Public Firm Presence, Financial Reporting, and the Decline of U.S. Manufacturing

August 11, 2019
Working Paper

We document evidence of a positive association between public firm presence and import competition. Using cross-sectional differences in the expected costs of the Sarbanes-Oxley Act as an instrument for changes in public firm presence after the Act, we find evidence that public firm presence cause changes in import competition. Subsequent mechanism tests suggest that this effect arises because U.S. securities regulation requires public firms to prepare and make publicly available audited financial reports. Although these reports are purportedly for the benefit of investors, our mechanism tests suggest that foreign competitors also make use of the performance and investment information disclosed in these reports to compete with U.S. firms.

The Influence of Loan Officers on Loan Contract Design and Performance

August 09, 2019
Working Paper

We investigate the extent to which loan officers generate individual effects on the design and performance of syndicated loan deals. We construct a novel database containing the identities of 6,821 loan officers involved in structuring syndicated loan deals. This data allow us to exploit movement of loan officers across banks to disentangle loan officer effects from bank fixed effects and estimate loan officers’ influence on both lending terms and loan performance. We find that loan officers have a significant influence on loan terms and loan performance that is incremental to bank and borrower characteristics. More

FTC Concerns Over Bristol-Myers Deal Raise Questions

August 05, 2019
Article • Center for the Business of Health

On Jan. 3, 2019, Bristol-Myers Squibb Co. announced its proposed acquisition of Celgene Corp. for approximately $74 billion. The Federal Trade Commission issued requests for additional information and documentary materials to the companies on March 25, 2019, that were “focused on marketed and pipeline products for the treatment of psoriasis.” In order to address the FTC’s concerns, BMS plans to divest Celgene’s Otezla (apremilast) drug, which is a phosphodiesterase-4 inhibitor indicated for the treatment of moderate to severe psoriasis and psoriatic arthritis. Psoriasis is an autoimmune disease with multiple subtypes, with large skin plaques being the most common manifestation.   More

Corrected Measures for Patent Citation Analysis: Accounting for Published Patent Applications

July 29, 2019
Working Paper

This article investigates patent citations made to published patent applications. Although citations to patent publications are conceptually indistinguishable from citations to granted patents, they are omitted from all standard measures. We find that publication citations are a large and growing portion of patent citations, and that they differ statistically from citations to granted patents on several important dimensions. We conclude that omitting publication citations is likely to generate biased measures, and that standard measures of patent citations should be corrected. We release our computer code and corrections for future use. More

Pay, Employment, and Dynamics of Young Firms

July 23, 2019
Working Paper

Why do young firms pay less? Using confidential microdata from the US Census Bureau, we find lower earnings among workers at young firms. However, we argue that such measurement is likely subject to worker and firm selection. Exploiting the two-sided panel nature of the data to control for relevant dimensions of worker and firm heterogeneity, we uncover a positive and significant young-firm pay premium. Furthermore, we show that worker selection at firm birth is related to future firm dynamics, including survival and growth. We tie our empirical findings to a simple model of pay, employment, and dynamics of young firms. More

Is Tax Planning Best Done In Private?

July 15, 2019
Working Paper

We investigate whether privately-held firms engage in more tax planning than do publicly-held firms. Private firms are commonly believed to face lower non-tax costs of tax planning relative to public firms, allowing them to engage in more tax planning. However, empirical evidence of U.S. private firm tax planning is limited, primarily because of difficulty in obtaining private firm data. More


Redefining the Physician’s Role in Cost-Conscious Care: The Potential Role of the Electronic Health Record

July 12, 2019

Recent health policy efforts have attempted to promote constructive conversations regarding cost-effectiveness by increasing transparency for both patients and physicians. Spurred by access and cost challenges resulting from increasing pharmaceutical prices, the Centers for Medicare & Medicaid Services (CMS) proposed a rule that would require direct-to-consumer prescription drug advertisements to include the list price for a typical 30-day course of therapy, according to their weighted average cost. This Viewpoint discusses implementing price transparency for health care products and services where physicians spend an increasing proportion of their time—in electronic health records (EHRs). More

Artificial Intelligence Alter Egos:Who benefits from Robo-investing?

July 06, 2019
Working Paper

Artificial intelligence, or AI, enhancements are increasingly shaping our daily lives. Financial decision-making is no exception to this. We introduce the notion of AI Alter Egos, which are shadow robo-investors, and use a unique data set covering brokerage accounts for a large cross-section of investors over a sample from January 2003 to March 2012, which includes the 2008 financial crisis, to assess the benefits of robo-investing. The man versus machine comparison allows us to shed light on potential benefits the emerging robo-advising industry may provide to certain segments of the population, such as low income and/or high risk averse investors.

Two Faces of Novelty: Idea Selection in Crowdsourcing Challenges

June 30, 2019
Working Paper

The selection of novel ideas is vital to the development of truly innovative products. Firms often turn to idea crowdsourcing challenges, in which both ideators and the seeker firms participate in the idea selection process. Yet prior research cautions that ideators and seeker firms may not select novel ideas. To address the links between idea novelty and selection, this study proposes a bi-faceted notion of idea novelty and probes the role of task structure. More

Attribute Auto-dynamics

June 28, 2019
Working Paper

Some contemporary new product introductions feature attribute auto-dynamics — the property that enables a product to adapt its attributes automatically in response to changing customer, product-system, or environmental (CSE) conditions. In addition to explicating auto-dynamics, the authors propose a typology of attribute auto-dynamics, based on close examinations of 273 U.S. utility patents published between 2001 and 2017. Attribute auto-dynamics offers an efficient mapping design, applicable to changing conditions and product attribute states, that indicates a four-part (contingent, distinctive, associative, and generative) typology.