Research in Action, Fall 2020

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IN ACTION Seventh Edition | Fall 2020


A New Strategy for Delivering Health Information to Diverse Communities on Facebook How Online Job Posting Data Could Change the Game for Investors Can Photos of Loved Ones Improve Ethics in the Workplace? Is Uber Changing the Fortunes of its Drivers for the Better? Research Abstracts Awards and New FacultyFALL 2020 RESEARCH IN ACTION


Research Highlights

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A New Strategy for Delivering Health Information to Diverse Communities on Facebook by Drew Farrington

In a perfect world, public health messaging in the United States would have a universal reach. It often doesn’t. Social media platforms offer a potential channel to communities of color and other historically underserved groups. Specifically targeting such groups, however, comes with its own limitations. Tackling this challenge requires a strategic approach. Connie Pechmann, a professor at the UCI Paul Merage School of Business, recently published a new strategy for targeting underserved communities through social media channels. In Facebook Recruitment Using ZIP Codes to Improve Diversity in Health Research, Pechmann and her colleagues Connor Phillips and Douglas Calder of UCI and Judith J. Prochaska of Stanford University report the outcomes of using a workaround to Facebook’s restrictions against advertising targeted by ethnicity. The study was funded by a grant from the National Cancer Institute, part of National Institutes of Health, and the findings were published in the Journal of Medical Internet Research.

Overcoming a history of distrust Many of today’s health messaging challenges are not new. Decades of research have documented the broad distrust of healthcare and health-related messaging within Black and Latinx communities. The Cambridge Analytica scandal—in which tens of millions of Facebook users’ personal data were secretly harvested and sold—made many people understandably wary of the information they see on social media. The effect was more pronounced among groups predisposed to suspicion. Pechmann was running a study when Cambridge Analytica hit and witnessed the effects firsthand. “The RESEARCH IN ACTION

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numbers proved our intuition that people weren’t trustful,” she says. “Ethnic groups were the ones not clicking. They were the first to drop off. Suddenly no one was coming to participate.”

Facebook: A powerful tool with frustrating limitations Facebook is the biggest social media platform for adults in the United States, with approximately 221 million monthly users, representing about 69 percent of the adult population registered as users. The platform is used at similar rates across ethnic and racial categories. Because of its reach, researchers have used Facebook’s advertising system to recruit for health-related studies, including support groups for smokers trying to quit. But those efforts run into a problem: because anti-smoking funding is generalized, resources for outreach tend to be thinly spread. Pechmann and her colleagues ran general anti-smoking Facebook campaigns across the country and found that mass-market campaigns don’t have the repetitive power of targeted advertising. White women tended to be overrepresented in groups formed by generalized campaigns. The researchers knew that from a public health perspective, they needed more diverse populations. The solution seems obvious: target messaging to specific ethnic groups on Facebook.

Unfortunately, it’s not that simple. While Facebook’s advertising platform allows targeting by age, gender and location, it explicitly does not allow targeting by race or ethnicity. The policy exists for valid ethical and legal reasons, such as preventing housing, credit or employment discrimination. But it has an unintended side-effect of undermining Facebook as a tool for delivering health information to specific ethnic communities. Although frustrated by the limitations they encountered, Pechmann and her colleagues were not deterred.

Hacking Facebook, in a sense Targeting by ethnicity was off the table, but Pechmann knew there were other avenues to pursue. Facebook advertising does allow geographic targeting. Pechmann’s novel approach combined census data, ZIP codes and health behavior data to get around Facebook’s limitations. “We specified ZIP codes based on the percentage of households of the target ethnicity,” says Pechmann. In this case that meant Black and Latinx communities, those traditionally not being reached by generalized antismoking campaigns.

A Significant Breakthrough Once they found they could bypass Facebook’s roadblocks, it was simply a matter of repeating the message. “We’re using tobacco company tactics, except we’re doing it virtually,” says Pechmann. The team posited that minority groups might not respond to general campaigns because of their infrequency. “We bombarded them and kept reminding them,” Pechmann says. “It just became a matter of getting enough exposure.” The groundbreaking results were immediately obvious. “We massively improved our reach to ethnic communities,” says Pechmann. Support groups began to look markedly more diverse. “We suddenly had three to four Black or Latinx members in a group of twenty.”



Once in the programs, nonwhite members successfully quit at the same rate as everyone else. Some had feared that targeting niche markets would require increased spending, but that wasn’t the case. It simply required a different strategy. “Our costs were not significantly higher for these ethnic-focused campaigns compared with our baseline general market campaign,” says Pechmann.

The precise future of health messaging Even greater implications lie beyond the current pandemic, however.

“Medicine is no longer one size fits all,” says Pechmann. The bigger picture of public health messaging Certain health issues can be Pechmann and her colleagues’ research offers a path correlated to specific ethnic and for improving diversity in health-based interventions. racial groups. For example, Latinx The COVID-19 pandemic exemplifies the importance of communities suffer from increased public health messaging, which has instances of diabetes, while been used to promote preventative Black communities have a higher “Pechmann’s novel measures like masks and social risk of death from COVID-19. “We distancing. “Public health is have to reach out to these subgroups,” approach combined suffering,” says Pechmann. “Health Pechmann says. communications are non-existent right census data, ZIP codes To reach specific communities, health now. We’ve been discredited, and communicators use “precision health” we’re horrified.” and health behavior data or “precision medicine.” They identify She points to the fact that, when a which group faces the greatest need to get around Facebook’s vaccine eventually becomes available, and target accordingly. Precision half of respondents say they won’t get medicine is a relatively new concept, limitations.” it. The team’s research can be used and researchers have struggled to turn to target groups that aren’t responsive theory into practice. or are known to harbor suspicions about messaging In ZIP code targeting, Pechmann hopes that her work targeting their community. has changed the game. “There are communities that are “We can use this to reach them,” says Pechmann. “It suffering at higher rates,” says Pechmann. “They should takes continued exposure to the same message, over be targeted, but they aren’t. We don’t even need different and over again. They need to see the message a lot ads or to spend more money. We just need to hit them more before they’ll respond.” more where they live.”

Connie Pechmann is a professor of marketing at the Merage School. She studies the effects of advertising, social media, product labeling, brand names and retail store locations on consumers. Professor Pechmann has received numerous grants and more than $1.5M to study youths’ responses to pro- and anti-smoking ads and product placements in movies. Her research persuaded movie studios to place anti-smoking ads on movie DVDs if the movies target youth and depict smoking. She is currently studying how to form effective online communities on Twitter for smoking cessation funded by a $2.5M R01 grant from NIH.


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How Online Job Posting Data Could Change the Game for Investors by Keith Giles



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Despite the inherent value of human capital, publicly traded companies are not required to make many disclosures about it. Most investors are largely unaware of a key indicator of a firm’s future growth potential: online job postings. Information about postings is hard to gather, making it accessible only to a select few. If postings data were readily available, more investors could gain new insights into growth trends.


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In their paper, Are Online Job Postings Informative to Investors?, forthcoming in Management Science, Terry Shevlin and Ben Lourie, both professors at the UCI Paul Merage School of Business, together with Elizabeth Gutierrez of Universidad de Chile and Alexander Nekrasov of University of Illinois at Chicago, propose that investors could use a company’s daily online job postings to predict future growth. Typically, job disclosures only cover key executives and annual head counts. “There’s no information about human capital in financial statements,” says Lourie, “even though it’s a very important asset for the firm.” The lack of human capital reporting creates a blind spot for the average investor. “Since employees are very important to the value creation of the firm, we were curious about what sorts of information could be found to help us determine the valuation of the firm more accurately,” says Lourie.

They were surprised by how strong the correlation turned out to be. This revelation confirmed that the human capital data was already a valuable resource for many investors. “It is highly likely that some group has informed certain investors about this type of information outside of what they normally have access to,” says Shevlin.

Historical data support this conclusion. It is unlikely that online job postings were available to investors to investors until around 2013. Looking at the period before data became more available, the team found less market reaction around daily job postings, and delayed reaction to firm “Business media outlets growth. After 2013, the correlation between daily job postings and market are drawing upon job movement became stronger.

postings data to evaluate

In the midst of a global pandemic, the pandemic’s impact business media outlets are drawing upon job postings data to evaluate the on individual firms and pandemic’s impact on individual firms and entire industries. “For example, a Sorting the wheat from the chaff entire industries.” lot of companies that have recently To aid their data collection, Shevlin and gone bankrupt showed a reduction Lourie used job postings data from in online job postings just before LinkUp, which has collected job posting data for the filing bankruptcy. We can see right now that many past decade. “With this data, we can see how many job retail companies are hurting, but large tech companies postings are available every day, which tells you if the are doing very well, and their job postings are on the company is hiring more or less every day,” says Lourie. rise,” Lourie says. He adds that unlike other types of To dig deeper, they needed to distinguish postings for information, job posting data are immediately available. replacement employees from those tied to growth. . . and for ordinary investors, too? related positions. As Shevlin explains, “If a job listing is for replacement, then the signal is different than for new Absent disclosure requirements, an individual investor jobs or growth-related hiring. So, if we compare those is unlikely to have access to postings data, giving hiring numbers to the past year’s sales growth this is institutional investors a big advantage. Individual an indication that those job postings are growth-related. investors lack the resources of institutions, which Also, if we compare the number of employees year-overcan afford to gather the information themselves or year we can see if the firm is adding new headcount or pay a third-party provider. The result is an obvious basically staying the same.” disadvantage for average investors.

A tool for institutional investors . . . The team was expecting to see a correlation between a firm’s daily job postings and changes in stock price. 8


Shevlin thinks the SEC may be moving toward a shift in policy. “Our research shows that online job postings are a strong leading indicator that investors can use to

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determine future performance. The SEC wants a level playing field for every investor. So, eventually this data might soon become a required disclosure to eliminate the disadvantage currently experienced by the average retail investor who doesn’t have easy access to this level of detail.”

Shevlin and Lourie hope their work contributes to the ongoing conversation about public company transparency and investor information. As more investors become aware of how important this data can be, the tide may turn in favor of rules to make job postings data more readily available for everyone, everywhere.

Terry Shevlin is a professor of accounting, Paul Merage chair in business growth and associate dean of research and doctoral programs at the Merage School. He earned his PhD from Stanford University in 1986 and joined the faculty at the University of Washington where he worked for 26 years until joining UCI in 2012. He has served as editor on three academic journals and on numerous editorial boards. He has published over 45 articles in the very top accounting and finance journals. His research interests are broad and include the effect of taxes on business decisions and asset prices, capital markets-based accounting research, earnings management, employee stock options, research design and statistical significance testing issues. Ben Lourie is an assistant professor of accounting at the Merage School. His research interests are broad and include financial reporting and disclosure, capital markets, financial analysts and human capital. His work examines, among other issues, equity analysts’ conflicts of interest, psychological biases and the informativeness of human capital measures. Lourie has published in top-tier journals such as The Accounting Review, Journal of Financial Economics, Management Science, Review of Accounting Studies and Review of Finance. His research has been covered by the Wall Street Journal, Financial Times, Business Insider, Bloomberg and International Business Times. He has taught at the master and PhD levels. He currently teaches financial statement analysis and SAS and STATA boot camp. Lourie earned his PhD from the UCLA Anderson School of Business and his bachelor’s degree in economics from Tel Aviv University. He worked as a senior consultant in Deloitte Management Consulting. RESEARCH IN ACTION

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Can Photos of Loved Ones Improve Ethics in the Workplace? by Drew Farrington

Not all unethical workplace behavior rises to Bernie Madoff or Enron levels. Smaller transgressions, like padding expense reports or stealing office supplies, are far more common. It’s easy to excuse, ignore, and even justify these minor breaches of ethics, but in aggregate they can cause measurable financial damage. Businesses can use symbols in the physical environment to nurture a stronger ethical sense within the workforce.



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Chris Bauman, associate professor at the UCI Paul Merage School of Business, recently published a new study on how environmental cues in the workplace can affect behavior. In Show Me the … Family: How Photos of Meaningful Relationships Reduce Unethical Behavior at Work, Bauman, along with colleagues Ashley Hardin from Olin Business School at Washington University in St. Louis and David Mayer from the Ross School of Business at the University of Michigan, report the results of their study of how photos of family members and other loved ones can foster ethical behavior in the workplace. The piece will be published in the November issue of Organizational Behavior and Human Decision Processes.

Small transgression, big losses Bauman and his team note that “organizations lose an estimated five percent of annual revenue as a result of employee fraud.” The fraud they’re talking about is a far cry from large-scale, headline-making corporate scandals. Rather, their study looks at smaller ethical violations like padded expense reports, swiped boxes of pens or dips into the petty cash box. Perhaps because they are small scale, these types of ethical violations get little attention, but they can have significant financial impacts.

“I’d like to think most people aren’t interested in soaking others for millions of dollars,” says Bauman. “We can all agree that’s pretty awful.” The vast majority of unethical workplace events could be considered mundane by some. “None of us are angels,” says Bauman. According to Bauman, more than a few working people ask questions like: “Is it really that bad if I expense $18 for lunch if my actual cost was $8? After all, I easily could have ordered a more expensive item.” Bauman says people tend to excuse themselves when they commit minor instances of wrongdoing. “Many people are pretty good at doing mental gymnastics that exonerate themselves from guilt and justify their low-value, high-frequency micro transgressions, even though, when added up, these transgressions do have an impact on the organization.”

A picture-perfect workspace Bauman and his colleagues based their work on an emerging area of research that explores how symbols in people’s environment affects social behavior and decision making.

“Research on ethical behavior has traditionally emphasized the influence of individuals’ traits and “The study looks at how subtle cues in the characteristics and the social relations among physical environment can snap people out of people in a situation,” this way of thinking and lead them to apply a says Bauman. “What’s different about our broader perspective that incorporates more of research is that we look at cues in the physical who they are outside of the office.” environment.”

In a business-related setting or situation, it is common for people to get in the habit of examining situations through an economic lens, says Bauman. Much of the time, this “economic schema” is appropriate for the workplace, but prior research shows that this mindset also prompts people to exhibit a greater propensity to lie, cheat, steal and be less compassionate. The study looks at how subtle cues in the physical environment can snap people out of this way of thinking and lead them to apply a broader perspective that incorporates more of who they are outside of the office. 12


They investigated how the presence of photos “decreases the hegemony of an economic schema in people’s minds, which in turn decreases their propensity to commit unethical behavior.” Bauman explains that people make a simple cognitive connection. “Seeing pictures of loved ones reminds you who you are or want to be outside of work, which is just one aspect of your life,” he says.

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Putting theory into practice A company’s physical environment is especially intriguing to scholars and practitioners because organizations have considerable control over their spaces. Identifying features that inhibit unethical behavior could lead to interventions that are beneficial for employees and organizations alike. In a field survey and laboratory experiments, the researchers observed participants as they made financial decisions. In the lab, participants completed expense reports with the possibility of inflating expenses to receive extra payment, mimicking real-life incentives. In the tests, when photos of loved ones were present, unethical behavior was noticeably muted. “Pictures of close relationships tend to squelch unethical acts,” says Bauman. “The pictures remind people of aspects of themselves other than self-interest.” If including photos of family at work can inhibit an economic schema and decrease unethical behavior, it stands to reason that working from home may have an even stronger effect. It turns out that “work-life balance” is more than a trendy catchphrase. “Our studies suggest that a little work-life integration can be healthy for ethical decision making,” says Bauman.

Moving the needle “Displaying photos of loved ones at work isn’t going to outright end unethical behavior,” says Bauman. “Our studies suggest the needle moves a little bit when people have those reminders available. However, the

bigger takeaway is that people’s physical environment can influence their ethical decision making and behavior.” Organizations that want to nurture a more ethical workplace, then, should pay attention to their physical environments. “The goal of our research is not to tell companies that every employee should have three pictures of loved ones taped to their monitor,” says Bauman. “Instead, companies should realize that how they create their workspaces has implications for how people think, feel, and ultimately act.” Photos are a small example of how people personalize their workspaces. Companies should also consider the impact of other symbols like performance awards, degrees, and certifications. “What is rewarded by companies and the message of who people ought to be when they’re at work says something about the values that a company promotes,” says Bauman.

Chris Bauman is a professor of organization and management at the Merage School. His research addresses how people make sense of and respond to their social environment, including the individuals, groups and organizations with whom they interact. One line of his research focuses on how individuals determine issues of ethics and fairness. This work includes studies of individual decision making, group diversity and corporate social responsibility. Other research examines information processing in negotiation and its implications for tactics that can increase individual or mutual gains.


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Is Uber Changing the Fortunes of its Drivers for the Better? by Keith Giles

New peer-to-peer platforms have enabled the development of a robust sharing economy. This emerging model allows people to share underutilized assets such as space, cars, tools, goods or specialized skills outside of traditional economic systems. Because it is changing so quickly, researchers have struggled to understand the sharing economy’s impact on consumers, workers, industries and society at large.



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In their paper, The Impact of the Sharing Economy on Household Bankruptcy, Tingting Nian and Vijay Gurbaxani of the UCI Paul Merage School of Business, together with Anthony Zhu of T. Rowe Price, take a deeper dive into how the emergence of Uber has influenced the number of personal bankruptcy filings in counties where it has been introduced. The paper is forthcoming from Management Information Systems Quarterly.

Just how good is the sharing economy? Nian was inspired to study the sharing economy after

she started using Uber herself. “I think it was around 2015 when I first used Uber. I would often talk with the drivers and almost everyone said they had started to drive in order to make ends meet,” says Nian. “This is the real appeal for many who just need a flexible job opportunity. Many drive for Uber as a way to supplement their income, to pay for food, utilities, pay their bills and so forth.” One goal was to explore whether the sharing economy has delivered a net positive for communities. “Obviously we know that the sharing economy has exploded over the last few years,” says Gurbaxani, “but the broader RESEARCH IN ACTION

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discussion of whether this growth is good or bad for the economy— or for taxi drivers or hotel industry employees—has yet to be fully explored. Our role is to study these things and to use science and data to measure the impact.”

reductions in other types of consumer defaults such as credit card, auto loans and mortgage delinquencies,” says Nian. As part of their study, the authors also explored the heterogeneous impact Uber has had across various population types. “We looked at whether the more affluent areas where Uber was introduced experienced greater or lesser bankruptcy rates,” Nian says. “What we found was that the counties that were economically disadvantaged experienced a greater economic impact compared to the more affluent counties. In other words, counties with higher unemployment rates, higher poverty ratios and lower personal income per capita experienced a much greater impact from Uber’s entry.”

When they began their study, Nian and Gurbaxani weren’t sure whether Uber’s impact on local economies was significantly positive. “We knew consumers were A bright future for the sharing economy? happy,” Nian says. “People can get a ride at all hours Beyond the obvious financial benefits provided to of the day or night. But we weren’t sure how the shared households there still remains the question of whether economy was impacting the drivers. If some people the sharing economy is a temporary were expecting Uber to provide a phenomenon or a sign of things to permanent income, for example, that “We found that driving come. “Every time you disrupt the expectation might lead some of them economy there are always going to overspend and fall into a debt trap. Instead, we found that driving for Uber for Uber actually reduced to be winners and losers,” says Gurbaxani. “Scooter, bike and car actually reduced their financial risk and their financial risk and sharing companies are disrupting improved their economic stability.” improved their economic the transportation industry, but many The stories bankruptcies tell of them have failed to make a profit. By using data from Uber and other That means venture capitalists are still stability.” sources, the authors sought to answer financing much of their success and a few specific questions. The team taking a very long view of how it might began with bankruptcy filings data to measure how one day become profitable. A lot is still up in the air.” Uber impacted personal income and delinquency rates. As Uber and other sharing economy businesses expand Because Uber’s entry into specific markets is easy to internationally, their long-term success starts to look trace, Nian and Gurbaxani could compare bankruptcies even brighter. “I think the future of the sharing economy and delinquencies before and after its entry. is going to be huge,” says Gurbaxani. “Bottom line: What they discovered was that Uber’s entry into a county made a significant impact. “We found that the rate of Chapter 7 personal bankruptcy filings was reduced by a quarterly rate of 3.26% after Uber’s entry.” says Nian. A less significant impact was also visible in Chapter 13 bankruptcy filings. “There were also



I think these new businesses are creating a lot of innovation and value worldwide.”

More options and better chances One reason for the global success of the sharing model could be the expanded efficiencies provided to

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consumers. “Many underutilized assets have now become a reliable source of income,” says Nian. “For those who don’t have or can’t afford these assets, they don’t need to save money to purchase a car because they can rent the use of someone else’s vehicle for an affordable price.”

“The question is not whether it’s the best job in the world but whether

says. “The question is not whether it’s the best job in the world but whether or not it’s a viable option for families to survive.”

The right job for right now

In 2018, over half a million people were driving for Uber. The average Uber to survive.” driver only works for six months or less. Some drive to supplement their income, while others drive to afford a special luxury. The emphasis on short-term success is what many sharing economy businesses have been banking on. Driving for Uber may not be a career path, but it can be a lifeline for those who need extra cash.

or not it’s a viable option

While the debate concerning the for families viability and longevity of these shared economy businesses continues to rage, one thing is clear: “Our research demonstrates that there is a positive economic impact,” Gurbaxani

Nian and Gurbaxani are hopeful that their work will contribute to the ongoing conversation about the social benefit of Uber and other sharing economy businesses. Their research suggests that Uber provides a benefit where it really counts and that’s something many are driving all the way to the bank.

Tingting Nian is assistant professor of information systems at the Merage School. Her research interests include the sharing economy, social media and branding, open innovation in online communities and labor markets. Nian received her doctoral degree in information systems at Stern School of Business, New York University, and her BS in information systems from School of Economics and Management, Tsinghua University in Beijing, China.

Vijay Gurbaxani is founding director of the Center for Digital Transformation and Taco Bell professor of information technology and computer science at the Merage School. His research interests are at the intersection of business strategy and digital technologies. He authored the book, Managing Information Systems Costs, and has published numerous articles in premier academic journals including MIS Quarterly, Information Systems Research and Management Science. Gurbaxani received his PhD from the William E. Simon School of Business, University of Rochester. RESEARCH IN ACTION

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Research Abstracts Latest Published Work by Merage School Faculty Members – August 2019-2020

Accounting Professor Joanna Ho Title: “Government Regulation, Executive Compensation and Risk-Premium-Related Derivatives Usage: Evidence from China” Co-authors: Lingsha Cheng and Ruijun Zhang Accepted at: China Accounting and Finance Review This paper examines how executive pay-performance sensitivity (PPS) affects the relationship between derivatives usage and firm risk and whether this effect is conditional on government regulation. Using a sample of Chinese-listed companies over the period 2008 to 2015, we observe that performance-based executive compensation contracts have a U-shaped effect on the relationship between derivatives usage and firm risk. Further analyses show a negative relationship between executive compensation and risk-premium-related derivatives usage when the government heightens its regulations. This suggests government regulation can effectively complement executive compensation contracts to lower firm risk through derivatives usage. The results are robust after we address endogeneity concerns and a battery of sensitivity tests. Our findings not only add to the literature on derivatives usage and corporate governance but also have policymaking implications for other developing countries.

Professor Terry Shevlin Title: “Corporate Tax Avoidance and Debt Costs” Co-authors: Oktay Urcan and Florin Vasvari Accepted at: Journal of the American Taxation Association We use path analysis to investigate how corporate tax avoidance is priced in bond yields and bank loan spreads. We find that approximately one half of the total effect of tax avoidance on bond yields is explained through the negative effect of tax avoidance on future pre-tax cash flow levels and volatility and, to a lesser extent, lower information quality. The effects of these mediating variables are much less pronounced for bank loan spreads. The results of additional cross-sectional analyses indicate that, relative to bond investors, banks are able to reduce information asymmetry problems more effectively, given their access to firms’ private information and greater ability to monitor borrowers.



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Professor Terry Shevlin and Doctoral Candidate Aruhn Venkat Title: “Does Public Country-by-Country Reporting Deter Tax Avoidance and Income Shifting? Evidence from the European Banking Industry A Discussion” Accepted at: Contemporary Accounting Research Joshi, Outslay and Persson (2020) examine EU multinational banks’ tax-motivated income shifting within financial affiliates following a requirement that banks report country by country financial results for their financial affiliates. They find reduced income shifting within financial affiliates consistent with mandated disclosures altering banks shifting behavior. They also examine overall tax avoidance and conclude banks did not change their overall tax avoidance. We discuss how this paper fits into the broad tax literature through the lens of the Scholes-Wolfson framework: non-tax costs, shifting income from one pocket to another and tax avoidance. We also contextualize the paper in the broad literature on the effects of mandated accounting disclosure (e.g. lease accounting, pension accounting and OPEB) and the more specific literature on the effects of mandated tax disclosures. We then provide some specific comments related to the paper focusing on the setting, reasons why we would expect changes in income shifting, problems with the data, a discussion of empirics, possible crosssectional predictions and a discussion of the role of control samples in a differencein-differences design. We conclude with a brief discussion of the policy implications assuming one takes the results at face value, which we caution against.

Professor Siew Hong Teoh Title: “Opportunity Knocks But Once: Delayed Disclosure of Financial Items in Earnings Announcements and Neglect of Earnings News” Co-authors: Yifan Li PhD ’17 and Alex Nekrasov Accepted at: Review of Accounting Studies We define a delayed disclosure ratio (DD) as the fraction of 10-Q financial statement items that are withheld at the earlier quarterly earnings announcement. We find that higher DD firms have a greater delay in investor and analyst response to earnings surprises: (i) the fraction of total market reaction to quarterly earnings news realized around the earnings announcement (after the 10-Q filing) is smaller (greater), and (ii) analysts are more likely to defer issuing forecasts from immediately after the earnings announcement to after the 10-Q filing. Consistent with our limited attention model predictions, the response catch-up associated with DD is incomplete, even after the delayed items are fully disclosed at the 10-Q filing date, and persists until the next earnings announcement date. The return reaction to earnings news over the entire quarter does not vary with DD, so differences in earnings informativeness do not


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explain the DD effect. Our findings suggest the importance for the timing of disclosures to be coincident with the focal periods—at earnings announcement dates—when investors and analysts are paying the most attention to mitigate limited attention effects.

Professor Chenqi Zhu Title: “Do Social Connections Mitigate Hold-Up and Facilitate Cooperation? Evidence from Supply Chain Relationships” Co-authors: Sudipto Dasgupta and Kuo Zhang Accepted at: Journal of Financial and Quantitative Analysis We show that prior social connections can mitigate hold-up in bilateral relationships and encourage relation-specific investment and cooperation when contracts are incomplete. We examine vertical relationships and show that relation-specific innovative activities by suppliers increase with the existence and strength of prior social connections between the suppliers’ managers and board members and those of their customers. To establish causality, we exploit connection breaches due to manager/ director retirements or deaths and find that innovation drops for affected suppliers after the departure of socially connected individuals relative to unaffected suppliers. Our work sheds light on how social connections can shape the boundary of the firm.

Finance Professor David Hirshleifer Title: “Mood Betas and Seasonalities in Stock Returns” Co-authors: Danling Jiang and Yuting Meng Accepted at: Journal of Financial Economics Existing research has documented cross-sectional seasonality of stock returns—the periodic outperformance of certain stocks during the same calendar months or weekdays. We hypothesize that assets’ different sensitivities to investor mood explain these effects and imply other seasonalities. Consistent with our hypotheses, relative performance across individual stocks or stock portfolios during past high or low mood months and weekdays tends to recur in periods with congruent mood and reverse in periods with noncongruent mood. Furthermore, assets with higher sensitivities to aggregate mood—higher mood betas—subsequently earn higher returns during ascending mood periods and lower returns during descending mood periods.



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Professors David Hirshleifer and Siew Hong Teoh Title: “There is Little Evidence that the Industrial Revolution was Caused by a Preference Shift” Accepted at: Behavioral and Brain Sciences The idea, based on Life History Theory, that the Industrial Revolution was a positive feedback process wherein prosperity induced prosperity-promoting preference shifts, is just an intriguing speculation. The evidence does not distinguish this explanation from simple alternatives. For example, increased prosperity may have freed up time for individuals to engage in innovative activity, and increased the benefits from doing so.

Professors David Hirshleifer and Ben Lourie Title: “First Impression Bias: Evidence from Analyst Forecasts” Co-authors: Thomas G. Ruchti and Phong Truong Accepted at: Review of Finance We present evidence of first impression bias among finance professionals in the field. Equity analysts’ forecasts, target prices and recommendations suffer from first impression bias. If a firm performs particularly well (poorly) in the year before an analyst follows it, that analyst tends to issue optimistic (pessimistic) evaluations. Consistent with negativity bias, we find that negative first impressions have a stronger effect than positive ones. The market adjusts for analyst first impression bias with a lag. Finally, our findings contribute to the literature on experience effects. We show that a set of professionals in the field, equity analysts, apply U-shaped weights to their sequence of past experiences, with greater weight on first experiences and recent experiences than on intermediate ones.


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Professor David Hirshleifer Title: “Evolutionary Dynamics of Culturally Transmitted, Fertility-Reducing Traits� Co-authors: Dominik Wodarz, Shaun Stipp and Natalia Komarova Accepted at: Proceedings of the Royal Society B: Biological Sciences Human populations in many countries have undergone a phase of demographic transition, characterized by a major reduction in fertility at a time of increased resource availability. A key stylized fact is that the reduction in fertility is preceded by a reduction in mortality and a consequent increase in population density. Various theories have been proposed to account for the demographic transition process, including maladaptation, increased parental investment in fewer offspring and cultural evolution. None of these approaches, including formal cultural evolutionary models of the demographic transitions, have addressed a possible direct causal relationship between a reduction in mortality and the subsequent decline in fertility. We provide mathematical models in which low mortality favors the cultural selection of low fertility traits. This occurs because reduced mortality slows turnover in the model, which allows the cultural transmission advantage of low fertility traits to out-race their reproductive disadvantage. For mortality to be a crucial determinant of outcome, a cultural transmission bias is required where slow reproducers exert higher social influence. Computer simulations of our models that allow for exogenous variation in the death rate can reproduce the central features of the demographic transition process, including substantial reductions in fertility within only 1 to 3 generations. A model assuming continuous evolution of reproduction rates through imitation errors predicts fertility to fall below replacement levels, if death rates are sufficiently low. This can potentially explain the very low preferred family sizes in Western Europe.



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Professor David Hirshleifer Title: “Presidential Address: Social Transmission Bias in Economics and Finance” Accepted at: Journal of Finance I discuss a new intellectual paradigm, social economics and finance: the study of the social processes that shape economic thinking and behavior. This emerging field recognizes that people observe and talk to each other. A key, underexploited building block of social economics and finance is social transmission bias: a systematic directional shift in signals or ideas induced by social transactions. I use five “fables’’ (models) to illustrate the novelty and scope of the transmission bias approach and offer several emergent themes. For example, social transmission bias compounds recursively, which can help explain booms, bubbles, return anomalies and swings in economic sentiment.

Professor Chong Huang Title: “Credit Rating Inflation and Firms’ Investments” Co-author: Itay Goldstein Accepted at: Journal of Finance We analyze credit ratings’ effects on firms’ investments in a rational debt-financing game that features a feedback loop. The credit rating agency (CRA) inflates the rating, providing a biased but informative signal to creditors. Creditors’ response to the rating affects the firm’s investment decision and credit quality, which is reflected in the rating. The CRA might reduce ex-ante economic efficiency, which results solely from the feedback effect of the rating: the CRA assigns more firms high ratings and allows them to gamble for resurrection. We derive empirical predictions on the determinants of rating standards and inflation and discuss policy implications.

Professor Zheng Sun Title: “Reaching for Dividends” Co-author: Hao Jiang Accepted at: Journal of Monetary Economics Interest rates dived into uncharted territories for an extended period after the financial crisis. What is the impact on investor behavior and asset prices? We find that when interest rates fall, flows into income-oriented equity funds increase, with higher dividend-yielding funds attracting more inflows after controlling for fund returns. Responding to their incentives, income fund managers tend to aggressively overweigh high dividend stocks in a low-rate environment. This behavior of “reaching for dividends” generates market impact: high dividend stocks tend to have higher prices when interest rates fall, and lower excess returns when interest rates subsequently normalize. RESEARCH IN ACTION

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Professor Yuhai Xuan Title: “More Than Money: Venture Capitalists on Boards” Co-authors: Natee Amornsiripanitch and Paul A. Gompers Accepted at: The Journal of Law, Economics, & Organization We explore patterns of board structure and function in the venture capital industry, identifying factors that influence whether venture capitalists receive a board seat and whether they take action to help portfolio companies in which they invest. In a comprehensive sample of U.S.-based and non-U.S.-based companies, we find that a venture capital firm’s prior relationship with the founder, lead investor status, track record, network size and geographical proximity to the portfolio company are positively correlated with its likelihood of taking a board seat in an investment round. When venture capital investors serve on the board, portfolio companies tend to recruit managers and board members from these investors’ network and are more likely to exit via relationship-based acquisitions. These patterns are particularly strong for successful and well-connected venture capitalists on the board.

Information Systems Professor Sanjeev Dewan Title: “Distance and Local Competition in Mobile Geofencing” Co-authors: Ian Ho PhD ’16 and Chad Ho Accepted at: Information Systems Research This research studies the performance of geofencing, a practice where mobile users are targeted within a pre-defined virtual geographic boundary around an advertiser’s establishment. Drawing on the notion of the purchase funnel, we develop a two-stage hierarchical Bayesian model to examine consumer click and conversion responses. The analysis emphasizes the impact of distance (between the focal establishment of the geofence and a mobile user) and local competition (defined in terms of the number of alternative establishments in the consumer vicinity zone) in geofencing. A unique data set of geofencing ad impressions is collected from one of the largest location-based marketing agencies in the United States. The results suggest that local competition matters in the click stage, while distance influences the propensity of conversion. Quantitatively, one additional competitor in the consumer vicinity zone lowers the click-through rate by 1.03%, whereas a one-mile increase in distance results in a 17.64% decrease in the conversion rate. We also find a significant interactive effect, whereby a higher degree of local competition amplifies the negative impact of distance on the likelihood of conversions. Additionally, product differentiation



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ameliorates the effects of distance and local competition, while these effects are found to be more prominent during office working hours. This study discovers the stagevarying roles of distance and local competition along the customer journey and offers new directions for leveraging locations for more effective mobile targeting.

Professors Vidyanand Choudhary and Mingdi Xin Title: “Sequential IT Investment: Can the Risk of IT Implementation Failure be Your Friend?” Co-author: Zhe Zhang PhD ’14 Accepted at: Information Systems Research An extensive literature has studied the benefits for a firm to be the first to invest in innovative technologies such as Information Technologies (ITs). However, investment in innovative technologies faces high levels of uncertainty. How would such uncertainty affect a pioneering firm’s incentive to invest? Do late adopters benefit from information about the pioneer’s investment? In this paper, we investigate these questions in a context where firms engage in sequential investment in an innovative IT. This paper differs from prior literature in two aspects: First, IT adoption is nonexclusive and available to all client firms. Second, IT implementation can fail. In this case, a late adopter may have an information advantage since he can make investment decisions contingent on knowledge about the early adopter’s IT investment and implementation outcome. We use a standard Hotelling model of duopoly competition to examine firms’ incentive to sequentially invest in IT given the risk of IT implementation failure. Our results show that the probability of IT implementation failure impacts firms’ investment incentives and profit through three distinct effects: the first-mover advantage mitigation effect, competition mitigation effect and uncertainty-driven cost-based differentiation effect, although these three effects may drive the firms’ investment and profit in opposite directions. The follower’s knowledge about the leader’s IT investment level before making his own IT investment decision gives the leader a first-mover advantage and the follower a disadvantage. In contrast, the follower’s knowledge about the leader’s IT implementation outcome can benefit both the leader and the follower. Finally, we find that a spaced-out IT investment schedule in which the follower makes his investment decision after the leader’s IT investment level and implementation outcome are known leads to the highest industry-wide IT investment and social surplus.


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Professor Mingdi Xin Title: “Open Source Adoption Strategy” Co-author: Evangelos Katsamakas Accepted at: Electronic Commerce Research and Applications Open innovation in the form of open-source software (OSS) has been a transformative force in the software industry and beyond. The growth of open source has created new ways to develop, distribute and adopt software in organizations. Despite the associated impressive growth of open source research, a rigorous analytical examination of open-source adoption in organizations constitutes a gap in the literature. This article fills this gap by providing insights toward a comprehensive open-source strategy. It develops a game-theoretic analytical model to explain when organizations adopt open source software applications and platforms, and what the implications are. The analysis characterizes conditions under which organizations adopt open source software, and examines whether these adoption patterns are socially beneficial. The article shows that open-source adoption depends crucially on organizational IT capabilities, network effects and the fit of OSS with the organizations’ application needs. The model predicts that firms may sometimes adopt a heterogeneous IT architecture that consists of open source and proprietary software. Moreover, the results suggest that open-source adoption is sometimes socially inefficient. Overall, this analysis contributes a nuanced understanding of the adoption of open innovation in the form of OSS that should be useful to managers and policymakers involved in related decisions. The article concludes with practical managerial recommendations on formulating a comprehensive open-source strategy.

Marketing Professor Imran Currim Title: “Managerial Metric Use in Marketing Decisions Across 16 Countries: A Cultural Perspective” Co-authors: Ofer Mintz PhD ’11, Jan-Benedict E.M. Steenkamp and Martijn de Jong Accepted at: Journal of International Business Studies Research on metrics is consistently designated a priority by academics and practitioners. However, less is known about how culture and cross-national differences can potentially impact metric use, which is theoretically and managerially limiting. This work develops a model that examines national and organizational cultural antecedents while controlling for the decision setting. Testing the model on data collected from 4,384 managerial decisions from 1,637 firms in 16 countries, reveals both levels of culture are associated with metric use but each has varying effects. Our results enable



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multinational executives to better understand and increase managerial metric use across different cultures and settings.

Professor Connie Pechmann Title: “The Characteristics of Transformative Consumer Research and How it Can Contribute To and Enhance Consumer Psychology” Co-author: Brennan Davis PhD ’08 Accepted at: Journal of Consumer Psychology Three papers are published in this special section of Journal of Consumer Psychology on Transformative Consumer Research. Each paper offers simple and compelling insights about consumption and well-being based on solid empirical research and theory. The Mende, Nenkov, Salisbury and Scott paper on “Financial Inclusion” determines that disadvantaged consumers who live in banking deserts – which are not serviced by traditional banks – have relatively negative perceptions of traditional banks, but these consumers can be turned around if a bank adopts a communal financial orientation. The Haws, Dallas, Roberto, Liu and Cawley paper on “Any-Size-SamePrice” concludes that consumers are often induced by any-size-same-price offerings to buy oversized beverages, even when calories are posted, but these consumers can be deterred by stoplight warnings. In other words, much more powerful health cues than calories are needed to dampen enthusiasm for oversized beverages when offered at the same price as the smaller sizes. The Stornelli, Pereira and Vann paper on “Visual Perspectives” determines that motivating consumers to pursue health goals with third-person messages – which ask consumers to imagine watching themselves engaged in goal pursuit – can shift focus away from implementation (how will I do it?) toward deliberation (should I do it?), and reduce health goal pursuit if consumers do not strongly self-identify with the health goal.

Professor Connie Pechmann Title: “Facilitating Adolescent Well-Being: A Review of the Challenges and Opportunities and the Beneficial Roles of Parents, Schools, Neighborhoods and Policymakers” Co-authors: Jesse R. Catlin PhD ’12 and Yu Zheng Accepted at: Journal of Consumer Psychology Adolescents face exceptional challenges and opportunities that may have a lifelong impact on their consumption and personal and societal well-being. Parents, community members (schools and neighborhoods) and policymakers play major roles in shaping adolescents and influencing their engagement in consumption behaviors that are either developmentally problematic (e.g., drug use and unhealthy eating) or developmentally constructive (e.g., academic pursuits and extracurricular activities).


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In this paper, we discuss two main topics: (1) the challenges and opportunities that characterize adolescence, based primarily on research in epidemiology and neuroscience, and (2) the ways that parents, community members and policymakers can facilitate positive adolescent development, based on research from many disciplines including marketing, psychology, sociology, communications, public health and education. Our goal is to summarize the latest scientific findings that can be used by various stakeholders to help adolescents navigate this turbulent period and become well-adjusted, thriving adults.

Professor Connie Pechmann Title: “The Performance Effects of Creative Imitation on Original Products: Evidence from Lab and Field Experiments” Co-authors: Liangyan Wang, Brian Wu and Yitong Wang PhD ’11 Accepted at: Strategic Management Journal A market entrant often challenges the incumbent using creative imitation: the entrant creatively combines imitated aspects of the original with its own innovative characteristics to create a distinct offering. Using lab and field experiments to examine creative imitation in China, we find the effects of creative imitations on the originals depend on the creative imitation’s quality. We explore the underlying mechanisms, and show that including a low-quality creative imitation in the retail choice set increases satisfaction with and choice of the original, while a moderate-quality creative imitation does the opposite. Moreover, creative imitation affects consumers’ satisfaction with the original by influencing whether their experience with the original verifies their expectations. Our paper reveals creative imitation effects to help incumbent firms effectively address them.

Professor Connie Pechmann Title: “Creating Boundary-Breaking Marketing-Relevant Consumer Research” Co-authors: Simona Botti, Donna Hoffman, Robert Kozinets, Donald R. Lehmann, John G. Lynch, Jr., Deborah J. MacInnis and Vicki G. Morwitz Accepted at: Journal of Marketing Consumer research often fails to have broad impact on members of our own discipline, on adjacent disciplines studying related phenomena and on relevant stakeholders who stand to benefit from the knowledge created by our rigorous research. We propose that impact is limited because consumer researchers have adhered to a set of implicit boundaries or defaults regarding what we study, why we study it and how we do so. We identify these boundaries and describe how they can be challenged. We show that boundary-breaking marketing-relevant consumer research can impact relevant stakeholders (including academics in our own discipline and allied ones, and a wide range of marketplace actors including business practitioners, policymakers, the 28


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media, and society) by detailing five articles and identifying others that have had such influence. Based on these articles, we articulate what researchers can do to break boundaries and enhance the impact of their research. We also indicate why engaging in boundary-breaking work and enhancing the breadth of our influence is good for both individual researchers and the fields of consumer research and marketing.

Professor Connie Pechmann Title: “The Use of Web-Based Support Groups Versus Usual Quit-Smoking Care for Men and Women 21-59 Years Old: A Protocol for a Randomized Controlled Trial” Co-authors: Douglas Calder, Kevin Delucchi, Connor Phillips and Judith J. Prochaska Accepted at: Journal of Medical Internet Research Protocols Existing smoking cessation treatments are challenged by low engagement and high relapse rates, suggesting the need for more innovative, accessible and interactive treatment strategies. Twitter is a web-based platform that allows people to communicate with each other throughout the day right from their phone. This study aims to leverage the social media platform of Twitter for fostering peer-to-peer support to decrease relapse with quitting smoking. Further, the study will compare the effects of co-ed versus women-only groups on women’s success with quitting smoking.

Professor Connie Pechmann Title: “Broadcast and Self-Reported Exposure to Court-Ordered Corrective Statements on Cigarette Harm” Co-author: David S. Timberlake Accepted at: Preventive Medicine Reports In August, 2006, U.S. District Court Judge Gladys Kessler ordered four tobacco companies to disseminate court-approved corrective statements on five topics pertaining to health hazards of cigarette smoking. Based on the 2018 Health Information National Trends Survey (HINTS), approximately 50% of U.S. smokers viewed at least one corrective statement via television or newspaper during the first six months of the airings/publications (November 2017-April 2018). Using televised gross rating points (GRPs) and cross-sectional data from the 2018 HINTS (n=3,484) and 2019 HINTS (n=3,331), the current study extends previous ones by estimating broadcast reach/frequency and the moderating effect of survey year on smokers’ exposure to a corrective statement. The weighted percentage of participants who viewed a corrective statement was significantly greater in the 2019 versus 2018 HINTS for smokers (64.3% vs. 50.5%, X21df=5.85, p=.01), but not for non-smokers (39% in 2018/2019, X21df=.02; p=.88); this differential effect was evidenced by a significant interaction term (OR=2.0(1.2, 3.2), p<.001). This study also revealed that the televised reach of the corrective statements to the U.S. population (43.5 GRPs/43.5%) was


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comparable to the published estimate from the 2018 HINTS (40.6%). The frequency of exposure to any corrective statement in the first six months of televised airings was only .68 exposures/month, an estimate that does not meet CDC best practices. Yet, as evidenced by the significant interaction, it is likely that the addition of messages to tobacco company websites and cigarette package onserts may have contributed to smokers’ greater exposure to a corrective statement.

Professor Emeritus Alladi Venkatesh Title: “The Influence of Objects on Creativity” Co-authors: Steven Chen PhD ’09 and Jennifer Chandler PhD ’07 Accepted at: Creativity and Innovation Management This study is an examination of how objects can influence creativity. Through a qualitative in-depth inquiry involving 22 consumers, the study sheds light on how objects can inform, inspire and facilitate creativity. Specifically, the findings show that objects can physically inform and facilitate the creative process because of their material properties (i.e., colors, densities, masses, lengths and shapes) and their embeddedness in object–human interaction networks. Although object agency is initially latent and located in the materiality of objects, it is unlocked during object–human interactions, ultimately enhancing creativity. The findings highlight an overlooked role of objects in creative processes. Further, this study contributes to the existing corpus of creativity research, which attributes creativity mostly to human agency, as rooted in human personality, human social systems, and human collaborations. The study also extends and supports object agency and servicedominant logic discourses.

Operations and Decision Technologies Professor Luyi Gui Title: “Recycling Infrastructure Development Under Extended Producer Responsibility in Developing Economies” Accepted at: Production and Operations Management To tackle the severe pollution caused by electronic waste (e-waste), several developing countries have introduced e-waste legislation based on Extended Producer Responsibility (EPR). A major challenge to implement EPR in developing countries is the lack of formal recycling infrastructure. In this paper, we study if a collective form of EPR implementation where producers may jointly invest in recycling facilities can promote their incentives to do so. We develop a Nash bargaining model that captures



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the decision dynamics underlying joint recycling facility investment. We show that despite its advantage in reducing producers’ fixed investment costs, joint investment in the collective system may lead to a worse recycling infrastructure development outcome than independent investment in an individual system. This can particularly happen when the collective system involves products whose recycling costs are highly differentiated. We further show that cost sharing based on the principle of Individual Producer Responsibility (IPR) may undermine the recycling infrastructure development outcome in the collective system compared to simple proportional cost sharing rules. In practice, it is generally believed that IPR leads to better design incentives than proportional cost sharing rules. Accordingly, our result indicates that there exists a tradeoff between these two cost sharing rules, and promoting recycling infrastructure development via collective systems may come at the expense of design incentives and vice versa.

Organization and Management Professor Ming D. Leung Title: “The Impact Of Decision Aids On Adults Considering Hip Or Knee Surgery” Co-authors: Vanessa Hurley, Hector P. Rodriguez and Stephen M. Shortell Accepted at: Health Affairs Trials of decision aids (DAs) for shared decision-making (SDM) find that patients engaged in SDM tend to choose more conservative treatment for preference-sensitive conditions. We examine whether routine provision of DAs for hip or knee osteoarthritis was associated with reduced surgical utilization compared to a matched comparison group of patients. Data from patients with hip and knee osteoarthritis within ten High Value Healthcare Collaborative (HVHC) systems between 2012-2015 were analyzed to determine their likelihood of joint replacement surgery after being exposed to DAs prior to consultations for hip or knee osteoarthritis. Compared to matched comparison group patients, patients exposed to DAs had two and a half times the odds of undergoing hip replacement surgery and nearly twice the odds of undergoing knee replacement surgery. Health systems that use DAs for hip and knee osteoarthritis consultations should not expect reduced surgical utilization.


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Professor Ming D. Leung Title: “Strategic Redundancy in the Use of Big Data: Evidence from a Two-Sided Labor Market” Co-authors: Moshe A. Barach, Aseem Kaul and Sibo Lu Accepted at: Strategy Science In this study, we examine how firms use the big data capabilities of third-party platforms to find transaction partners. While use of the platform’s big data capabilities creates value by lowering search costs, firms may capture little of this value if they become entirely dependent on the platform. We therefore argue that firms will invest in strategic redundancy, i.e., they will continue to rely partly on their internal screening capabilities to identify partners so as to maintain their bargaining power relative to the platform. We further predict that this reliance on internal screening will be greater the lower the relative advantage of the platform’s big data capabilities and the more salient the threat to the firm’s bargaining power. We test these predictions in the context of an online labor platform, using a research discontinuity design to examine the effect of the platform’s recommendations on the firm’s decision to hire an applicant. Consistent with our theory, we find that firms’ use of the platform’s recommendations is lower in later stages of the hiring process, in larger sub-markets and for firms with greater experience on the platform. Our study thus sheds new light on how firms make use of (third-party) big data techniques, showing that firms may strategically choose to limit such use in order to maintain independence.

Strategy Doctoral Candidate Albert Ahn and Professor Margarethe Wiersema Title: “Activist Hedge Funds: Beware the New Titans” Accepted at: Academy of Management Perspectives Deploying more than $65 billion in capital globally and with more than 900 campaigns in 2018, activist hedge funds represent “the activist” in the capital market and are having a significant influence on corporate governance and strategy and even the ownership of companies. While finance scholars have focused on understanding what firms they target and the performance repercussions of their campaigns, management scholars have largely ignored this important constituent. Based on our extensive research on the context of hedge fund activism we provide a research agenda that articulates the opportunities for management scholars to conduct research on this important phenomenon. By shedding light on the dynamics of hedge fund activism, management scholars have the opportunity to provide greater clarity as to whether these activists are shareholder champions or whether they undermine the long-term strategic health of companies. 32


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Professor Philip Bromiley Title: “The Behavioral Theory of the (Community Oriented) Firm: The Differing Response of Community Oriented Firms to Performance Relative to Aspirations” Co-authors: Stephen J. Smulowitz and Horacio E. Rousseau Accepted at: Strategic Management Journal Combining insights from the behavioral theory of the firm (BTOF) with sociological research on local embeddedness, we propose that community oriented firms respond differently to performance relative to aspirations than noncommunity oriented firms. Community oriented firms develop long-term relations with local constituents and emphasize community goals. This orientation should buffer them from the risk-inducing effects of falling below financial aspirations, and encourage them to pursue community goals more intensely when exceeding financial aspirations. Using U.S. bank data from 2005-2013, we find that community orientation – exemplified by community-banks – attenuates the influence of performance below aspirations on risk taking, but amplifies the influence of performance above aspirations on community investments such as small business loans. We discuss implications for a sociologically-informed view of performance feedback processes.

Professor Philip Bromiley Title: “Some Problems in Using Prospect Theory to Explain Strategic Management Issues” Co-author: Devaki Rau Accepted at: Academy of Management Perspectives Prospect theory has had an immense impact on strategic management scholarship, stemming from an apparent belief that the theory leads to relatively straightforward general hypotheses relating performance and risk taking. We argue that the theory does not justify such general hypotheses. Specifically, we identify two sets of issues related to the application of prospect theory to strategic decisions. The first stems from an incomplete application of the core ideas in the theory – the value and weighting functions, reference points, and frame of reference – to firm decisions. The second set of issues arises from empirical and practical considerations. These include the availability of risk information in firms in a form that corresponds to the information used to develop prospect theory, the application of the theory to a level of analysis different from the one it was developed for, and the distinction managers make between risk and uncertainty. Prospect theory only leads to the predictions many claim it makes under restrictive assumptions that those deriving the predictions seldom if ever postulate. Furthermore, these restrictive conditions may not be plausible in the contexts examined. We conclude with some suggestions for when scholars might fruitfully apply prospect theory to explaining strategic issues. RESEARCH IN ACTION

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Professor Philip Bromiley Title: “The Challenges of March and Simon’s Organizations: Introduction to the Special Issue” Co-authors: Rouslan Koumakhov, Denise M. Rousseau and William H. Starbuck Accepted at: Journal of Management Studies March and Simon pushed the study of organizations into the mainstream of academic writing about business. We outline central ideas discussed by the book and its pioneering role in studying cognitive processes underlying boundedly rational human beings. Through their representational approach, March and Simon defined and explicated key mechanisms of individual and organizational decision-making. Organizations provided an empirically-based understanding of human behavior and coordination and set up core scientific criteria for creating the cumulative body of management and organization research. We summarize the papers presented in this special issue and point out contributions by organizations that have been understated, forgotten or ignored in management studies.

Professor Philip Bromiley Title: “A Behavioral Perspective of Search in Nonprofit Organizations: How Programmatic Performance Drives Fundraising Efforts” Co-authors: Horacio E. Rousseau and Pascual Berrone Accepted at: Academy of Management Annual Meeting Proceedings In this paper, we extend the BTOF to nonprofit organizations. Nonprofits hold both financial and higher-priority nonfinancial programmatic performance goals that relate to program spending directed to fulfill a social mission. We hypothesize that, while financial performance above aspirations decreases fundraising, programmatic performance above aspirations increases fundraising efforts. We also theorize that board size, environmental munificence and program-generated revenue influence the extent of fundraising as a response to attainment discrepancies. We test our hypotheses using a panel dataset of 12,382 U.S. nonprofits and find support for several of our predictions.

Professor John Joseph Title: “Organizational Structure, Information Processing and Decision Making: A Retrospective and Roadmap for Research” Co-author: Vibha Gaba Accepted at: Academy of Management Annals Beginning with Simon (1947)—and motivated by an interest in the effect of formal organizational structure on decision making—a large body of research has examined 34


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how organizations process information. Yet, research in this area is extremely diverse and fragmented. We offer a retrospective of past research to summarize our collective knowledge, as well as identify and advance new concerns and questions. In doing so, we identify three critical issues: a division between an aggregation perspective and a constraint perspective of structure; little focus on informational sources of conflict; and uneven treatment of the various stages of decision making. We then offer a roadmap for future research that elaborates the role of organizational structure in decision making. In this endeavor, we offer an ecological perspective of information processing that addresses the issues and provides opportunities to expand research in new directions.

Professor Luke Rhee Title: “March and the Pursuit of Organizational Intelligence: The Interplay between Bounded Rationality and Sensible Foolishness” Co-authors: Dylan Boynton and William Ocasio Accepted at: Industrial and Corporate Change March’s long and varied career in organization theory encompasses a variety of seemingly disparate themes from bounded rationality, to ambiguity and the garbage can model, to exploration and exploitation in organizations. We examine March’s diverse research trajectory and conclude that his different insights can be brought together under one common theme for his career: that both bounded rationality and sensible foolishness are necessary for the pursuit of organizational intelligence. Models of procedural rationality are insufficient because goals are unstable and inconsistent and causal ambiguity leads to myopic learning or worse. To explain the interplay of bounded rationality and sensible foolishness in organizations we explore their role in the interrelated processes of programming, monitoring, sensemaking, search and decision making.

Professor Margarethe Wiersema and Doctoral Candidate Albert Ahn Title: “Activist Hedge Fund Success: The Role of Reputation” Co-author: Yu Zhang Accepted at: Strategic Management Journal Given that hedge fund activism is having a major impact on firm’s strategic and financial decision-making, it is important to understand how these activist investors influence companies. An activist campaign is a highly disruptive event leading to considerable ambiguity and uncertainty as to what is likely to transpire. Given this information void, our study finds that the board and management respond based on the reputation of the activist investor that has taken a stake in the company. That activist investors with a reputation for being hostile are more successful may be a defensive response on the part of management in order to avoid the potential adverse consequences of a hostile campaign. This has implications for corporate governance and the fiduciary duty of the board. RESEARCH IN ACTION

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Appointments, Awards and Honors Professor Grace McLaughlin was honored with the 2020 Lecturer of the Year Award, presented by the Academic Senate Council on Teaching, Learning and Student Experience. This campus wide Celebration of Teaching Award is based on nominations from peers, colleagues and students.

Professor Connie (Cornelia) Pechmann was honored with the inaugural Academic Senate Special Award for Impact on Society and also the first AMAEBSCO Annual Responsible Research in Marketing Award presented by the American Marketing Association and EBSCO.

Welcome New Faculty Members Professor Patrick Bergemann Assistant Professor of Organization and Management Patrick Bergemann joins the Merage School as an assistant professor in the area of organization and management. Bergemann comes to us from the University of Chicago, Booth School of Business, where he served as an assistant professor since 2017. He received his BA in economics from University of Chicago and his PhD in sociology from Stanford University. He served as a postdoctoral research scholar for three years at Columbia Business School before working at Booth. Bergemann’s research focuses on when and why people report wrongdoing, and what leads



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individuals to report such behavior to the authorities. In particular, Bergemann focuses on the ways in which the institutional and social environment impacts whistleblowing and other types of reporting behavior. His research has been published in the American Journal of Sociology and the American Sociological Review. His book, Judge Thy Neighbor: Denunciations in the Spanish Inquisition, Romanov Russia, and Nazi Germany, was published by Columbia University Press. Â

Professor Travis Howell Assistant Professor of Strategy Travis Howell joins the Merage School as an assistant professor in the area of strategy. Professor Howell received a BA in accounting from Brigham Young University, Marriott School of Management and a PhD in strategy and entrepreneurship from the University of North Carolina at Chapel Hill, Kenan-Flagler Business School. His research examines the role of founders at multiple levels of analysis, including individual founders, founding teams and founder communities. Before coming to the UCI Paul Merage School of Business, Howell worked as a consultant at PwC focusing on the valuation of intangible assets (technology, customer relationships, trademarks, etc.). He also worked at two startups: IMSAR, a startup developing advanced radar technology, and Seasons, an attempt at re-inventing the grocery store.

Professor Frank MacCrory Assistant Professor of Teaching of Information Systems Frank MacCrory joins the Merage School as an assistant professor of teaching. MacCrory received his BS in communications and applied technology from Drexel University in 2004 and his PhD in management from the University of California, Irvine in 2012. He was a post-doctoral associate at MIT – Sloan School of Management from 2013-16 and is currently an assistant professor at Fordham University. His research focuses on the impact of information technology on the broader labor market, turnover among IT professionals, skill acquisition and labor mobility and platform enabled markets.


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