A Reexamination of Tunneling and Business Groups: New Data and New Methods

Jordan I. Siegel; Prithwiraj  Choudhury

Article | Review of Financial Studies | June 2012

A Reexamination of Tunneling and Business Groups: New Data and New Methods

by Jordan I. Siegel and Prithwiraj Choudhury

Abstract

One of the most rigorous methodologies in the corporate governance literature uses firms' reactions to industry shocks to characterize the quality of governance. This methodology can produce the wrong answer unless one considers the ways firms compete. Because macro-level shocks reverberate differently at the firm level depending on whether a firm has a cost structure that requires significant adjustment, the quality of governance can only be elucidated accurately analyzing a firm's business strategy and their corporate governance. These differences can help one determine whether the fruits of a positive macro-level shock have been expropriated by insiders. Using the example of Indian firms, we show that an influential finding is reversed when these differences are considered. We further argue that the conventional wisdom about tunneling and business groups will need to be reformulated in light of the data, methodology, and findings presented here.

Keywords: Governance; System Shocks; India;

Format: Print

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Citation:

Siegel, Jordan I., and Prithwiraj Choudhury. "A Reexamination of Tunneling and Business Groups: New Data and New Methods." Review of Financial Studies 25, no. 6 (June 2012).

Working Paper | HBS Working Paper Series | 2020

(When) Does Appearance Matter? Evidence from a Randomized Controlled Trial

Prithwiraj Choudhury, Tarun Khanna, Christos A. Makridis and Subhradip Sarker

While there is evidence about labor market discrimination based on race, religion, and gender, we know little about whether physical appearance leads to discrimination in labor market outcomes. We deploy a randomized experiment on 1,000 respondents in India between April and May 2020 to investigate how “looks” affect labor market outcomes. Using machine learning and computer face rendering techniques, we simulate North, South, and Northeastern Indian faces and randomize two waves of treatments where we attach faces with otherwise identical CVs. However, the second wave also contains a vignette where we provide respondents with information about the incidence of discrimination. We focus on Northeastern Indian faces that resemble those in China to focus on the potential for discrimination that has historically been present in anecdotal accounts. While we do not find evidence of discrimination against Northeastern faces in the first wave, we do so in the second among those who do not see the vignette. We provide suggestive evidence that these results are consistent with the presence of homophily under limited attention.

Keywords: Behavioral economics; coronavirus; discrimination; homophily; labor market mobility; limited attention; resumes; Personal Characteristics; Prejudice and Bias;

Citation:

Choudhury, Prithwiraj, Tarun Khanna, Christos A. Makridis, and Subhradip Sarker. "(When) Does Appearance Matter? Evidence from a Randomized Controlled Trial." Harvard Business School Working Paper, No. 21-038, September 2020. View Details

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A Reexamination of Tunneling and Business Groups: New Data and New Methods

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