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Organizational Identity and Performance: An Inquiry into Nonconforming Company Names
No full textChoosing the right company name is challenging and may have major consequences for firm prospects. Drawing on the strategic conformity literature, we investigate the implications of “nonconforming” company names, i.e. foreign sounding and family-unrelated, for family firms’ performance. Consistent with the idea that such names endow the business with greater visibility and recognition, we find that nonconforming names are positively associated with financial performance. This association is stronger when the firm operates in an industry with a low share of nonconforming peers and a high share of eponymous peers, in a crowded product class, and is smaller than industry peers. Collectively, our analysis provides new evidence on the strategic implications of company names
Fiscal Responses to Monetary Policy: Insights From a Survey Among Government Officials
No full textIn a novel survey, we study how German senior government officials systematically adjust fiscal policy in response to economic shocks, focusing on their fiscal responses to a contractionary monetary policy shock. Using randomized vignette treatments, we examine how officials update GDP and inflation expectations under fiscal and monetary policy shock scenarios and assess their preferred fiscal adjustments. Our findings show that officials predominantly respond by increasing debt and reducing spending, with tax increases playing a minor role, often combining multiple fiscal instruments. Counterfactual analysis reveals that officials’ reasoning aligns with key insights from the Heterogeneous Agent New Keynesian literature
A Glimpse Into the Innovative Landscape of the Accounting Profession From the Perspective of Future Accountants
No full textCurrent entrants to the accounting profession confront the increasing influences of digitalization on the profession, yet how these entrants perceive such trends is little understood. Based on 42 interviews with final-year accounting students at a North American university, this study delves into the perceptions and attitudes of future accountants toward the technological developments unfolding in the profession they aspire to join. Our findings hold significance for accounting practitioners and educators, shedding light on students’ awareness of the technological shifts in the profession and their enthusiasm for these changes. Despite expressing concerns about their accounting education and professional training, the prospective accountants in our study exhibit self-efficacy beliefs in their technological skills. They see technology playing a pivotal role in making accounting a more appealing specialization, emphasizing value-added tasks. By examining prospective accountants’ underlying views on the profession amidst digital transformation, our study offers valuable insights that could be leveraged to enhance interest and retention in the accounting fiel
Fiscal Responses to Monetary Policy: Insights from a Survey of Government Officials
No full textIn a novel survey, we study how German senior government officials systematically adjust fiscal policy in response to economic shocks, focusing on their fiscal responses to a contractionary monetary policy shock. Using randomized vignette treatments, we examine how officials update GDP and inflation expectations under fiscal and monetary policy shock scenarios and assess their preferred fiscal adjustments. Our findings show that officials predominantly respond by increasing debt and reducing spending, with tax increases playing a minor role, often combining multiple fiscal instruments. Counterfactual analysis reveals that officials’ reasoning aligns with key insights from the Heterogeneous Agent New Keynesian literature
Ignorance is Bliss? Domain Dependence of Preferences for the Timing of Information
No full textIs there a fundamental gain-loss asymmetry in information preferences? Using two-stage lotteries with varying dates of resolution and a fixed future date of payment, we ask subjects when they want to know the outcome: earlier, gradually, or later. When facing gains, information seeking predominates, becoming stronger at higher likelihoods. However, in the domain of losses, we find indifference between gradual and late resolution. Moreover, higher the probability of losing, weaker is the demand for information. Remarkably, a sizable minority are willing to pay for ignorance of bad news, a novel and explicit demonstration of information avoidance that is referred to as the ostrich effect. Our findings are inconsistent with established models in economics that cannot accommodate domain dependence of information preferences. They also reveal the importance of emotions in driving attitudes towards information
Wisdom of crowds as a verification tool in bank lending: Evidence from borrowers’ customer tweets
No full textCompared to dispersed, public creditors (e.g., bondholders), private block creditors (such as traditional banks) are more sophisticated, superior monitors and have privileged information about borrowers. Thus, while publicly available information about borrowers such as social media information may be useful to dispersed, public creditors in their lending decisions, it is ex-ante unclear whether such information is useful for bank loan contracting. Using Twitter as the setting, this study examines whether and how customer-generated comments on social media that portray favorable images of publicly listed borrowers affect loan pricing. In the aggregate sample, we find no evidence of a robust relationship between social media information and loan pricing. In the cross section however, we find such information to be negatively associated with loan spreads only when borrower-provided public disclosure is of questionable quality. In contrast, we find no such evidence for borrowers without information credibility issues. Leveraging favorable customer comments also reduces (increases) bank’s reliance on financial (general) covenants. Our evidence points to decline in information risk as the economic mechanism through which such effects occur. Overall, our results indicate that third-party-generated information on social media substitutes for borrower-provided information in lending decisions when borrower-provided information is less reliable
Donations in the Dark
No full textWe examine the impact of the 2013 shift from mandatory to voluntary disclosure of corporate philanthropy in the United Kingdom (UK). Using a difference-indifferences approach over the period 2009-2017, we find that, relative to a sample of United States firms, UK firms (i) reduce corporate philanthropy disclosure and (ii) increase corporate philanthropic donations in the voluntary period. The increases in donations are more pronounced for firms with CEOs who have more connections to charities. Moreover, we find that in the voluntary period, UK firms that decrease corporate philanthropy disclosure increase donations and donate to more prestigious charities. Overall, our results point towards the idea that the shift to voluntary disclosure (i) reduces managerial incentives to transparently report corporate philanthropic activities and (ii) exacerbates managers' incentives to engage in self-serving corporate donations
Theory-Driven Entrepreneurial Search
No full textHow should theory-based entrepreneurs search for strategies to implement their ideas? The theory-based view of strategy posits that decision-makers hold theories about their environment premised on beliefs that should be actively tested. This causal framework, which underlies the theory-based view, also has implications for entrepreneurial search: the process by which entrepreneurs uncover strategies to implement their ideas. In this paper, we develop a Bayesian model where entrepreneurs update their beliefs as they conduct entrepreneurial search. We find several optimal behaviors for theory-based entrepreneurs such as reverting to a previous strategy after finding a relatively poor strategy and continuing to search after finding a relatively good strategy, which are missing when entrepreneurs lack such a theory-based approach. As these predictions align with examples of successful entrepreneurs, our findings both provide a method to empirically identify skilled entrepreneurs and demonstrate the usefulness of applying the theory-based view to entrepreneurial behavior more generally
Continuation Funds: Performance and Determinants, 2018-2022 Vintages
No full textContinuation funds are an emerging and increasingly important vehicle for private equity funds to exit their investments while keeping control of the asset. Due to their short history, as well as the notoriously opaque nature of private equity, we know little about the performance of these funds, and even less about the determinants of performance itself. To fill this gap, I combined primary data collection with archival data search, and compiled a data base of 231 continuation funds generated in the 2018-2022 period: for 140 of those, I also collected performance data. Preliminary exploratory analysis reveals little return differences across industries, markets, or type of fund (single- vs multi-asset). In a further effort to understand returns, I compare 159 funds from the 2019 vintage to 184 simulated multi-asset funds: I find that while returns are comparable, the risk profile of single-asset funds is lower, indicating a narrower spread of outcomes
Relational work and accounting: What venture capital analysts do with accounting and other information in situations of uncertainty
No full textAnalysts in venture capital (VC) organizations are important mediators in the entrepreneurial economy, operating as both 'scouts' and 'coaches' of early-stage ventures. Research shows that these analysts invest heavily in collecting and scrutinizing accounting and a wide range of other information at all stages of their work. However, we lack an integrative theorization of how, in the presence of fundamental or 'Knightian' uncertainty, analysts effectively use this information. We explore this topic through interviews with VC analysts and project makers operating in Denmark in 2009 and 2010. Drawing on and extending the work of Viviana Zelizer, we show, firstly, how the multiple, different uses of accounting and other information function in relation to each other and the communication and transformation of social relations. Each stage of analyst work involves a double movement in which economic media is differentiated and the relationships between analysts and project makers and their ventures are created, negotiated, maintained, and changed. Secondly, we show how this double movement provides an indirect and 'ontological' mode of handling situations of uncertainty in which accounting information adds matter and form to the new business venture. We conclude by exploring opportunities for further applications of relational work in accounting research