Mandating Women on Boards: Evidence from the United States

October 13, 2018
Working Paper

Our findings indicate that mandated increases in gender diversity on corporate boards are detrimental to shareholder value. More

Leverage Cycles in a Mature Asset Class: New Evidence from a Natural Laboratory

October 12, 2018
Working Paper

We model leverage cycles in the natural laboratory of a mature asset class, namely US Commercial Real Estate. In this setting we can observe entrepreneurs' asset values as well as debt balance and thus model capital-market yields, as conditioned by market-wide leverage, which indicates debt availability. Using a VAR framework, we examine variance decompositions and impulse-response functions. We show that leverage constitutes the primary driver of innovations in capital-market yields and vice versa. We further find evidence for flight to quality as well as knock-on effects that affect low-leverage entrepreneurs in the market. More

Common Ground: How to pursue a mixed strategy for economic development and come out ahead

October 11, 2018
White Paper

Like anyone trying to get something done with limited time and resources, economic developers have a lot of options to weigh when formulating a strategy to attract and retain businesses in their local economy. Over the years, economic development researchers have espoused a succession of theories as they’ve learned more about the many factors that influence economic growth. Historically, practitioners have tended to respond by focusing their efforts around what they perceive as the latest and greatest thinking, often at the expense of previously favored approaches. In practice, this has led to waves in which economic developers have focused on recruiting large, established companies or on fostering home-grown start-ups—but rarely both. More

Price Discovery of a Speculative Asset: Evidence from a Bitcoin Exchange

October 01, 2018
Working Paper

This paper examines price discovery and liquidity provision in the secondary market for bitcoin -- an asset that has no observable fundamentals and is associated with a high level of speculative trading. Based on a comprehensive dataset of the full limit order book of BTC-e over the 2013-2014 period, we find that order informativeness generally increases with order aggressiveness within the first 10 tiers, but that this pattern reverses in the outer layers of the book. In a high volatility environment, aggressive orders seem to be more attractive to informed agents, as reflected by the increased information content of such orders, although market liquidity appears to migrate outward in response to the information asymmetry. More

Net-Metered Distributed Renewable Energy: A Peril for Utilities?

September 27, 2018
Working Paper

Our paper studies the implications of “distributed renewable energy” (such as rooftop solar panels) for utility profits and social welfare under net metering that has sparked heated debates in practice. More

Activism and Empire Building

September 08, 2018
Working Paper

We study the role of hedge fund activists in curbing empire building. We show that firms with poor acquisition records are more likely to become activist targets. Our findings highlight an important channel through which activists improve the efficiency of public companies. More

Credit Default Swaps Around the World: Investment and Financing Effects

August 28, 2018
Working Paper

We analyze the impact of CDS introduction on real decision-making within the firm, taking into account differences in the local economic and legal environment of firms. We extend the model of Bolton and Oehmke (2011) in order to consider uncertainty in whether actions taken by the reference entity will trigger CDS obligations. More

Making Process Improvements Stick

August 28, 2018
Working Paper

Our findings debunk the myth that a ‘continuous improvement culture’ will emerge amongst workers and staff that sustains improvement efforts. The root cause behind backsliding is that sustaining process improvement initiatives involves all levels of the organisation, and that leaders play a pivotal role herein they often neglect. We identify four common failure modes. More

Can Investors Time Their Exposure to Private Equity?

August 28, 2018
Working Paper • Institute for Private Capital

We find modest gains, at best, to pursuing more realistic, investable strategies that time capital commitments to private equity. There is a high degree of time-series correlation in net cash flows even across commitment strategies that allocate capital in a very different manner over time. More

Blockchain Adoption for Combating Deceptive Counterfeits

August 15, 2018
Working Paper

We show that blockchain can be more effective than pricing strategy in eliminating the post-purchase regret and improving social welfare. More