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Reproducibility of Empirical Results: Evidence from 1,000 Tests in Finance
No full textHEC Paris Research Paper No. FIN-2022-1467International audienceWe analyze the computational reproducibility of more than 1,000 empirical answers to six research questions in finance provided by 168 international research teams. Running the original researchers’ code on the same raw data regenerates exactly the same results only 52% of the time. Reproducibility is higher for researchers with better coding skills and for those exerting more effort. It is lower for more technical research questions, more complex code, and for results lying in the tails of the results distribution. Neither researcher seniority, nor peer-review ratings appear to be related to the level of reproducibility. Moreover, researchers exhibit strong overconfidence when assessing the reproducibility of their own research. We provide guidelines for finance researchers and discuss several implementable reproducibility policies for academic journals
Valuing Spanners: Why Category Nesting and Expertise Matter
No full textOrganizations need to both differentiate themselves while conforming to their audiences’ expectations. To meet this demand, organizations may span different categories. However, valuing spanners is challenging for audiences. We contend that spanners’ valuation depends on category nesting, as the congruence of informational cues varies between basic categories and subcategories. Furthermore, we expect that more expert audiences find spanners to be more congruent (and hence, more valuable) at a subordinate level than at a basic level of categorization. We test our hypotheses using a mixed methods design in the context of venture capital investments. We analyze observational data on more than 29,000 venture capital deals and develop two experimental studies. Our findings support our hypotheses that subcategory-spanning lowers valuation, and that this effect is attenuated as investors’ expertise increases. Our experimental studies further show that congruence is a causal mechanism explaining these effects. Our findings have important implications for research on organizational conformity and optimal distinctiveness, categorization in markets from an information processing perspective, and the impact of expertise on valuation
The Greening of the Economic and Monetary Union
No full textAll pillars of the Economic and Monetary Union (EMU) recently unleashed an array of measures to transform the economy towards climate neutrality. With the Green Deal, the ECB’s Strategy Review and the growing body of sustainable finance legislation, climate considerations have entered the traditional mandates governing the conduct of financial, fiscal and monetary policy. The cross-sectional nature of climate issues reinforces the interdependence and coordination of EMU policies. The present study explores changes to EMU architecture and discusses the institutional and legal implications of the novel role of climate in the coordination of EMU policies. It addresses the relationship between Treaty mandate and policy leeway, specifically the way in which the European Central Bank extends its focus on price stability to account for climate considerations and the fiscal legal framework relies on flexibility to incentivize climate investment. It also tracks the emergence of climate stability as an EMU concept adding to existing concepts of price, fiscal and financial stability
A Rivalry-Based Theory of Gender Diversity
No full textWe offer a rivalry-based perspective of gender diversity as a form of competitive action. We theorize that a firm adjusts its senior-level female representation when they identify business opportunities that may be seized by demonstrating alignment to gender parity expectations. Examining US corporate law firms and potential buyers of their services, we theorize and find that when the buyers of rivals of the focal firm increase their gender diversity, the focal firm responds by increasing its female partner representation. Reinforcing the strategic approach to managing gender diversity, we also show that a focal firm reduces its gender-related response to rivals’ buyers as the opportunity to attract those buyers decreases, and when the focal firm can use racial diversity as a credible substitute for gender diversity
Clustering and Stochastic Simulation Optimization for Outpatient Chemotherapy Appointment Planning and Scheduling
No full textInternational audienceOutpatient Chemotherapy Appointment (OCA) planning and scheduling is a process of distributing appointments to available days and times to be handled by various resources through a multi-stage process. Proper OCAs planning and scheduling results in minimizing the length of stay of patients and staff overtime. The integrated consideration of the available capacity, resources planning, scheduling policy, drug preparation requirements, and resources-to-patients assignment can improve the Outpatient Chemotherapy Process’s (OCP’s) overall performance due to interdependencies. However, developing a comprehensive and stochastic decision support system in the OCP environment is complex. Thus, the multi-stages of OCP, stochastic durations, probability of uncertain events occurrence, patterns of patient arrivals, acuity levels of nurses, demand variety, and complex patient pathways are rarely addressed together. Therefore, this paper proposes a clustering and stochastic optimization methodology to handle the various challenges of OCA planning and scheduling. A Stochastic Discrete Simulation-Based Multi-Objective Optimization (SDSMO) model is developed and linked to clustering algorithms using an iterative sequential approach. The experimental results indicate the positive effect of clustering similar appointments on the performance measures and the computational time. The developed cluster-based stochastic optimization approaches showed superior performance compared with baseline and sequencing heuristics using data from a real Outpatient Chemotherapy Center (OCC)
Long Information Design
No full textInternational audienceWe analyze information design games between two designers with opposite preferences and a single agent. Before the agent makes a decision, designers repeatedly disclose public information about persistent state parameters. Disclosure continues until no designer wishes to reveal further information. We consider environments with general constraints on feasible information disclosure policies. Our main results characterize equilibrium payoffs and strategies of this long information design game and compare them with the equilibrium outcomes of games where designers move only at a single predetermined period. When information disclosure policies are unconstrained, we show that at equilibrium in the long game, information is revealed right away in a single period; otherwise, the number of periods in which information is disclosed might be unbounded. As an application, we study a competition in product demonstration and show that more information is revealed if each designer could disclose information at a predetermined period. The format that provides the buyer with most information is the sequential game where the last mover is the ex-ante favorite seller
Algorithmic Pricing and Liquidity in Securities Markets
No full textWe let "Algorithmic Market-Makers" (AMMs), using Q-learning algorithms, choose prices for a risky asset when their clients are privately informed about the asset payoff. We find that AMMs learn to cope with adverse selection and to update their prices after observing trades, as predicted by economic theory. However, in contrast to theory, AMMs charge a mark-up over the competitive price, which declines with the number of AMMs. Interestingly, markups tend to decrease with AMMs’ exposure to adverse selection. Accordingly, the sensitivity of quotes to trades is stronger than that predicted by theory and AMMs’ quotes become less competitive over time as asymmetric information declines
Cancel Culture and Social Learning
No full textWe study social learning and information transmission in a sender-receiver game wherein senders may be attacked (``cancelled'') for challenging the status-quo beliefs. We find that cancellations (and self-censorship) don't arise unless there is a positive probability the receiver gains a direct benefit from attacking dissenting speakers. In this case, even receivers who bear a cost from cancelling speakers attack dissenting speakers, as a means to build a reputation for ``toughness''. By doing so, not only they deter future dissenters from revealing their private information but also influence the decision making process.Surprisingly, sometimes the larger the disagreement between speakers and receivers, the more information transmission is elicited in equilibrium
Entrepreneurial Ecosystems As Amplifiers of The Lean Startup Philosophy – Management Control Practices In Earliest-Stage Startups
No full textEntrepreneurial ecosystems play a key role in the development of startups by not only providing support – such as flexible office space and access to skilled employees, mentors and investors – but moreover by promoting concrete ideals about ‘good’ entrepreneurship. In our empirical analysis of management control systems (MCSs) in earliest-stage startups, we witness a strong influence of such ideals – above all the Lean Startup philosophy – on the MCSs analyzed. Building on cross-sectional field study data resulting from a comprehensive field-immersion strategy and 50 interviews with key actors in an entrepreneurial ecosystem as well as with founder-managers of startups, we consider the entrepreneurial ecosystem as a collective meso-level community that mediates between macro-level institutional pressures and micro-level practices of startups. We show how this community – through a variety of what we term amplifying mechanisms – not only actively deinstitutionalizes a legacy entrepreneurial philosophy epitomized by the business plan concept but propagates the Lean Startup philosophy so that this alternative has become the dominant institutional philosophy in the studied ecosystem and its startups. Due to the amplifying mechanisms exerted by the meso-level, startups use MCSs that play a crucial role in the rapid experimentation and learning process towards finding a scalable business model that is characteristic of the Lean Startup philosophy. We theorize this role of MCSs through the lenses of interactive and enabling control systems and make these concepts amenable to multi-level entrepreneurial settings