an informal monitoring mechanism. Consistent with our expectations, we […]
Does Marketing Capability matter in determining the Effectiveness of Sport Sponsorships?
Kamran Eshghi, Sourav Ray, and Hesam Shahriari | 2017-02 | Download the PDF
Despite the significant academic and corporate interest in sports sponsorships, and despite the significant financial stakes these present (sports sponsorship is almost a $15 billion business in North America alone), the literature is equivocal both on the impact as well as on the determinants of the effectiveness of these activities. While some papers report sports […]
Quality Signaling through Ex-Ante Voluntary Information Disclosure in Entrepreneurial Networks: Evidence from Franchising
Farhad Sadeh and Manish Kacker | 2017-01 | Download the PDF
This paper examines antecedents of ex-ante voluntary information disclosures for standardized contracts in entrepreneurial networks. Entrepreneurs (e.g., franchisors) may make such disclosures to prospective business partners in order to signal profitability of partnering, attract financial and managerial resources and develop their entrepreneurial networks. In practice, only a fraction of franchisors make financial performance representations (FPR), […]
Arbitrage Pricing Restrictions and the Predictability of Stock Returns by Statistical Factor Analysis
Ronald Balvers and Adam Stivers | 2016-04 | Download the PDF
In standard principal components estimation of the APT, the factors are obtained without employing the restrictions on mean returns implied by the APT. We modify the principal components methodology to allow mean returns to reflect the theoretical restrictions up to any level of accuracy and generate optimal constrained APT factors from the eigenvectors of a […]
Asset Valuation
Ronald J. Balvers | 2016-02 | Download the PDF
A survey discussing fundamental conceptual issues in valuation. Topics include differences in fundamental valuation, comparative valuation, and replacement-value based valuation; accounting approaches to valuation such as residual income as contrasted with discounted cash flows; the use of valuation ratios based on earnings, dividends, and return on investment; the roles of different types of real capital […]
Fire-Sale Channel of Industry Contagion: Evidence from the Pricing of Industry Recovery Rate
Yi-Ting Hsieh, Peter Miu, Wenchien Liu, and Yuanchen Chang | 2016-01 | Download the PDF
How does bankruptcy contagion propagate among industry peers? We study the fire-sale channel of industry contagion by examining whether the cost of debt of a company is affected by the observed recovery rates of its bankrupt industry peers. Our results show that lower industry recovery rates are associated with higher loan spreads but only when […]
Discretion in Bank Loan Loss Allowance, Risk Taking, and Earnings Management
Justin Jin, Kiridaran Kanagaretnam, and Gerald J. Lobo | 2015-12 | Download the PDF
We study whether bank managers’ use their discretion in estimating the allowance for loan losses (ALL) for efficiency or for opportunistic reasons. We do so by examining whether the use of this discretion relates to bank stability and bank risk taking, or whether it relates to earnings management to meet or beat earnings benchmarks. We […]
Determining hurdle rate and capital allocation in credit portfolio management
Peter Miu, Bogie Ozdemir, Evren Cubukgil, and Michael Giesinger | 2015-11 | Download the PDF
We examine two interrelated issues in risk-adjusted return on capital performance measurement: estimating hurdle rates and allocating capital to debt instruments in a portfolio. We consider a methodology to differentiate hurdle rates for individual debt instruments that incorporates obligor-specific information. These instrument-specific hurdle rates, which define the required compensation of the shareholders, enable a granular […]
Conceptualization and Measurement of Virtuous Leadership: Doing Well by Doing Good
Gordon Wang and Rick D. Hackett | 2015-10 | Download the PDF
Despite a long history in eastern and western culture of defining leadership in terms of virtues and character, their significance for guiding leader behavior has largely been confined to the ethics literature. As such, agreement concerning the defining elements of virtuous leadership and their measurement is lacking. Drawing on both Confucian and Aristotelian concepts, we […]
Social Capital and Bank Accounting Transparency
Justin Jin, Kiridaran Kanagaretnam, and Gerald J. Lobo | 2015-09 | Download the PDF
Using a sample of public and private banks and a county-level index for social capital, we study how social capital relates to accounting transparency. In a region with high social capital, individuals have a greater propensity to honor an obligation and there is greater mutual trust within a much denser network that deters opportunistic/self-serving actions […]
Temperature Shocks and the Cost of Equity Capital: Implications for Climate Change Perceptions
Ronald Balvers, Ding Du, and Xiaobing Zhao | 2015-08 | Download the PDF
Financial market information can provide an objective assessment of losses anticipated from climate change. In a Merton-type asset pricing model, with asset prices affected by perceived changes in investment opportunities due to climate change, the risk premium is significantly negative, loadings for most assets are negative, and asset portfolios in more vulnerable industries have stronger […]
International Diversification, SFAS 131, and Post-Earnings Announcement Drift
Tony Kang, Inder Khurana, and John Wang | 2015-07 | Download the PDF
Using data from 1990-2013, we show 1) the serial correlation of analyst forecast errors increases in the extent of international diversification, 2) PEAD based on analyst forecast errors increases in the extent of international diversification, and 3) the impact of international diversification on the serial correlation of analyst forecast errors and the associated drift is […]
Conflict and Performance in Channels: A Comparative Synthesis of Empirical Findings
Kamran Eshghi and Sourav Ray | 2015-06 | Download the PDF
We conduct a comprehensive meta-analysis of the literature on the role of channel conflict in channel performance. In particular, we assess the existing empirical evidence to compare two rival views of conflict. In the first view, conflict is a residual outcome of business processes that reduces joint profit and is efficiency depleting. Reduction or elimination […]
On business theory and influential scholarship: What makes research interesting?
Vishwanath V. Baba | 2015-05 | Download the PDF
Couched within a theory of business, this paper explores what makes business scholarship influential and probe into mechanisms that make a paper interesting to its audience. It presents a framework to combine several attributes of influential scholarship and presents a model for making research interesting. Examples of interesting scholarship are provided and speculations about why […]
The Reallocative Employee Costs of Corporate Bankruptcy
John R. Graham, Hyunseob Kim, Si Li, and Jiaping Qiu | 2015-04 | Download the PDF
This paper examines how bankruptcy by a firm leads to costs borne by its employees due to reallocation of the workforce. Using worker-firm matched data from the U.S. Census Bureau’s LEHD program, we demonstrate that annual wages deteriorate by about 10% upon corporate bankruptcy and remain below pre-bankruptcy wages for (at least) six years. In […]
Profitability, Value and Stock Returns in Production-Based Asset Pricing without Frictions
Ronald J. Balvers, Li Gu, and Dayong Huang | 2015-03 | Download the PDF
In a production-based asset pricing model without adjustment costs and with decreasing returns to scale following Brock (1982), stock returns at the firm level are no longer identically equal to investment returns but are determined by profitability, the book-to-market ratio, and the change in future profitability prospects. Although firms with low book-to-market ratios are normally […]
Value Creation in Strategic Alliances
Anna Sadovnikova, and Ashish Pujari | 2015-02 | Download the PDF
Many firms recognize the appeal of going green and employ strategic partnerships to manage corporate environmental strategies. Yet the mechanisms in green collaborations that create value for a firm remains mostly unexplored. To address this gap, the authors examine the effects of announcements of green strategic partnerships on a firm’s stock market value. It was […]
Technology Spillovers and Corporate Cash Holdings
Jiaping Qiu and Chi Wan | 2014-06 | Download the PDF
This study examines the effect of technology spillovers on firms’ cash holdings. It finds that firms facing greater technology spillovers hold higher cash balances. This effect is more pronounced among financially constrained firms and for firms that are likely to benefit more from diffused technology, e.g., those have newer patents, are more profitable, face better […]
Radical Innovation in Strategic Partnerships: A Framework for Analysis
Anna Sadovnikova, Ashish Pujari, and Andrey Mikhailitchenko | 2014-05 | Download the PDF
The study proposes a conceptual model of the phenomenon of a radical innovation partnership and examines particular partner attributes affecting its performance. Borrowing from the paradox perspective in organizational studies, the model argues that a radical innovation partnership features several paradoxes – the paradox of a partnership structure, the paradox of partnership resources, and the […]
Social Screens and Systematic Boycott Risk
Hao (Arthur) Luo and Ronald J. Balvers | 2014-04 | Download the PDF
We consider the pricing implications of screens imposed by Socially Responsible Investing funds. The model extends standard risk-based asset pricing models by deriving as an additional systematic risk factor a portfolio of stocks shunned by a subgroup of institutional investors. We reconcile the empirically observed risk-adjusted sin-stock abnormal return with a “boycott risk premium” which […]
A New Method to Measure the Performance of Leveraged Exchange-Traded Funds
Narat Charupat and Peter Miu | 2014-03 | Download the PDF
We examine the effects of daily return compounding, financing costs, and management factors on the performance of leveraged exchange-traded funds (LETFs) over various holding periods. We propose a new method to measure LETFs’ tracking errors that allows us to disentangle these effects. Our results show that the compounding effect generally has more influence on tracking […]
Financial Disclosure and Customer Satisfaction: Do Companies Talking the Talk Actually Walk the Walk?
Ronald J. Balvers, John F. Gaski, and Bill McDonald | 2014-02 | Download the PDF
Using the emerging technology of large-scale textual analysis, this study examines use of the term “customer satisfaction” and its variants in the principal annual financial reports issued by publicly-traded U.S. corporations and filed with the Securities and Exchange Commission as Form 10-K. We document the frequency of the term’s occurrence in 10-Ks over the 1995 […]
How Firm Strategies Impact Size of Partner-Based Retail Networks: Evidence from Franchising
Manish Kacker, Rajiv P. Dant, Jamie Emerson, and Anne T. Coughlan | 2014-01 | Download the PDF
How do firms’ partnering strategies impact the size of their partner-based retail networks? We draw on agency theory to address this question in the context of franchising. Our econometric analyses (based on nine years of longitudinal balanced panel data) include assessment of data nonstationarity and estimation of a dynamic panel data model that accounts for […]