Research


The Differential Impact of TMT Structure on the Performance of Founder and Non-Founder Led Firms

January 15, 2019
Working Paper

Little is known about how TMT members affect a founder-led firm’s performance later in a firm’s life. Using novel methods and a sample of over 2,000 firms, we find that although team structure has a significant impact on the performance of non-founder-led firms (consistent with past literature), it has little to no effect on the operating performance of founder-led firms, suggesting that founder CEOs may exert too much control. More

Attenuating the Forward Guidance Puzzle: Implications for Optimal Monetary Policy

January 14, 2019
Working Paper

We examine the implications of less powerful forward guidance for optimal policy using a sticky-price model with an effective lower bound (ELB) on nominal interest rates as well as a discounted Euler equation and Phillips curve. We find that, under a wide range of plausible degrees of discounting, it is optimal for the central bank to compensate for the reduced effect of a future rate cut by keeping the policy rate at the ELB for longer. More

Direct Versus Iterated Multi-Period Volatility Forecasts: Why MIDAS Is King

January 11, 2019
Working Paper

In this paper, we compare several approaches of producing multi-period-ahead forecasts within the GARCH and RV families – iterated, direct, and scaled short-horizon forecasts. We also consider the newer class of mixed data sampling (MIDAS) methods. More

Marketing Department Power and Board Interlocks

January 11, 2019
Working Paper

Although the level of power held by the marketing department can determine key organizational outcomes, including firm performance, this power often is modest and, in many firms, diminishing. To address this apparent disconnect, the authors propose that the board of directors is a critical but overlooked driver of marketing department power. More

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

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

Tax Reform Made Me Do It!

November 29, 2018
• Working Paper • UNC Tax Center

This paper examines corporations’ actions, and statements about actions, following the tax law change known as the Tax Cuts and Jobs Act (TCJA). Specifically, we examine four different outcomes — bonuses (or other actions that benefit workers), announcements of new investments, share repurchases, and dividend announcements. We find that 4% of public firms in our sample announced in Q1 2018 they would pay some portion of their tax savings toward workers. In terms of investment, we find that 22% of the S&P 500 firms in our sample mentioned in earnings conference calls that they would increase investment because of the TCJA. We find a general increase in share repurchases following the passage of the TCJA, but the increase is extremely concentrated in a small number of firms. We find only nine firms that announced a new share repurchase plan explicitly attributed the new plan to the TCJA. In regression analysis, we find that both political and economic variables explain TCJA-linked announcements. More

Persistent Government Debt and Risk Distribution

November 18, 2018
Working Paper

Does it matter whether a government is prompt or slow in consolidating outstanding debt? We address this question by studying the connection between the time variation of the persistence of government-debt-to-output ratio, macroeconomic activity, and asset prices. Our model suggests that committing to a rapid reduction of the debt-to-output ratio can enhance the value of innovation, aggregate wealth, and hence welfare. 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

A Tale of Two Creativities: Creative Idea Recognition Differs Between Idea Creators and Implementers.

November 16, 2018
Article

nnovation, the implementation of creative ideas, involves a dialogue between two roles: creators - who generate creative ideas, and evaluators-who determine which ideas to implement. Although each role aids innovation, we reveal that each role may also shape creativity assessments in different ways. In two experiments, participants randomly assigned to either an evaluator or creator role rated the same idea described as having low or high levels of novelty. More