Placement
Students on the Job Market
Students on the Job Market
Please note this page will be updated throughout the fall.
Accounting & Management
Wilbur Chen
Abstract:
- Financial Analysts' Interest in Digitization and AI Investment in Non-IT Firms
- I use analysts' digital questions in quarterly earnings conference calls to study how they evaluate digital investments made by non-IT firms and to examine the relationship between their views and future investment in advanced digital technologies -- artificial intelligence (AI). Consistent with analysts functioning as effective information analyzers, determinant analyses show that analysts’ interest in digitization is based on factors that drive greater digitization, namely, (1) whether the firm is more likely to be suited to AI technologies and (2) whether the firm has executives or board members with experience in digital technologies. Analysts also appear to play a monitoring role when firms invest in AI at abnormally high-levels, as analysts ask more negative and competition-related questions in these situations. On the relationship between analysts' interest in digitization and future AI investment, I find that digital questions are positively associated with AI investment (as measured by job postings with AI skills) in the following year. Further cross-sectional analyses suggest that analysts are actively encouraging firms to invest more in AI as the positive relationship is stronger when there is no managerial or industry-wide analyst disclosure on digital topics, or when the firm is not currently investing in AI. Moreover, the positive relationship is also stronger when firms are currently investing in AI at abnormally low-levels. Thus, the overall findings suggest that analysts play a positive governance role in shaping non-IT firms’ investment in AI.
Faculty Advisor(s):
Suraj Srinivasan
(Chair),
Paul M. Healy
,
Charles C.Y. Wang
, and
Shane M. Greenstein
Aditya Mohan
Abstract:
- Ratings Based Incentives and Institutional Investor Response: Evidence from the Mutual Fund Market
- I provide evidence supporting the incentive effects of Morningstar ratings. I analyze managerial response to impending ratings in the year before a fund gets rated for the first time and find that managers just below ratings cutoffs try to improve risk adjusted returns by decreasing risk relative to managers just above the ratings cutoffs. The reduction in risk is through decreased fund exposure to unsystematic risk. Other ways in which managers alter their funds include an increased fund exposure to growth stocks. The effects are driven by both investor flows and manager career concerns. Managers just below the three and the four star rating cutoff and those just below the two and the three star rating cutoff are more likely to reduce risk in the rating year. The effects are also driven by risk averse managers. My findings suggest that Morningstar ratings can align investor and manager incentives by encouraging managers to focus on risk adjusted returns.
Business Economics
Francesca Bastianello
Abstract:
- Partial Equilibrium Thinking, Extrapolation, and Bubbles
- We model a financial market where some agents mistakenly attribute any price change they observe to new information alone, when in reality part of the price change is due to other agents’ buying/selling pressure, a form of bounded rationality that we refer to as “Partial Equilibrium Thinking” (PET). PET provides a micro-foundation for price extrapolation, where the degree of extrapolation depends on the informational edge of informed agents. In normal times, this edge is constant and bubbles and crashes do not arise. By contrast, following a large one-off innovation in fundamentals that temporarily wipes out informed agents' edge (a “displacement event”), extrapolation by PET traders is initially very aggressive but then gradually dies down, leading to bubbles and endogenous crashes. Micro-founding the degree of extrapolation in this way allows us to shed light on both normal market dynamics and on the Kindleberger (1978) narrative of bubbles within a unified framework.
Gabriel Levin-Konigsberg
Abstract:
- Narrow Framing and Risk Management
- Even though financial risk management has the ability to generate value, the use of financial derivatives among non-financial corporations remains limited. The literature has stressed the role that net-worth plays in risk-management decisions. In this paper, we consider another channel: narrow framing. We explore this phenomenon among importing firms in Mexico. We use the universe of USD-MXN derivative transactions in Mexico along with customs data to construct a dataset on FX operational exposure and financial hedging. Contrary to a rational benchmark, we find that the performance in previous derivative transactions predicts future derivative use. Firms are less likely to take a new position after incurring losses in the previous position as compared to those that incurred gains. These effects are also present in the intensive margin. We use a regression kink design to find that this predictability is due to narrow framing on the firms' side. Given this behavioral bias, firms are 18 p.p. less likely to take a new position after experiencing the average loss.
Frank Pinter
Abstract:
- Regulatory Mandates and Electric Vehicle Product Variety
- When should policies to encourage new types of products use supply-side tools, like regulations and mandates, and when should they use demand-pull tools like consumer incentives? We study an important supply-side policy in the early electric vehicle industry: the zero-emission vehicle mandate in California and nine other states. Focusing on the 2009–17 period, we examine the interaction between imperfect competition and endogenous product entry. After showing that firms internalized much of the social benefit of entry under the mandate, we evaluate a counterfactual policy that replaces the mandate with a demand-pull subsidy and tax regime. Holding fixed the regulator's stated target, electric vehicle sales in regulated states, the demand-pull policy creates a weaker incentive for socially beneficial product entry and generates lower consumer and total surplus. When fewer products are introduced, producers avoid entry costs, but forego long run benefits of entry.
Michael Thaler
Abstract:
- The Supply of Motivated Beliefs
- When people choose what messages to send to others, they often consider how others will interpret the messages. In many environments, particularly in politics, message receivers engage in motivated reasoning, distorting how they process information in directions they find more attractive. This paper uses two online experiments to study what information senders choose to send to receivers on topics that evoke politically-motivated beliefs. Experiment 1, conducted using a sample of social media users, studies the effect of incentivizing senders to be perceived as truthful. These incentives cause senders to send less truthful messages. With these incentives, senders send more false information when it aligns with receivers' motivated beliefs, even controlling for receivers' current beliefs. Receivers do not anticipate the adverse effects of senders' incentives. Experiment 2 isolates the role that motivated reasoning plays by constructing an environment in which receivers assess the truthfulness of messages from a computer and senders choose which message to be paid for. Senders predict that politically-motivated reasoning impacts receivers' inference, they demand information about receivers' political preferences, and they use the receivers' politics to strategically choose less truthful messages.
Ron Yang
Abstract:
- (Don't) Take Me Home: Home Bias and the Effect of Self-Driving Trucks on Interstate Trade
- How will self-driving trucks transform U.S. interstate trade? I argue that human drivers' preferences to return home generate geographic specialization in the freight market, and self-driving trucks would eliminate this "home bias." I build a model of trucking carriers making dynamic decisions about where to work, given that they have a preference for being at home. A large home bias increases the value of driving places that are likely to bring one home and increases the value of taking time off at home. Using trucking freight transactions and highway inspections, I estimate the model parameters and find that carriers value being at home at $55 per day. More concretely, the average carrier away from home would pay about $200 to return immediately. In a counterfactual where I eliminate home bias, carriers become more willing to drive to driver-poor states, and overall driving increases as carriers spend less time off. The increased supply of carriers lowers import and export prices overall, and especially for driver-poor states. Compared to a full automation counterfactual which also captures lower per-mile costs and extended range, eliminating home bias explains about one-quarter of the potential decrease in overall freight prices.
David Zhang
Abstract:
- Closing Costs, Refinancing, and Inefficiencies in the Mortgage Market
- In the US, mortgage borrowers who are slow to refinance cross-subsidize other borrowers. This effect is amplified when borrowers cover their closing costs by accepting a higher mortgage rate, as borrowers who are slow to refinance make the extra interest payments for a longer expected period of time. Is this cross-subsidization merely a transfer, or does it also lead to social deadweight losses by distorting borrower incentives? To answer this question, I construct a general equilibrium model of mortgage refinancing where borrowers with heterogeneous refinancing tendencies choose how much of their closing costs they want to add to the rate. I estimate this model using a newly constructed data set linking upfront closing cost choices and subsequent borrower behavior. I find significant cross-subsidization of mortgage closing costs to the extent that they are added to the rate, which approximately doubles the transfers between borrowers with different refinancing speeds. Minority borrowers are particularly affected as they pay 0.4-0.5% of the loan amount more in extra interest payments. Furthermore, borrowers who would otherwise not refinance become incentivized to do so only to receive more transfers, an effect that accounts for about one quarter of all US refinancing and generates deadweight losses due to administrative resource costs. Overall, I estimate a welfare loss of $365/mortgage (~$2.9 billion per year) relative to the no cross-subsidization case. Consequently, alternative contract designs such as (i) adding closing costs to the balance of the loan, or (ii) making fixed-rate mortgages automatically refinancing can both reduce transfers and increase total welfare.
Management
Yusaku Takeda
Abstract:
- Nationalism and Corporate Strategy: From Yamaha Pianos to Motorcycles, 1945-1960
- I theorize how nationalist ideology sparks unconventional managerial discourse about strategies and sets in motion novel strategy processes and outcomes. Using proprietary archival data, I study the evolution of strategic discourse at Nippon Gakki Ltd, later known as Yamaha Corporation and Yamaha Motor Company. In the 1950s, Nippon Gakki diversified into the motorcycle and other motorized product businesses from its incumbent musical instrument business, driven by an imperative to help Japan regain national prestige and prosperity after World War II. I depict a dynamic process in which, over time, nationalist ideology reinforces and fundamentally transforms managerial discourse and perceived strategic priorities. Nationalist ideology initially frames organizational identity and strategic priorities within the existing business context, but as nationalism becomes emotionally charged, it obscures the relative significance of the identities tied to the existing businesses, leading to a substantial deviation from prior core businesses. I synthesize these findings to offer an integrated theoretical framework on the effect of nationalist ideology on strategy-making, introduce nationalism as a potent ideological force on corporate strategy, and invite research on the link between nationalism and organizations.
Marketing
Serena Hagerty
Abstract:
- Zero-Sum Perceptions Reduce Acceptability of Premium Offerings
- Many firms offer premium services that provide ease, expedience, and access to those who can afford them. These services provide clear benefits to the individuals who use them and the firms that may profit from them. However, anecdotal evidence suggests that many– particularly non- premium consumers – often believe that when firms offer premium services, the consumers of basic services are made worse off. Six studies demonstrate the importance of these zero-sum perceptions on the perceived acceptability of premium services. While it is morally acceptable for a firm to offer enhanced services at high prices, it is unacceptable for a firm to offer a premium service that detracts from the experiences of other customers. However, not all consumers react equally to zero-sum perceptions in their moral evaluations of premium services. Individuals with strong beliefs in upward mobility are less sensitive to zero-sum perceptions, such that they find premium services to be more acceptable, even when zero-sum perceptions are high. Contributing to norm violation literature, these studies show that beyond moral judgments, zero-sum perceptions may lead to negative evaluations of the firm and retaliation behavior.
Byungyeon Kim
Abstract:
- Managing Relational Sales: The Role of Behavior-Based and Outcome-Based Controls
- This study provides a dynamic structural analysis of an agent’s behavior in response to behavior-based and outcome-based sales force control measures. The model accommodates both observable, quantifiable sales effort (e.g., number of sales calls) and unobservable, qualitative sales effort (e.g., attitude), as well as the dynamics in demand channeled by customer goodwill. By understanding how multiple sales management instruments--including incentives, route call planning and price promotions--jointly influence behavior, the study offers insights on optimal sales management policies. The results show existence of different types of salespeople that possess heterogeneous preferences and productivity. A series of counterfactual experiments demonstrate a trade-off between increasing the number of sales calls (behavior-based control) versus offering additional incentives (outcome-based control); heterogeneous responses to reducing the level of price promotions in which some salespeople exert extra effort to mitigate the disadvantage; and how a firm can minimize the negative impact of reducing price promotions by utilizing different sales force control measures.
Technology & Operations Management
Tommy Pan Fang
Abstract:
- Managing Platform Value through Complementor Business Model Governance
- This study offers a novel account of how platforms can orchestrate complementor business models through governance choices. In a platform setting, the platform owner can often govern how third-party firms participate by shaping the rules and architecture. Business models jointly consider value creation activities and value capture methods, and thus, are a critical strategic choice that affect the value proposition of a platform and its complements. Thus, a key tension in platform governance design is to encourage complementor value creation for the platform ecosystem, while finding ways to capture a share of that value. Through a large-scale quantitative study of 15,604 mobile applications between January 2021-July 2021 supplemented with a program of qualitative interviews, I investigate how changes to Apple App Store policies around complementor business models affected platform participants. I leverage the announcement of a platform change that negatively impacted in-app advertising to show that firms that had relied on advertising were more likely to exit from the platform and shifted their innovation efforts. I also provide preliminary evidence that while this change negatively affected the amount of value capture that the platform owner received from affected third-parties, it also led to increased first-party value capture. These findings enrich our understanding of how platform owners balance between value creation and value capture in an ecosystem.