Microfoundations of Corporate Social Responsibility and Irresponsibility

December 22, 2018
Article • Center for Sustainable Enterprise

This study examines how social perception of corporate social responsibility (CSR) and irresponsibility (CSI) affects specific outcomes. Drawing from the social psychology literature on stereotypes, we argue that two fundamental dimensions of social perception—warmth and competence—mediate and moderate the effects of socially responsible and irresponsible practices. More

Expectations Uncertainty and Household Economic Behavior

December 13, 2018
Working Paper

We show that there exists significant heterogeneity across US households in how uncertain they are in their expectations regarding personal and macroeconomic outcomes, and that uncertainty in expectations predicts households' choices. Individuals with lower income or education, more precarious finances, and living in counties with higher unemployment are more uncertain in their expectations regarding own-income growth, inflation, and national home price changes. More

Expectations Uncertainty and Household Economic Behavior

November 29, 2018
Working Paper

We show that there exists significant heterogeneity across US households in how uncertain they are in their expectations regarding personal and macroeconomic outcomes, and that uncertainty in expectations predicts households' choices. More

SONOMA: A Small Open ecoNOmy for MAcrofinance

November 18, 2018
Working Paper

We develop a small economy model in which external debt, corporate domestic debt and risky equities coexist. We show that credit shocks are an important determinant of economic fluctuations in a model consistent with asset pricing facts. More

Uncertainty and Contracting in Organizations

November 15, 2018
Working Paper

We explore the impact of Knightian uncertainty on contracting within a multi-layered firm. We study a setting where, absent uncertainty, division managers should be paid based on their division performance, but not other divisions' performance. More

Management by the Numbers: A Formal Approach to Deriving Informational and Distributional Properties of “Un-­managed” Earnings

October 26, 2018
Article • UNC Tax Center

We explore the theoretical relation between earnings and market returns as well as the properties of earnings frequency distributions under the assumption that managers use unbiased accounting information to sequentially decide on real options their firms have and report generated earnings truthfully, with the market pricing the firm based on those reported earnings. More

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 • Center for Competitive Economies

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