Research Magazine 2023
2023 Ninth Issue
Coles Research Magazine
For nine years, the Coles Research Magazine has given the Michael J. Coles Col- lege of Business a platform to share the groundbreaking research of our faculty and our Ph.D. graduates. The research featured in this publication enhances our collective understanding of the complex economic, societal, technological, and behavioral concepts influencing business today. In this 9th edition of The Coles Research Magazine, you will find six papers published in Financial Times Top 50 journals; research from the recipients of the Coles College Distinguished Journal, Outstanding Impact Publication, Com- munity Engagement, and Competitive Grant awards; the winners of the Coles Working Paper Series awards; papers presented at the Coles Research Symposium on Homeland Security; and the work of our most recent summer research fel- lows. In addition to faculty research, the issue includes two Ph.D. student execu- tive summaries. The articles presented here cover a broad range of exciting, relevant topics. Can new ventures enhance their reputations by relocating to socially stigmatized cities? Do high-integrity CEOs harm their businesses by being too risk-averse? What role does a manager’s age have on their effectiveness? These are some of the questions addressed in this issue with digestible, easy-to-understand summaries. Explore the latest edition of The Coles College Research Magazine and discover how our faculty and student researchers are bridging the gap between theory and practice.
Robin Cheramie Dean, Michael J. Coles College of Business Tony and Jack Dinos Eminent Scholar Chair of Entrepreneurial Management Kennesaw State University
TABLE OF CONTENTS
Journal Publications - Financial Times Top 50 Journals 8 Straight OUTTA Detroit: Embracing Stigma as Part of the Entrepreneurial Narrative By Birton J. Cowden, Joshua S. Bendickson, Blake D. Mathias, and Shelby J. Solomon 10 Determinants and Consequences of the Severity of Executive Compensation Clawbacks By Bright Asante-Appiah and Divesh S. Sharma 12 Losers of CEO Tournaments: Incentives, Turnover, and Career Outcomes By Eric W. Chan, John H. Evans III, and Duanping Hong 14 CEO's Childhood Experience of Natural Disaster and CSR Activities By Daewoung Choi, Hyunju Shin, and Kyoungmi Kim 16 Who Cares More About the Environment, Those with an Intrinsic, an Extrinsic, a Quest, or an Atheistic Religious Orientation?: Investigating the Effect of Religious Ad Appeals on Attitudes Toward the Environment By Denni Arli, Patrick van Esch, and Yuanyuan Cui 18 Entrepreneurship and Subjective vs. Objective Institutional Journal Publication - Distinguished Journal 20 Exploring the Dark Side of Integrity: Impact of CEO Integrity on Firms' Innovativeness, Risk-Taking and Proactiveness By Prachi Gala and Saim Kashmiri Journal Publication - Outstanding Impact 22 The Effect of Alternative Fraud Model Use on Auditors' Fraud Risk Judgments By Doug Boyle, Todd DeZoort, and Dana Hermanson Performance: A Decade of US Hospital Data By Shelby Renee Meek and Matthias A. Tietz
* Coles College of Business faculty highlighted in bold.
TABLE OF CONTENTS
Community Engagement 24 Letters to the Editor - Wall Street Journal, Atlanta Journal- Constitution, and Marietta Daily Journal By Dana Hermanson Research Grant 26 Cybersecurity Basic Concept and Cyber Career Pathways: KSU GenCyber School Camp 2022-2023 By Miloslava Plachkinova PhD Summaries 28 Knock! Knock! Is the Doctor In? Impact of Consumer-Facing Health-IT on Health Outcomes By Arpit Sharma, Saurabh Gupta, Humayun Zafar, and Shankar Banik 30 Alexa? What Keeps Consumers (from) Engaging with You? By Kate Nicewicz Scott, Mona Sinha, Saurabh Gupta, Jennifer Hutchins, and Patrick van Esch Coles Research Symposium 32 Conflict, Inequality, and the Provision of Public Good in a Model of Location Choice By Abhra Roy 34 Conflicts and Education Expenditure By Aniruddha Bagchi, Xiao Huang, and Benjamin Scafidi 36 Lives or Livelihoods: A Configurational Perspective of COVID-19 Policies By Jomon A. Paul, Xinfang Wang, and Aniruddha Bagchi 38 A Model of Fortification Using Bayesian Persuasion By Jomon A. Paul and Abhra Roy 40 Dynamic Model of Conflict with Endogenous Destruction By Leo MacDonald and Aniruddha Bagchi
* Coles College of Business faculty highlighted in bold.
TABLE OF CONTENTS
Summer Research Fellowship 42 A Meta-Analytic Examination of the Impact of Leader Age on Leader Effectiveness By Joshua Palmer 44 The Effects of GPO Relationships on Hospitals' Purchasing Performance By Yoon Hee Kim 46 Misspecification and Weak Identification By Zhaoguo Zhan Working Papers 48 The Macroeconomic Effects of Business Tax Cuts By Filippo Occhino 50 Do SPAC Combinations Affect Their Peers' Accounting Quality? By Daniel Cohen, Kelly Ha, Sunay Mutlu , and John Schomburger 52 Market Reactions to Innovative Firms' Earnings News By Marcus Caylor, Duanping Hong, Hyungshin Park, and Hong Qu 54 CEO Pay Slice and Firm Value: Is Corporate Social Responsibility a Missing Link? By Prachi Gala and Duncan Nicol 56 Subnational Institutional Differences, R&D-Performance, Relationship, and FDI Spillovers in Russia By Sergey Lebedev and Mike W. Peng
58 Coles College Research Highlights
* Coles College of Business faculty highlighted in bold.
Straight OUTTA Detroit: Embracing Stigma as Part of the Entrepreneurial Narrative Birton J. Cowden, Joshua S. Bendickson, Blake D. Mathias, and Shelby J. Solomon
Journal of Management Studies, Vol. 59, No. 8 ( December 2022), pp. 1915-1949
OVERVIEW
This inductive field study set out to clarify how and why ventures embrace a noncore stigma. Most of the stigma literature suggests that organizations tend to avoid/disidentify from anything or anyone associated with stigma. We focus on locational stigma, which we define as a collective, stakeholder group-specific perception that an organization’s geographic location indicates a fundamental flaw that discredits it and prevents their desire to identify with it. We find that entrepreneurs in Detroit, Mich., embrace locational stigma as an underdog comeback narrative. They promote it to differentiate their ventures as heroic and to gain access to in-group advantages and resources. Our work is novel in showing how locational stigma can benefit organizations.
8 | Journal Publications - Financial Times Top 50 Journals
EXECUTIVE TAKEAWAYS
■ New ventures can use stigma, even if it is not because of them or their industry. ■ An underdog narrative allows entrepreneurs to co-opt useful attributes of the stigma. ■ New ventures can differentiate themselves from those in nonstigmatized cities. ■ Location stigma gives entrepreneurs a social mission to help remove the stigma. ■ Stigmatized locations may serve as an ideal launching pad for certain ventures.
Birton J. Cowden, Assistant Professor of Entrepreneurship
Determinants and Consequences of the Severity of Executive Compensation Clawbacks Bright Asante-Appiah and Divesh S. Sharma
Contemporary Accounting Research, Vol. 39, No. 4 (Winter 2022), pp. 2409-2455
OVERVIEW
As one of the most substantial, prolonged, and controversial proposals for reforming executive compensation, clawback rules recently regained the attention of the US Securities and Exchange Commission (SEC). Our intuitive severity score finds that clawbacks are not homogenous, as the literature assumes, but vary widely. Our determinants analyses suggest that their severity is increasing in firms with effective boards and high cash and stock awards as director compensation, and attenuated in firms with powerful CEOS and stock options as director compensation. Our consequences analyses indicate that while severe clawbacks deter financial restatements, management circumvents them by reducing research and development expenses to avoid earnings decreases, and boardroom dynamics dilute their benefits. Our findings have strong implications for the efficacy of the SEC’s recent implementation of executive compensation clawback rules and boards’ crafting and triggering of clawback provisions.
10 | Journal Publications - Financial Times Top 50 Journals
EXECUTIVE TAKEAWAYS
■ Director incentives affect the stringency of executive compensation clawbacks. ■ Only clawbacks with teeth can deter management from engaging in financial misreporting. ■ Management maneuvers around strong clawbacks by reducing discretionary expenses. ■ Relationships between the CEO and directors affect the governance effect of clawback.
Divesh S. Sharma, Professor of Accounting
Losers of CEO Tournaments: Incentives, Turnover, and Career Outcomes Eric W. Chan, John H. Evans III, and Duanping Hong
The Accounting Review, Vol. 97, No. 6 (October 2022), pp. 123-148
OVERVIEW
We investigate the consequences of participating in CEO promotion tournaments for nonpromoted executives (NPEs). We find that NPEs’ total incentives decrease after a tournament: their future promotion prospects dwindle, and subsequent increase in compensation is limited. Consistent with the theory that NPEs leave a company in response to reduced incentives, our results indicate that turnover is higher for NPEs who were more competitive for promotion, especially those who compete in open tournaments without an heir apparent versus closed tournaments with an heir apparent or in tournaments won by an outsider rather than an insider. Subsequent career outcomes suggest that the labor market assesses NPEs who leave after open tournaments and tournaments with an outsider winner relatively favorably. Overall, the evidence suggests that promotion tournaments not only weed out low-quality managers but also cause high-quality managers to leave.
12 | Journal Publications - Financial Times Top 50 Journals
EXECUTIVE TAKEAWAYS Executive Takeaways
■ In CEO promotions, nonpromoted executives (NPEs) have lower potential for future promotion. ■ Strong NPEs often subsequently leave the firm due to greater loss of incentives. ■ NPEs in firms that promote an heir apparent are less subject to the issue of NPE turnover. ■ NPEs who leave after a tournament are not always deemed "losers" by the labor market.
Duanping Hong, Assistant Professor of Accounting
CEO's Childhood Experience of Natural Disaster and CSR Activities Daewoung Choi, Hyunju Shin, and Kyoungmi Kim
Journal of Business Ethics, 2023
OVERVIEW
Interest in the drivers of corporate social responsibility (CSR) is growing. Using archival data, we explore an understudied area; specifically, three mechanisms that may account for the relationship between CSR and the CEO’s childhood experience of natural disaster. While prior research based on posttraumatic growth theory has established a positive relationship, we explain it through the dual mechanisms of prosocial values and the CEO’s risk aversion. We further find that the positive relationship is stronger when (1) CEOs have longer career horizons, and (2) community social capital is high. This study has important research and managerial implications. In particular, it advances upper echelon theory by revealing that CEOs’ childhood experience of natural disaster, amplified by their career horizons and level of community social capital, is a factor that contributes to understanding the substantial variations in firms’ CSR commitment and effort.
14 | Journal Publications - Financial Times Top 50 Journals
EXECUTIVE TAKEAWAYS Executive Takeaways
■ A CEO's childhood experience of a natural disaster positively influences CSR. ■ Early-career CEOs with such experiences are more likely to engage in CSR than their older counterparts. ■ CEOS who work in a tight-knit community engage in more CSR.
Hyunju Shin, Assistant Professor of Marketing and Professional Sales
Who Cares More About the Environment, Those with an Intrinsic, an Extrinsic, a Quest, or an Atheistic Religious Orientation?: Investigating the Effect of Religious Ad Appeals on Attitudes Towards the Environment Denni Arli, Patrick van Esch, and Yuanyuan Cui
Journal of Business Ethics, 2022
OVERVIEW
While scientists agree that climate change is a growing, human-made threat to our planet, people all over the world, including people of faith, remain divided for reasons not yet fully explained. Studies 1 and 2 explore the impact of consumers’ religious orientation—religion as an end in itself (intrinsic), a means to an end (extrinsic), a journey toward understanding (quest), or a false ideology (atheism)—on their attitudes toward the environment, focusing on the effects of advertisements promoting recycling with and without religious cues. Study 3 examines environmental identity as a causal mechanism and the moderating effect of political views on consumers’ lack of belief in climate change. Results show that religious people are less committed than atheists to recycling and otherwise remediating the environment and reversing climate change. Practically, they indicate that advertising campaigns should seek endorsement from religious leaders and dissemination through the religious institutions they represent.
16 | Journal Publications - Financial Times Top 50 Journals
EXECUTIVE TAKEAWAYS Executive Takeaways
■ Most religious people lack commitment to the environment and climate change. ■ Ads from experts who are religious appeal to religious consumers. ■ Atheism positively affects recycling and climate-change identity.
Patrick van Esch, Assistant Professor of Marketing
Entrepreneurship and Subjective vs. Objective Institutional Performance: A Decade of US Hospital Data Shelby Renee Meek and Matthias A. Tietz
Research Policy, Vol. 51, No. 9 (November 2022), 104652
OVERVIEW
Regional entrepreneurial activity can strongly affect the performance of local public service institutions. However, the literature explaining these relationships suffers from five methodological problems: (1) inferred direction of influence; (2) blurring of objective and subjective performance; and lack of (3) representative; (4) longitudinal; and (5) fine-grained regional data. Our empirical approach applies econometric, mixed-effects regression models merging two sources of entrepreneurial activity at the county level with a rich longitudinal dataset representing the ubiquitous institution of hospitals; specifically, the entire hospital population in over 3,000 US counties between 2006 and 2018. We discriminate objective from subjective institutional performance, with striking results: regional entrepreneurial activity positively affects objective institutional performance and negatively affects subjective performance, although the hospital's research designation attenuates the latter. These findings, suggesting that institutional performance is a byproduct of regional entrepreneurial activity, have significant theoretical and policy implications.
18 | Journal Publications - Financial Times Top 50 Journals
EXECUTIVE TAKEAWAYS Executive Takeaways
■ Nationwide longitudinal data per county show that regional entrepreneurial activity affects hospitals' objective outcomes positively and subjective performance negatively. ■ Expectations for innovation may influence subjective institutional performance. ■ Knowledge can spill over from enterprises to institutions.
Shelby Renee Meek, Assistant Professor of Entrepreneurship
Exploring the Dark Side of Integrity: Impact of CEO Integrity on Firms' Innovativeness, Risk-Taking, and Proactiveness Prachi Gala and Saim Kashmiri
European Journal of Marketing, Vol. 56, No. 7 (June 2022), pp.2052-2102
OVERVIEW
This paper examines the effect of chief executive officer (CEO) integrity on the firm’s strategic orientation. The authors propose that CEOs with strong integrity tend to be unimaginative, negatively influencing their firms’ entrepreneurial dimensions, including innovativeness, risk-taking, and proactiveness. They argue that this negative effect is likely to be stronger for overconfident CEOs with significant power and weaker when the firm has a strong customer orientation and CEO compensation has a high equity-to-pay ratio. An analysis of 741 observations of publicly traded US firms from 2014 to 2017 broadly supports these claims. Results add to prior work on CEO integrity by highlighting some hitherto unexplored negative outcomes. They have valuable implications for board members, investors, managers, compensation committee members, and researchers interested in understanding the antecedents of innovation, risk-taking, and proactiveness
20 | Distinguished Journal
EXECUTIVE TAKEAWAYS Executive Takeaways
■ A firm's entrepreneurial orientation is shaped by its CEO's personality traits and cognitive biases. ■ Introducing customer advocates in top management teams reduces the risk-averse behavior of CEOs with high integrity. ■ CEOs should understand that integrity is a double-edged sword to leverage its strengths. ■ Paying high equity to CEOs weakens the negative impact of their integrity.
Prachi Gala, Assistant Professor of Marketing
The Effect of Alternative Fraud Model Use on Auditors' Fraud Risk Judgments
Doug Boyle, Todd DeZoort, and Dana Hermanson
Journal of Accounting and Public Policy, Vol. 34, No. 6 (November-December 2015), pp. 578-596
OVERVIEW
Dana Hermanson received the Outstanding Impact Publication award for the 2015 article noted above. Co-author Boyle earned his DBA from Coles College in 2012, and DeZoort served as a DBA Global Scholar. In 2004, Hermanson worked with forensic accountant David Wolfe to introduce a new model of fraud, the “fraud diamond,” which adds a fourth side, capability, to Cressey’s traditional fraud triangle based on pressure, opportunity, and rationalization. The 2015 article provides evidence that auditors using a tool based on the fraud diamond assess risk significantly higher than those using the triangle and proposes an enhanced fraud triangle. According to Google Scholar, the 2004 article has been cited over 2,000 times, and the 2015 paper has over 140 citations. In 2022, Hermanson presented insights from the 2004 and 2015 papers to the two leading US auditing regulators, the American Institute of CPAs and the Public Company Accounting Oversight Board. He uses the fraud diamond and enhanced fraud triangle in his classes and has presented these models to many professional groups. He hopes they can help auditors and others to mitigate fraud.
22 | Outstanding Impact
EXECUTIVE TAKEAWAYS Executive Takeaways
■ In 2004, Wolfe and Hermanson introduced the fraud diamond, which adds a fourth side, capability, to the traditional fraud triangle. ■ The 2015 article finds that auditors assess fraud risk higher when using the diamond. ■ Hermanson has presented this research to auditing regulators, students, and professionals.
Dana Hermanson, Dinos Eminent Scholar Chair of Private Enterprise and Professor of Accounting
Letters to the Editor - Wall Street Journal, Atlanta Journal-Constitution, and Marietta Daily Journal Dana Hermanson
2018-2022
OVERVIEW
This award recognizes Dana Hermanson’s engagement with the national, regional, and local communities on current business, accounting, political, and other topics. From 2018-2022, he had 25 letters to the editor published in the Wall Street Journal, 13 in the Atlanta Journal-Constitution, and 7 in the Marietta Daily Journal. Over his career, in addition to articles in academic and professional journals, he has published more than 100 letters to editors. Some of Hermanson’s recent letters to the Wall Street Journal have been featured as the lead or only submission: “What Trump Can Learn from the Bee Gees,” “Biden Plays ESG Politics with Your Retirement Plan,” “What the SEC Needs to Hear on Climate Risk,” “Keep it Simple, Stupid,” “When the Economic Cure is Worse than the Disease,” and “Pardon Me, Did You Say ‘Good’ Socialism?” In offering his perspectives to a broad audience, he has enjoyed feedback through emails and online comments.
24 | Community Engagement
EXECUTIVE TAKEAWAYS Executive Takeaways
■ Hermanson reaches a broad audience by publishing letters to the editor. ■ He had 45 letters published from 2018-2022 and over 100 throughout his career. ■ His perspective on business, accounting, political, and other topics appear in the Wall Street Journal and other outlets.
Dana Hermanson, Dinos Eminent Scholar Chair of Private Enterprise and Professor of Accounting
Cybersecurity Basic Concept and Cyber Career Pathways: KSU GenCyber School Camp 2022-2024
Miloslava Plachkinova
OVERVIEW
The National Security Agency (NSA) has awarded approximately $147,000 to the GenCyber program, a joint effort of faculty across Kennesaw State University departments. This two-year, hybrid school/camp is designed to increase high school students’ interest in cybersecurity careers. A total of 65 students in grades 9-12 were carefully selected, focusing on minority, female students from metropolitan Atlanta and its suburbs (Clayton, Cummins, Decatur, Dunwoody, East Cobb, Lawrenceville, Marietta) and counties north of Atlanta (Acworth, Canton, Cartersville, Kennesaw, Rome). Running from Spring 2022 to Spring 2024, the program teaches them the basic principles of cybersecurity to prepare them for further education and careers in the field. On-campus activities leverage a state-of- the-art cyber range and undergraduate-level learning resources in cybersecurity fundamentals, ethics, risk management, adversarial thinking, ethical hacking, computer network security, and secure app development. Pre- and post-camp activities include virtual lectures on cybersecurity careers as well as formative and summative assessments.
26 | Research Grant
EXECUTIVE TAKEAWAYS Executive Takeaways
■ KSU faculty designed and are hosting the NSA-funded GenCyber School/Camp from 2022-2024. ■ High school students will gain knowledge on cybersecurity fundamentals and careers.
Miloslava Plachkinova, Assistant Professor of Information Security and Assurance
Knock! Knock! Is the Doctor In? Impact of Consumer-Facing Health- IT on Health Outcomes Arpit Sharma (PhD Graduate)
Saurabh Gupta (Dissertation Chair) Humayun Zafar (Committee Second) Shankar Banik (Reader)
OVERVIEW
Dr. Arpit Sharma graduated from the PhD program in Business Administration in Summer 2022. His dissertation focuses on the influence of new and innovative technologies on primary care health outcomes such as patient satisfaction, continuity of care, and patient efforts. Its unique contribution is in using Bandura's Social Cognitive Theory to highlight how collective efficacy mediates the relationship between technology use and health behavior. This mixed-methods research involving rapid focus groups furnished a theoretically grounded model that identifies technologies' limitations and contributions to an individual's psychological beliefs. Its essential insights for technology development clarify why some work and some do not.
28 | PhD Summaries
EXECUTIVE TAKEAWAYS Executive Takeaways
■ Collective efficacy informs learning group behavior and supports healthcare delivery. ■ Technology features contribute to and undermine the collective efficacy of individuals. ■ Despite the good design, some technologies work, and some don't— mediating role of human psychology. ■ Rapid focus groups are useful in developing new and innovative healthcare technologies. ■ Healthcare delivery platforms must encompass information systems, psychology, and medicine.
Arpit Sharma, PhD Graduate Saurabh Gupta, Professor of Information Systems Humayun Zafar, Professor of Information Security and Assurance
Alexa? What Keeps Consumers (from) Engaging with You? Kate Nicewicz Scott (PhD Graduate) Mona Sinha (Dissertation Chair) Saurabh Gupta (Committee Co-Second) Jennifer Hutchins (Committee Co-Second) Patrick van Esch (Reader)
OVERVIEW
As consumers continue to grow more comfortable leveraging technology in their daily routines, the introduction of artificial intelligence, including smart speakers, has become largely unavoidable (Davenport et al., 2020). Smart speakers offer convenience benefits for users, while providing firms with a competitive advantage in the way of large amounts of valuable data acquired through consistent, meaningful consumer engagement. This work employs a mixed-methods strategy to investigate why and how individual user, task, and technology characteristics influence engagement with smart speakers. Findings show both willingness and resistance to engage with AI technology, depending upon a users’ personality characteristics, the device’s level of anthropomorphism, and/or the nature of the task (Serenko, 2007; Swartz, 2003; Waytz et al., 2010a). Study 1 conducted in- depth interviews with both users and non-users of smart speakers to examine how user, task, and technology characteristics interact to affect engagement (or lack thereof) with smart speakers. A metaphor analysis identified variables that strengthen or weaken direct relationships. Several constructs emerged and were used to develop a new empirical model that Study 2 tests through partial least squares structural equation modeling (PLS-SEM).
30 | PhD Summaries
EXECUTIVE TAKEAWAYS Executive Takeaways
■ Smart-speaker engagement depends on the user's personality, the task, and features of the technology. ■ A metaphor analysis identified variables that support or disrupt engagement. ■ Cognitive engagement is a critical dimension of the construct, especially for consumer research. ■ The study offers a reliable, valid, empirical framework for examining smart-speaker engagement.
Kate Nicewicz Scott, PhD Graduate Mona Sinha, Associate Professor of Marketing Saurabh Gupta, Professor of Information Systems Jennifer Hutchins, Associate Professor of Marketing Patrick van Esch, Assistant Professor of Marketing
Conflict, Inequality, and the Provision of Public Good in a Model of Location Choice Abhra Roy Coles Research Symposium on Homeland Security, Special Issue, SIFALL22-04, October 2022
OVERVIEW
We analyze a model of conflict between an insurgency and a government. The median voter chooses an equilibrium tax rate and the government chooses how much to allocate to defense. The media outlet reports on the value of the public good. The insurgents choose the probability and the location of the attack. We compare between two scenarios: a) when the government is only concerned about security and b) when it maximizes welfare. We find that under security concern, a rise in media bias regardless of political spin causes a lower provision of the public good and moves the location of attack closer to the rural region than under welfare concern, however, with higher probability. The location of attack moves closer to the urban region under welfare concern. Finally, we show that the effect of inequality on the location of attack changes depending on whether or not the government is welfare maximizing.
32 | Coles Research Symposium
EXECUTIVE TAKEAWAYS Executive Takeaways
■ The government over-commits the provision of defense under security concern. ■ Exclusive concern about security reduces warfare. ■ The government provides the maximum of public good under welfare concern. ■ The location of an attack lies closer to the rural region than under security concern.
Abhra Roy, Associate Professor of Economics
Conflicts and Education Expenditure Aniruddha Bagchi, Xiao Huang, and Benjamin Scafidi
Coles Research Symposium on Homeland Security, Special Issue, SIFALL22-02, October 2022
OVERVIEW
This paper analyzes the impact of terrorism on a country’s education expenditures. Using the dynamic panel data method and data on 93 countries between 1993 and 2011, we find that terrorism has a negative and statistically significant impact on a country’s education expenditures. Previous literature finds that terrorism has a negative effect on investment; our work sheds light on its long-term impact on human capital accumulation and economic growth. The dynamic nature of our model permits us to study the cumulative effect of terrorism on education expenditures, and instrumental variables are used to estimate possible endogeneity
34 | Coles Research Symposium
EXECUTIVE TAKEAWAYS Executive Takeaways
■ Terrorism has a negative impact on a country's education expenditures. ■ This negative relationship is dynamic and may accumulate over time. ■ Terrorism's impact on long-term human capital accumulation is significant.
Aniruddha Bagchi, Professor of Economics Xiao Huang, Professor of Economics Benjamin Scafidi, Professor of Economics
Lives or Livelihoods: A Configurational Perspective of COVID-19 Policies Jomon A. Paul, Xinfang Wang, and Aniruddha Bagchi Coles Research Symposium on Homeland Security, Special Issue, SIFALL22-01, October 2022
OVERVIEW
We adopt a configurational perspective to analyze the complexity of COVID-19 policies, which must balance public health and economic outcomes. Our fuzzy-set, qualitative, comparative analysis (fsQCA) of 1,543 cases from a variety of sources supports nonlinear combinations of the policies that led to the success or failure of health and economic outcomes. Among our noteworthy findings, first, each of the four outcomes can be achieved via different pathways. For instance, three configurations lower COVID-19 death rates, one suggesting an all-in approach in the presence of all causal conditions, while another addresses a combination of present and absent conditions. Second, the cause/effect relationship is asymmetric: school closures can both lower and raise COVID-19 death rates, depending on the demand and supply policies undertaken Results provide policymakers with a complementary and substitutive strategy for navigating a complex, unstable environment. They gain valuable guidance on protecting both lives and livelihoods, an ethical dilemma beyond health crisis settings. Our study framework applies to many policy decisions that involve weighing the protection of human life against economic loss.
36 | Coles Research Symposium
EXECUTIVE TAKEAWAYS Executive Takeaways
■ A configurational analysis of COVID-19 policies balances public health and economic outcomes. ■ It provides policymakers with complementary and substitutive strategies. ■ It reveals a cause/effect relationship that is confunctional, equifinal, and asymmetric. ■ Results inform a policy matrix for mitigating the ethical dilemma of protecting both lives and livelihoods.
Jomon A. Paul, Professor of Quantitative Analysis Aniruddha Bagchi, Professor of Economics
A Model of Fortification Using Bayesian Persuasion Jomon A. Paul and Abhra Roy Coles Research Symposium on Homeland Security, Special Issue, SIFALL22-05, October 2022
OVERVIEW
Many critical infrastructure firms may be vulnerable to imminent attacks, but they are often myopic and assess their need for fortification based on its cost and their assessment of danger. From their perspective, fortification pays off only if an attack occurs. To the extent that they serve as the economy’s backbone, their inertia can harm society in general. In this context, can the government persuade more firms to fortify? The answer is yes. The government can persuade firms to fortify against possible attacks when they might not have done so on their own by creating an informational environment. Public welfare is highest under perfect intelligence, but even under high or moderate intelligence, disclosing less information, the government can mobilize more firms to fortify.
38 | Coles Research Symposium
EXECUTIVE TAKEAWAYS
■ The government can usually persuade reluctant firms to fortify. ■ Persuasion always improves the general welfare. ■ The government may persuade more firms under high intelligence than any other scenario. ■ Full information disclosure is never optimal. ■ Updating the intelligence apparatus always increases welfare.
Jomon A. Paul, Professor of Quantitative Analysis Abhra Roy, Associate Professor of Economics
Dynamic Model of Conflict with Endogenous Destruction: The Role of Motivation Leo MacDonald and Aniruddha Bagchi Coles Research Symposium on Homeland Security, Special Issue, SIFALL22-03, October 2022
OVERVIEW
We consider a contest for a territory between two countries that differ in their rationales for fighting. Suppose one wants to win for primarily ideological reasons (e.g., shared heritage, ethnicity, religion), and the other for primarily economic reasons (e.g., access to natural resources). The economic value of the territory declines over time proportional to the intensity of the conflict, which has a stronger adverse impact on the economically motivated country. Thus, other factors remaining the same, we find the ideologically motivated country has a better chance of winning because it allocates a higher share of resources to armaments and a lower share to consumption during every period. In contrast, the economically motivated country initially allocates a high share of resources to armaments but less as the war lingers. Its citizens are willing to sacrifice consumption only in the initial stages, which is a disadvantage over the long haul. However, this disadvantage is erased if its initial valuation of the territory is significantly higher than that of the ideologically motivated country. We find no change in the chance of winning, even if the two countries have different initial endowments.
40 | Coles Research Symposium
EXECUTIVE TAKEAWAYS
■ When two countries with different motivations wage war, the ideologically motivated country enjoys an advantage over one motivated by economics. ■ The advantage persists even if their initial endowments differ significantly. ■ It vanishes if their initial valuations of winning are sufficiently dissimilar.
Leo MacDonald, Professor of Quantitative Analysis Aniruddha Bagchi, Professor of Economics
A Meta-Analytic Examination of the Impact of Leader Age on Leader Effectiveness Joshua Palmer
OVERVIEW
Does the age of first-line and midlevel leaders affect their effectiveness? Surprisingly, as the workforce grows older, and researchers increasingly focus on the role of age in the workplace, few have investigated whether older first-line and midlevel leaders are more or less effective than their younger counterparts. We conducted a meta- analysis of 217 primary studies to examine the relationship between leader age and widely studied leader and follower work outcomes as first-line and midlevel leaders not only perform their own tasks but also shape followers’ work outcomes. We found that leader age was negatively and weakly related to the leader’s own task performance but was positively and weakly related to follower task performance and organizational citizen behavior (OCB). Our findings were largely robust regardless of the gender of the leader and follower and the age difference between the leader and follower
42 | Summer Research Fellowship
EXECUTIVE TAKEAWAYS
■ Leader age had a negative and weak relationship with leaders' own task performance. ■ Leader age had a positive and weak relationship with follower task performance and OCB. ■ These relationships were largely generalizable across conditions.
Joshua Palmer, Assistant Professor of Organizational Behavior/Human Resources Management
The Effects of GPO Relationships on Hospitals' Purchasing Performance Yoon Hee Kim
OVERVIEW
Group purchasing organizations (GPOs) have become the largest first-tier suppliers for most US hospitals. Several studies suggest that 90-98 percent of US hospitals purchase, on average, 73 percent of their supplies through GPOs. Faced with persistent pressures to cut costs, hospitals have increased their reliance on a GPO to lower total purchasing costs by tapping into a GPO’s pooled buying power and expertise over a wide range of products. Given that supply expenses account for about 30-45 percent of a hospital’s operating budget, selecting the right GPO is an important first step in improving cost efficiency and financial performance. However, extant studies ignore how hospitals should select a GPO, focusing mainly on the GPO’s roles and effectiveness in healthcare product supply chains. To fill this gap, we collected secondary data on 2,590 unique acute-care hospitals and their primary GPOs, and investigate which factors of GPO organizations and hospital-GPO relationships affect hospitals’ purchasing performance.
44 | Summer Research Fellowship
EXECUTIVE TAKEAWAYS
■ This study is the first to investigate the relationship between US hospitals and GPOs using a large, nationwide secondary dataset.
Yoon Hee Kim, Associate Professor of Management
Misspecification and Weak Identification Zhaoguo Zhan
OVERVIEW
A common practice across disciplines is to infer conclusions from a theoretical model using empirical data. However, two inherent problems jeopardize its usefulness. First, models are only approximations of reality, and their analysis typically suffers from the so-called misspecification problem, or biased coefficients, error terms, and/or parameter estimates. Second, even if a model is theoretically correct, researchers may not have sufficient empirical data to infer its structural parameters. This problem is termed weak identification. Our project focuses on the asset-pricing literature to develop novel econometric methods to jointly address both theoretical and empirical questions related to misspecification and weak identification.
46 | Summer Research Fellowship
EXECUTIVE TAKEAWAYS
■ Misspecification and weak identification commonly impair asset-pricing studies. ■ Conventional test statistics may fail to detect them. ■ Novel methods can jointly account for them.
Zhaoguo Zhan, Associate Professor of Economics
The Macroeconomic Effects of Business Tax Cuts Filippo Occhino
Coles Working Paper Series, SPRING23-04, March 2023
OVERVIEW
This paper studies the macroeconomic effects of business tax cuts using a dynamic general equilibrium model that incorporates endogenous debt and equity financing, interest deductibility, and accelerated capital depreciation. A cut in the tax rate stimulates business investment and output persistently, but the size of the effects is small: a 10 percentage point permanent tax cut raises investment and output by only 2 percent and 0.4 percent, respectively. The cumulative tax multiplier ranges from −0.4 in the initial year to −0.6 after ten years. The model predicts more expansionary effects without debt financing and accelerated depreciation. The multiplier of investment tax credits is larger in absolute value than the tax-rate multiplier, and the multiplier of depreciation allowances is much smaller at first than over time
48 | Working Papers
EXECUTIVE TAKEAWAYS
■ The effect of business tax cuts is studied using a dynamic general equilibrium model. ■ A 10 percentage point cut in the tax rate raises output by 0.4 percent on impact. ■ The predicted effect would be larger without debt financing and accelerated depreciation. ■ The cumulative tax rate multiplier is -0.4 on impact and -0.6 after ten years. ■ Impact multipliers of depreciation allowances and tax credits are -0.1 and -0.7
Filippo Occhino, Associate Professor of Economics
Do SPAC Contributions Affect Their Peers' Accounting Quality? Danial Cohen, Kelly Ha, Sunay Mutlu, and John Schomburger
Coles Working Paper Series, FALL22-02, November 2022
OVERVIEW
We explore whether firms going public through mergers with special purpose acquisition company (SPAC) combinations influence their peer firms’ financial reporting quality. Although SPAC combinations provide an efficient alternative to traditional initial public offerings (IPOs) for private firms, recent studies show that their financial reporting is poor. Extending this line of research, we show that their peers’ financial reporting quality actually improves in the years following the merger. Consistent with SPAC combinations attracting regulatory scrutiny of their peer group. The increase in financial reporting quality is driven by the more visible peers. Our study provides a new perspective on the debate over the general effects of SPAC combinations
50 | Working Papers
EXECUTIVE TAKEAWAYS
■ Regulators like the Securities and Exchange Commission (SEC) scrutinize SPAC combinations and their peer firms. ■ Following the merger, peer firms' accounting quality improves. ■ This improvement is more pronounced among more visible peers.
Kelly Ha, Assistant Professor of Accounting Sunay Mutlu, Associate Professor of Accounting
Market Reactions to Innovative Firms' Earnings News Marcus Caylor, Duanping Hong, Hyungshin Park, and Hong Qu
Coles Working Paper Series, FALL22-05, November 2022
OVERVIEW
Keynes (1936) predict that investors will overreact to public information in valuing stock as they try to guess other investors’ beliefs. We examine this prediction in the context of disruptive technology firms. We predict that due to their uncertain business and valuation models, publicly available information on these firms should lead to stronger market reactions than other firms. Consistent with this prediction, we find that disruptive technology firms’ earnings announcements prompt strong price reactions and high trading volume. Our results also indicate that even sophisticated market participants, such as financial analysts, overreact to public information in stock valuation. Their target price forecast revisions, but not their earnings forecast revisions, are more sensitive to earnings news about disruptive technology firms. Moreover, the dispersion of stock recommendations relative to profitability forecasts is narrower for disruptive technology firms than their counterparts, consistent with overweighting public information.
52 | Working Papers
EXECUTIVE TAKEAWAYS
■ We examine Keynes' prediction on stock price behavior in disruptive technology firms. ■ We predict strong market and analyst reactions to public information on disruptive technology firms. ■ Market reactions to earnings announcements are stronger for disruptive technology firms than their counterparts. ■ Analysts' price revisions to earnings announcements are stronger for disruptive technology firms than their counterparts.
Marcus Caylor, Professor of Accounting Duanping Hong, Assistant Professor of Accounting Hyungshin Park, Assistant Professor of Accounting Hong Qu, Assistant Professor of Accounting
CEO Pay Slice and Firm Value: Is Corporate Social Responsibility a Missing Link? Prachi Gala and Duncan Nicol
Coles Working Paper Series, FALL22-01, November 2022
OVERVIEW
The topic of pay disparity in the upper echelons has recently attracted scholarly attention, but the mechanisms that explain its performance effects remain obscure. Based on stakeholder theory, we propose that pay disparity, calculated as CEO pay slice (CPS), affects levels of investment in internally and externally oriented corporate social responsibility (CSR) initiatives, which can affect firm value. Results derived from a large, longitudinal sample of US-based public firms support a partial mediation model where internal, but not external CSR initiatives mediate the negative relationship between CPS and firm value. While external CSR investments were positively associated with firm value, CPS did not affect them significantly. Note that we adopted an instrumental variable approach to address endogeneity concerns between CPS and firm value. Findings remain consistent across analytical specifications and econometric techniques, enhancing confidence in our theory and results. Our findings show that the negative impact of a large compensation differential between the CEO and the rest of the executive team extends beyond tactical, individual actions like shirking (Henderson & Fredrickson, 2001) or aggressive interpersonal behaviors (Dye, 1984). Firm–level outcomes, such as CSR investments and capital market valuations, extend the influence of these policy decisions
54 | Working Papers
EXECUTIVE TAKEAWAYS
■ Paying a CEO more than the rest of the top management team has a dark side. ■ Internal and external corporate social responsibility have differential effects on the firm's value. ■ Internal corporate social responsibility matters more to firm value when CEO pay is high compared to top management team compensation.
Prachi Gala, Assistant Professor of Marketing
Subnational Institutional Differences, R&D-Performance, Relationship, and FDI Spillovers in Russia Sergey Lebedev and Mike W. Peng
Coles Working Paper Series, SPRING23-02, March 2023
OVERVIEW
This paper analyzes the influence of institutional development in different regions. Specifically, we look at firms in 39 regions in Russia. First, we find that in regions with more developed market institutions—for example, with more transparent regulation and less corruption—firms can reap more benefits from investing in research and development (R&D). Second, we find that in regions where more developed market institutions are combined with more foreign direct investment (FDI) inflows, R&D benefits become even more pronounced, while in regions with underdeveloped institutions, FDI may crowd out local firms. This finding may have important implications for foreign firms considering entry location as well as local firms analyzing positive and negative effects of foreign competition.
56 | Working Papers
EXECUTIVE TAKEAWAYS
■ Differences in the development of market institutions within a country matter, especially in emerging economies. ■ Firms benefit from innovation strategies more in institutionally developed regions. ■ Institutional development in a region influences the effect of FDI inflows on local firms. ■ FDI likely promotes benefits from R&D only in more institutionally developed regions.
Sergey Lebedev, Assistant Professor of Strategic Management
GENERIC THEMES
DECISION AND RISK ANALYTICS
SUSTAINABILITY
SOCIAL WELLBEING WORK LIFE BALANCE ECONOMIC GROWTH
TEACHING
ETHICS
INNOVATION
TECHNOLOGY
STRATEGY
ENTREPRENEURSHIP
DIGITAL TRANSFORMATION
CORPORATE GOVERNANCE
HUMAN RESOURCE MANAGEMENT
METHODOLOGY
ENTREPRENEUR ORIENTATION ORGANIZATIONAL CULTURE
CORE THEMES
INFORMATION SYSTEMS AND SECURITY
FINANCE
INFORMATION SYSTEMS
INVESTMENTS
SECURITY
CORPORATE FINANCE
HUMAN-COMPUTER INTERACTION
BEHAVIORAL FINANCE
INFORMATION TECHNOLOGY
FINANCE - GENERAL
SCHOOL OF ACCOUNTANCY
MARKETING
ACCOUNTING
BRANDING
AUDIT TAX
DIGITAL MARKETING
ADVERTISING
MARKETING STRATEGY SERVICES MARKETING
ECONOMICS
INTERNATIONAL TRADE
PROFESSIONAL SALES
HEALTH ECONOMICS
EDUCATION ECONOMICS
SPORTS ECONOMICS TAXATION
Coles Faculty have contributed over
15321 times from other researchers
Which were cited
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Annals of Tourism Research Auditing: A Journal of Practice and Theory Contemporary Accounting Research European Journal of Operational Research Industrial Marketing Management International Journal of Hospitality Management Journal of Association of Information Systems Journal of Business & Economic Statistics Journal of Business Finance and Accounting Journal of Financial and Quantitative Analysis Journal of Management Journal of Management Studies Journal of Organizational Behavior Journal of Service Research Journal of the Academy of Marketing Journal of the Academy of Marketing Science Research Policy Review of Accounting Studies The Accounting Review Many publications included in A+ Journals such as:
While being editorial board members in
Academy of Management Review Auditing: A Journal of Practice and Theory Contemporary Accounting Research Industrial Marketing Management
Journal of Banking and Finance Journal of International Business Studies Journal of Organizational Behavior Journal of the Academy of Marketing Science
International Journal of Hospitality Management
Which has yielded
$2,042,585 Total external research grant dollars
Special thanks to the following faculty and committees for their significant contributions to the Coles Research Magazine.
Coles Working Paper Series
Editor: Jomon Paul
Editorial Board: Canan Mutlu ■ Dana Hermanson ■ Divesh Sharma Filippo Occhino ■ Gohar Sedrakyan ■ Graham Lowman Mark Hiatt ■ Jennifer Hutchins ■ John Abernathy ■ Justin Cochran Leo MacDonald ■ Luc Noiset ■ Marcus Caylor ■ Nik Nikolov Prachi Gala ■ Pramod Iyer ■ Rajaram Veliyath ■ Stacy Campbell Stefan Sleep ■ Susan Young ■ Sunay Mutlu ■ Stacey Kessler Vineeta Sharma ■ Xiao Huang ■ Xuepeng Liu ■ Zhaoguo Zhan
Research and Development Committee Andy Green ■ Armen Taschien ■ Filippo Occhino Hong Qu ■ Max North ■ Pramod Iyer Qi Dong ■ Samia Siha ■ Xuepeng Liu ■ Yoon Hee Kim
PhD Program Executive Director: Saurabh Gupta
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