Matthew D. Shaffer - Faculty & Research - Harvard Business School
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Matthew D. Shaffer

Doctoral Student

Working Papers
  1. Governance Through Shame and Aspiration: Index Creation and Corporate Behavior

    Akash Chattopadhyay, Matthew D. Shaffer and Charles C.Y. Wang

    After decades of both de-prioritizing shareholders' economic interests and low corporate profitability, Japan introduced the JPX400 in 2014. The index highlighted the country's “best-run" companies by annually selecting the 400 most profitable among Japan's large and liquid firms. Index-inclusion incentives led firms to increase ROE proportionally by 41%, though firms did not realize significant capital-market or product-market benefits from inclusion. Status incentives contributed to the observed performance improvement. Back-of-the-envelope estimates suggest that JPX400-inclusion incentives accounted for 16% (20%) of the growth in aggregate earnings (market capitalization) over our sample period. Stock indexes can transform longstanding behavior via non-pecuniary channels.

    Keywords: JPX-Nikkei 400 index; corporate governance; Status incentives; return on equity; capital efficiency; Social Norms; Motivation and Incentives; Corporate Governance; Behavior; Investment Return; Status and Position; Japan;


    Chattopadhyay, Akash, Matthew D. Shaffer, and Charles C.Y. Wang. "Governance Through Shame and Aspiration: Index Creation and Corporate Behavior." Harvard Business School Working Paper, No. 18-010, July 2017. (Revised June 2018.)  View Details