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- September 2022
- Article
A Spanner in the Works: Category-Spanning Entrants and Audience Valuation of Incumbents
By: Rory M. McDonald and Ryan T. Allen
Previous work has examined how audiences evaluate category-spanning organizations, but little is known about how their entrance affects evaluations of other, proximate organizations. We posit that the emergence of category-spanning entrants signals the advent of an...
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- September 2022
- Article
Human Versus Machine: A Comparison of Robo-Analyst and Traditional Research Analyst Investment Recommendations
By: Braiden Coleman, Kenneth J. Merkley and Joseph Pacelli
We provide the first comprehensive analysis of the properties of investment recommendations generated by “Robo-Analysts,” which are human analyst-assisted computer programs conducting automated research analysis. Our results indicate that Robo-Analyst recommendations...
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- 2022
- Working Paper
Heterogeneous Investors and Stock Market Fluctuations
By: Odhrain McCarthy and Sebastian Hillenbrand
We introduce a heterogeneous agent model which features extrapolative beliefs and time-varying risk aversion. The model leads to an empirical framework which we estimate with stock prices, survey data and risk aversion measures. We find that extrapolative beliefs and...
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- January 2022
- Article
Why Is Corporate Virtue in the Eye of the Beholder? The Case of ESG Ratings
By: Dane Christensen, George Serafeim and Anywhere Sikochi
Despite the rising use of environmental, social, and governance (ESG) ratings, there is substantial disagreement across rating agencies regarding what rating to give to individual firms. As what drives this disagreement is unclear, we examine whether a firm’s ESG...
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- 2021
- Working Paper
What Drives Variation in Investor Portfolios? Evidence from Retirement Plans
We study empirical patterns in investment behavior using a comprehensive data set of defined contribution plans. Using plan-level portfolio allocation data for the near universe of 401(k) plans over the period 2009–2019, we document substantial differences in...
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- November 2021
- Article
Ratings, Reviews, and the Marketing of New Products
By: Itay P. Fainmesser, Dominique Olié Lauga and Elie Ofek
We study how user-generated content (UGC) about new products impacts a firm's advertising and pricing decisions and the effect on profits and market dynamics. We construct a two-period model where consumers value quality and are heterogeneous in their taste for the new...
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- May 2021 (Revised September 2021)
- Case
CPE and SUS Environmental: You've Got to Know When to Hold 'Em (A)
By: Josh Lerner and Franko Jira
In July 2016, Di Yang and Grace Guo of the leading Chinese private equity group CPE faced a dilemma—a happy dilemma, but a challenge nonetheless. CPE’s investment in the waste-to-energy firm SUS Environment had proved to be exceedingly successful. This success had...
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- December 2020
- Article
Stock Market Returns and Consumption
By: Marco Di Maggio, Amir Kermani and Kaveh Majlesi
This paper employs Swedish data containing security level information on households' stock holdings to investigate how consumption responds to changes in stock market returns. We exploit households’ portfolio weights in previous years as an instrument for actual...
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- July 2020
- Case
Mortgage Backed Securities and the Covid-19 Pandemic
By: Emil N. Siriwardane, Luis M. Viceira and Dean Xu
In April 2020, global financial markets were still reeling as the COVID-19 pandemic spread rapidly across the world. Global equity markets had initially fallen by 30% in response to the pandemic, and high-yield credit markets had dropped by nearly 20%. In contrast,...
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- December 2019 (Revised May 2021)
- Case
The Dutch East India Company in 1612 (A)
By: Lynn S. Paine and Giuseppe Dari-Mattiacci
The Dutch East India Company’s board of directors must decide what to do about an impending legal requirement to liquidate the company’s assets and return to shareholders their capital and any profits earned during a ten-year lock-up period. The charter granted to the...
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- December 2019 (Revised January 2021)
- Supplement
The Leveraged Buyout of TXU: (B) Energy Future Holdings
By: Trevor Fetter, Erik Snowberg and Rebecca M. Henderson
This case is designed to support a lively discussion about the relative merits of shareholder vs. stakeholder perspectives in the context of a company that provides a vital public service that has important environmental implications. The 2007 purchase of TXU, the...
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- November 2019 (Revised June 2020)
- Case
Russia: A Drama In Three Acts
By: Rawi Abdelal, Rafael Di Tella, Galit Goldstein and Sogomon Tarontsi
The collapse of central authority in the Soviet Union in 1991 ushered in a period of revolutionary transformations for the states that emerged in its wake. The leaders of Russia, the USSR's successor, struggled to reestablish central authority while also seeking to...
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Keywords:
Business ＆ Government Relations;
Developing Countries;
Government Policy;
Policy Change;
Policy Making;
Economic Systems;
Economics;
Globalization;
Emerging Markets;
Privatization;
Non-Renewable Energy;
Governance;
Global Strategy;
Corporate Governance;
Policy;
Business History;
Lawfulness;
Problems and Challenges;
Business and Government Relations;
Risk and Uncertainty;
Strategy;
Change Management;
Russia;
Moscow
- 2019
- Working Paper
Reflexivity in Credit Markets
By: Robin Greenwood, Samuel G. Hanson and Lawrence J. Jin
Reflexivity is the idea that investors' biased beliefs affect market outcomes, and that market outcomes in turn affect investors' beliefs. We develop a behavioral model of the credit cycle featuring such a two-way feedback loop. In our model, investors form beliefs...
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- January 2019
- Article
Bubbles for Fama
By: Robin Greenwood, Andrei Shleifer and Yang You
We evaluate Eugene Fama's claim that stock prices do not exhibit price bubbles. Based on U.S. industry returns 1926–2014 and international sector returns 1985–2014, we present four findings: (1) Fama is correct in that a sharp price increase of an industry portfolio...
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Keywords:
Bubble;
Market Efficiency;
Predictability;
Price Bubble;
Stocks;
Price;
Forecasting and Prediction
- 2018
- Working Paper
Buying the Verdict
By: Lauren H. Cohen and Umit G. Gurun
We document evidence that firms systematically increase specialized, locally targeted advertising following the firm being taken to trial in that given location—precisely following initiation of the suit. In particular, we use legal actions brought against publicly...
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- March 2018 (Revised July 2018)
- Case
Cadre
By: Thomas R. Eisenmann, Scott Duke Kominers and David Lane
Late in 2017, CEO Ryan Williams and his team debated whether Cadre should become not only a technology-enabled investment manager, but also an online trading exchange providing high levels of liquidity for investors in commercial real estate (CRE) equity. Cadre was a...
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- February 2018 (Revised June 2018)
- Case
Uruguay: Facing the 21st Century
By: Sophus A. Reinert, Michael Chu and Carin-Isabel Knoop
In the fall of 2017, self-made business leader Edgardo Novick pondered his campaign to be elected President of Uruguay, “the Switzerland of Latin America.” Inspired by populist revolts against the status quo observable worldwide, Novick hoped he could ride popular...
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- September 2017 (Revised February 2018)
- Case
Dinesh Moorjani and Hatch Labs
By: Shikhar Ghosh, Christopher Stanton, Allison Ciechanover and Jeff Huizinga
This case is about Tinder. It discusses different business models and ways of structuring the initial team. With a $6 million investment from IAC/Interactive in 2010, Dinesh Moorjani founded Hatch Labs to build mobile apps. His mission was to attract entrepreneurial...
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- Article
Narrow Networks on the Health Insurance Marketplaces: Prevalence, Pricing, and the Cost of Network Breadth
By: Leemore S. Dafny, Igal Hendel, Victoria Marone and Christopher Ody
Anecdotal reports and systematic research highlight the prevalence of narrow-network plans on the Affordable Care Act’s health insurance Marketplaces. At the same time, Marketplace premiums in the period 2014–2016 were much lower than projected by the Congressional...
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- 2017
- Article
Inflation Bets or Deflation Hedges? The Changing Risks of Nominal Bonds
By: John Y. Campbell, Adi Sunderam and Luis M. Viceira
The covariance between U.S. Treasury bond returns and stock returns has moved considerably over time. While it was slightly positive on average in the period 1953–2009, it was unusually high in the early 1980s and negative in the 2000s, particularly in the downturns of...
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