Indian School of Business (ISB)

Surprise, Function and Experience: How Innovativeness and Utilitarian and Hedonic Attributes Affect Consumer Word of Mouth

Thu, 15 Oct 2009 12:09:30 GMT

Date: 30 Oct 2009(Friday)
Location: AC2 MLT
Speaker: Purushottam Papatla
Abstract: We propose and empirically test a theory to explain the volume and type of consumer word of mouth for products. Our theory builds on Chitturi et al's (2008) theoretical framework and includes innovativeness as a stimulant of word of mouth. The theory leads to four sets of hypotheses. The first two are regarding the effects of utilitarian and hedonic attributes and the third is related to the role of innovativeness. Specifically, the hypotheses related to the role of utilitarian attributes are that satisfying consumers on such attributes does not generate positive word of mouth while not pleasing them on those attributes results in negative word of mouth. The hypotheses related to hedonic attributes state that pleasing consumers on those attributes leads to positive word of mouth but that not doing so does not stimulate negative word of mouth. The third set of hypotheses are that innovativeness increases the volume of word of mouth but that it could increase both positive and negative word of mouth simultaneously. The fourth set of hypotheses is related to the effects of ignoring the role of innovativeness in analyzing consumer word of mouth. We expect this to result in two types of effects: inflated estimates of the effects of utilitarian and hedonic attributes on word of mouth and incorrect signs for the effects. We test the theory empirically on consumer word of mouth over a seven year period for 279 models of automobiles across 36 brands. All four sets of hypotheses are supported by our empirical results and suggest that utilitarian and hedonic attributes play very different roles in consumer word of mouth. Specifically, utilitarian attributes are the primary determinants of negative word of mouth in that, if products are not satisfactory on those attributes, consumers are likely to express their unhappiness to other consumers. Satisfying consumers on these attributes, however, does not necessarily lead to positive word of mouth. Hedonic attributes, on the other hand, are primarily responsible for positive word of mouth in that, if they are pleased with the performance of products on those attributes, consumers are likely to discuss the positive aspects of the products with other consumers. Not pleasing consumers on these attributes, on the other hand, is unlikely to stimulate negative word of mouth. Product innovativeness plays a role that is different from that of product attributes. Specifically, innovativeness can lead to both negative and positive word of mouth. Additionally, because of this dual effect, omitting innovativeness from an analysis of the role of product attributes in consumer word of mouth can lead to inflated and incorrect estimates of their effects. We also present the managerial implications of our findings.

The Lingering Effects of Country-Level Governance on Cross-Listed Firms

Thu, 15 Oct 2009 12:09:30 GMT

Date: 16 Oct 2009(Friday)
Location: AC2 New Mini LT
Speaker: Kuldeep Shastri
Abstract: We examine the relation between perceptions of institutional quality and governance, and trading costs and asymmetric information for NYSE-listed, non-U.S. firms. Consistent with studies that suggest that home-country institutions have lingering effects on cross-listed firms, we report that the liquidity of NYSE-listed, non-U.S. firms is related to the perceived institutional quality and governance of the firm's home country. Cross-listed firms from countries perceived as having stronger (weaker) institutional quality and governance exhibit lower (higher) trading costs and less (more) asymmetric information. The enduring effect of home-country institutions extends to non-microstructure measures of information asymmetry, as we find that analyst coverage is positively related to perceived institutional quality and governance. Perception-based measures better explain differences in trading costs than quantitative measures of shareholder rights and earnings quality. Our results suggest that firms and investors may benefit from improvements in market participants' perception of institutional quality in the form of lower transaction costs and improved liquidity.

Environmental Characteristics and the Impact of IT on Efficiency and Innovation

Thu, 15 Oct 2009 12:09:30 GMT

Date: 30 Sep 2009(Wednesday)
Location: AC2 New MLT
Speaker: V Sambamurthy
Abstract: Managers focus upon innovation and efficiency as two alternative means to improving their firm's performance. Information systems research has demonstrated that investments in information technology usually contribute to the improvements in organizational efficiency. Other research has sought to examine whether information technology investments enhance organizational innovativeness. Yet, a common feature of most prior research is a universalistic assumption, viz., that IT investments will always improve efficiency or innovation, regardless of the firms' environmental context. To extend prior research, we propose a contingency theory explanation and propose that the dynamism, munificence, and complexity of the environment in which firms' operate moderates the relationship between IT investments and efficiency and innovation outcomes. Using panel data from 2003 to 2005 that covers a wide range of industry environments, our research finds that in more stable environments (lower levels of dynamism, munificence and complexity), IT investments are associated with a greater improvement in the efficiency of operations. However, in more unstable environments (higher levels of dynamism, munificence and complexity), IT is associated with a greater increase in innovation (i.e., development of new products and processes, and exploration of growth opportunities). Thus, our analysis suggests that IT is associated with distinct value-creation processes and benefits, depending on the characteristics of the firms' environment.

Outsourcing Two-Level Service Processes

Thu, 15 Oct 2009 12:09:30 GMT

Date: 29 Sep 2009(Tuesday)
Location: AC2 New MLT
Speaker: Robert Shumsky
Abstract: Services processes are often broken into multiple parts and when outsourcing services, a fundamental question is which part(s) of the service process to outsource.� We consider a two-level service process, where the first level serves as a gatekeeper for experts in the second level.� When a customer request enters this system, it is first assessed by a gatekeeper.� Depending on the request's complexity, the gatekeeper can refer it to an expert (direct referral) or attempt to perform the service. If the gatekeeper successfully performs the service, then the customer request leaves the system.� Otherwise, the request is referred to an expert, who always completes the service.� This two-level process is common in practice.� The customer request could be a call to a technical support call center or a visit to a medical clinic; in both these cases the customer is present.� The request could also be a credit or loan application, in which case the customer is not physically present at the time of service. A firm may choose to outsource all or parts of this two-level process to a vendor.� In this talk we examine the optimal approach to outsourcing and describe the parameters of optimal contracts between the firm and the vendor.� We also investigate how vendor labor cost advantages and other parameters influence the firm's choices.� We draw upon results from a series of related papers involving joint work with Pinker, Hasija and Lee that provide building blocks for the analysis of this problem.

Comparing Extrinsic and Intrinsic processes of Whistle-Blowing: A Multi-Level, Multi-Method Approach

Thu, 15 Oct 2009 12:09:30 GMT

Date: 21 Sep 2009(Monday)
Location: AC2 New MLT
Speaker: Abhijeet K Vadera
Abstract: In this dissertation, I compare and contrast the extrinsic and the intrinsic processes of whistle-blowing. Specifically, I investigate if observers of wrongdoing blow the whistle because they expect positive external outcomes for their potential act of whistle-blowing, or because they are morally outraged upon witnessing the wrongdoing. I also consider three antecedents of whistle-blowing, namely, wrongdoing intensity, moral identity of the observer of wrongdoing and ethical leadership at the subunit level. I test my proposed framework using two methodologies: (a) Through surveys, followed by, (b) semi-structured interviews with some of the survey respondents. Data is currently being collected at a large cement manufacturing firm in India.

Repairing Relationships at Work: Facilitating Forgiveness in the Aftermath of Conflict

Thu, 15 Oct 2009 12:09:30 GMT

Date: 17 Sep 2009(Thursday)
Location: AC2 New MLT
Speaker: Ruchi Sinha
Abstract: As organizational researchers it is essential to not only understand the antecedents and consequences of injustices, interpersonal conflicts and offenses at the workplace, but also the mechanisms and dynamics through which damaged relationships can be restored to positive relationships at work. In this talk I will present findings from an empirical study that examines the dispositional and situational predictors of forgiveness and behavioral revenge. I will also briefly discuss my program of research in terms of my current and future research projects.

Level, adjustment and observation biases in the newsvendor model

Thu, 15 Oct 2009 12:09:30 GMT

Date: 01 Sep 2009(Tuesday)
Location: AC 2 New Mini Lecture Theatre
Speaker: Nils Rudi
Abstract: In an experimental newsvendor setting where 310 subjects make 50 repeated newsvendor decisions with the same known ex-ante parameters, we investigate three biases: Level bias - the average tendency of ordering away from the normative order quantity; adjustment bias - the tendency to adjust period-to-period order quantities; and observation bias - the tendency to let the degree of demand information observed influence order quantities. We study these biases in terms of decisions (quantities) and performance (expected mismatch cost) and find evidence to support the presence of all three as well as significant interaction between them. We find that the portion of mismatch cost due to adjustment bias exceeds the portion of mismatch cost due to level bias in three out of four conditions; highlighting the importance of considering adjustment bias in addition to the more commonly studied level bias. Observation bias is studied through censored demands, a situation which arguably represents the majority of newsvendor settings. When demands are uncensored, subjects tend to order below the normative quantity when facing high margin and above the normative quantity when facing low margin, but in neither case beyond mean demand (a.k.a. the pull-to-center effect). Censoring in general leads to lower quantities, magnifying the downward adjustment when facing high margin but partially counterbalancing the upwards adjustment when facing low margin, violating the pull-to-center effect in both cases.

The effect of matching contributions on compliance to donation requests

Thu, 15 Oct 2009 12:09:30 GMT

Date: 13 Aug 2009(Thursday)
Location: AC2 New MLT
Speaker: Narayan Janakiraman
Abstract: Matching contributions are increasingly being used by charities and gift campaigns in attracting donations from potential donors. Extant research has been ambiguous about the effect of matching contribiutions on compliance. We show that matching contributions increase compliance and that this effect is moderated by having a threshold for the matching contributions. We examine the mediating role of donation impact or dollar efficacy and show that it explains best the role of matching contributions on compliance.

The Impact of Portfolio Manager Ownership on the Pricing of Closed-End Funds

Thu, 15 Oct 2009 12:09:30 GMT

Date: 11 Aug 2009(Tuesday)
Location: AC2 New MLT
Speaker: Ajay Khorana
Abstract: We examine the relationship between portfolio manager ownership, closed-end fund premiums/discounts, and future returns. Using a sample of 592 closed-end funds, representing 95% of the entire industry, we find that fund manager ownership has a positive and economically significant impact on fund premiums and future fund performance measured using both NAV and price returns. Furthermore, a number of board level characteristics, including the fraction of independent directors and directors on the board with financial expertise, are related to premiums and returns. These findings add to our understanding of the closed-end fund discount puzzle and suggest that the disclosure of portfolio manager ownership is beneficial for investors.

The Role of Wages, Exchange Rates, Preferential Trade Arrangements, and Quotas in the Global Trade in Textiles and Apparel

Thu, 15 Oct 2009 12:09:30 GMT

Date: 04 Aug 2009(Tuesday)
Location: AC2 New MLT
Speaker: Anusua Datta
Abstract: A modified version of the partial equilibrium gravity model, originally proposed by Fukao et al. (2003), is employed to investigate the changing patterns of U.S. textile trade. We use the data on US Bilateral Manufacturing Imports and Exports by SIC4, which cover the period 1989 to 2001, to assess the impact of labor wages, tariffs, and exchange rates on the composition of U.S. textile imports before and after the creation of NAFTA. Unlike many previous studies, we also consider the effect of tariff removals under NAFTA on U.S. trade with non-NAFTA nations. The analysis is performed at the 2-digit industry level as well as the more disaggregated 4-digit sector level. We conclude that there is little evidence of trade diversion in textiles frequently attributed to NAFTA, while trade creation is clearly present. Furthermore, lower wages in some textile-exporting countries (e.g., countries in Asia) do not appear to significantly increase these countries' share of U.S. textile imports at the expense of other trading partners. Variations in currency exchange rates and tariffs, on the other hand, have substantial effects on the composition of U.S. imports.

Market Share or Profit Margins? Design for Financial Goals

Thu, 15 Oct 2009 12:09:30 GMT

Date: 21 Jul 2009(Tuesday)
Location: AC2 New MLT
Speaker: Ravindra Chitturi
Abstract: It is generally accepted that good product design is good business. However, it is unclear if design benefits impact key indicators of good business such as market-share and profit-margins, differently. Are hedonic design benefits more influencial on improving product choice (i.e., market share) and/or willingness to pay (i.e., profit-margins) than utilitarian design benefits, and if so why? This paper, (1) studies if customers' likelihood of purchase and willingness to pay more for a product changes if it offers superior hedonic versus superior utilitarian benefits, and (2) explains the underlying reasons for the observed difference based on the theory of specific emotions. With the help of three experiments and a field study involving automobiles, cell phones, notebook computers, and wrist watches, we answer the following research questions: (1) do customers' believe that a hedonically superior product will be priced higher by retailers over a product that offers superior utilitarian benefits or vice versa?, (2) do customers' exhibit significant preference reversal in terms of choice probability versus willingness-to-pay levels involving products offering superior hedonic versus superior utilitarian benefits?, (3) is there a boundary condition when this preference reversal involving products with superior hedonic and superior utilitarian benefits disappears?, and (4) can we explain these findings using theory of specific emotions such as excitement, delight, confidence, and satisfaction? The primary theoretical insights this research provides are as follows: (1) customers believe that retailers are more likely to price products with superior hedonic benefits higher (1) than products with superior utilitarian benefits, (2) customers are more likely to purchase a product that offers superior utilitarian benefits over a product that offers superior hedonic benefits whereas they are willing to pay more for a hedonically superior product over a product that offers superior utilitarian benefits, (3) the phenomenon of preference reversal (i.e., report purchase preference for utilitarian product and willingness-to-pay more for hedonic product) disappears when customers are certain of their minimum utilitarian and hedonic needs and both products meet those minimum needs (i.e., under this condition, customers are more likely to choose as well as pay more for a hedonically superior product), and (4) customers who are willing to pay more for a hedonically superior product anticipate experiencing greater positive emotions of excitement and delight during consumption than those who choose a product with superior utilitarian design benefits. The results suggest that marketing managers and designers must emphasize greater hedonic design benefits to improve profit-margins and greater utilitarian design benefits to improve market-share for a new product. However, once the minimum utilitarian and hedonic needs of customers are met, product designers and marketers should focus on enhancing hedonic benefits to maximize both market-share and profit margins. In conclusion, the results suggest that design strategy can be leveraged to fulfill the financial goals of improving only market-share or improving only profit-margins, or improving both.

How do private returns to inventive activity change when IPR regimes are substantially strengthened?

Thu, 15 Oct 2009 12:09:30 GMT

Date: 06 Jul 2009(Monday)
Location: AC2 New MLT
Speaker: Ashish Arora
Abstract: How do private returns to inventive activity change when IPR regimes are substantially strengthened? Our paper investigates this question by looking at the impact of patent reforms in India on India-based pharmaceutical companies. In a fundamental policy shift, India agreed to introduce product patents for pharmaceuticals when it signed the WTO TRIPS treaty in 1995. This policy came into effect through an enabling legislation in 2000 and a final implementation in 2005. The dataset is a panel of 315 pharmaceutical firms from 1990 to 2005. The findings indicate a monotonic increase in private returns to inventive activity. However, these findings raise more questions than answers because we also find that much of the R&D investments is in process research and formulations rather than product research, that markets do not value product patents. We tentatively conclude that other factors, such as trade liberalization and changes in the global pharmaceutical industry have been at least as significant as patent reform in explaining R&D investments by Indian pharmaceutical firms.

The 'a-ha' Moment: Discontinuous Learning of Product Features

Thu, 15 Oct 2009 12:09:30 GMT

Date: 30 Jun 2009(Tuesday)
Location: AC2 New MLT
Speaker: Arun Lakshmanan
Abstract: This research investigates how consumers learn to use a product feature and the impact that the learning process has on consumer acceptance of new products. Skill learning has been assumed to follow a power law trend, with the largest gains occurring early in the product's usage followed by monotonically decreasing performance improvements over trials. This paper proposes an alternative process in which skill acquisition of individual consumers exhibits a discrete step function which corresponds with a moment of insight. The learning process also has consequences such as performance, perceived ease of use and usage intentions which are explored in a series of lab experiments.

R&D and Managerial Compensation

Thu, 15 Oct 2009 12:09:30 GMT

Date: 23 Jun 2009(Tuesday)
Location: AC2 New MLT
Speaker: Paroma Sanyal
Abstract: This paper investigates whether aligning manager and owner incentives can improve the innovation performance of firms. We find that innovation magnitude, R&D and technology concentration have an inverted U-shape relationship with price pay sensitivity. These first increase with price pay sensitivity, and then decrease at very high levels of price pay sensitivity. However, the quadratic term occurs beyond the 95th percentile of the distribution, and thus for the majority of the sample greater sensitivity of managerial wealth to stock price changes encourages innovation & R&D, and makes firms concentrate on their core technology areas. Only patent quality has a positive linear relationship with pay sensitivity. We also find that more entrenched managers, as measured by increased stock holdings, have a negative impact on patenting and R&D investment. Short-term monetary incentives have no impact on the innovation strategy of a firm.

Building an Asset Based Services Business - Some Considerations

Thu, 15 Oct 2009 12:09:30 GMT

Date: 01 Jun 2009(Monday)
Location: AC 3 MLT
Speaker: Inderpreet Thukral
Abstract: Inderpreet Thukral, Vice President, Strategy and New Business Development, IBM Growth Markets, will be talking on the topic, " Building an Asset Based Services Business - Some Considerations."

Institutional Trading Frictions

Thu, 15 Oct 2009 12:09:30 GMT

Date: 26 May 2009(Tuesday)
Location: AC2 New MLT
Speaker: Pankaj K Jain
Abstract: We propose and empirically examine a comprehensive measure of institutional trading frictions to include the dimensions of price impact, quantity of execution, return dynamics, speed of execution or order splitting, and trading commissions. Our empirical analysis reveals that various hidden components of institutional trading frictions such as adverse selection and clean-up costs are persistent and could add significantly to previously measured directly observable components of transaction costs. Our simultaneous system of equations accounts for the endogeniety in institutional order aggressiveness based on potentially superior information as well as order splitting strategies in the implementation stage to reduce transaction costs. Order aggressiveness, market conditions and other stock characteristics are associated with the significant variations in trading frictions.

Exploring SMEs' Local Links with Foreign MNCs:Exploratory Studies in Scotland and India

Thu, 15 Oct 2009 12:09:30 GMT

Date: 19 May 2009(Tuesday)
Location: AC2 New MLT
Speaker: Shameen Prashantham
Abstract: In this research seminar, I seek to shed some light on a relatively under-researched phenomenon viz. knowledge-intensive SMEs' local network relationships with foreign MNCs. Prior research has not examined MNCs as a source of social capital for smaller firms. I report findings from two exploratory studies. First, a dataset of 107 Scottish software SMEs is analyzed to explore antecedents of such ties. A key finding is that alliance proactiveness is a significant predictor of whether an SME establishes links with MNCs as customers/partners rather than merely as suppliers. Second, a study of 102 Indian software SMEs examines consequences of such ties. A key finding is that social capital emanating from such ties is significantly associated with SMEs' internationalization capability. The results of these studies improve extant understanding of SME internationalization given the tendency for academics - and perhaps even practitioners - to overlook local networks as a facilitator of international expansion. Recognition of SME-MNC links as an important locus of value creation has significant implications for public policy where efforts targeted at SME development and FDI attractions typically operate in parallel.

Small Firm-Large Firm Alliance Dynamics: The story of David and Goliath Retold

Thu, 15 Oct 2009 12:09:30 GMT

Date: 12 May 2009(Tuesday)
Location: AC2 New MLT
Speaker: Gautam Kasthurirangan
Abstract: The research study investigates the conditions under which alliances with large firm create value for the small firm. Using a resource dependency perspective, it is hypothesized that high power differences between the alliance partners may create instabilities in the alliance, negatively affecting the value which the small firm may gain from the alliance operations. On the other hand, it is argued the degree of mutual interdependence between the partners fosters an atmosphere of cohesion, trust and information exchange positively affecting the value which the small firm may gain from their alliance operations. Data is tested on 142 small firm-large firm alliances in the biotechnology industry. The results suggest that high power differences between the alliance partners negatively affect the value which the small firm may gain from the alliance operations. The results also suggest that small firms were able to overcome the problem of their power handicap when they established repeat alliances and when firms established coalitions or multi-partner alliances. Finally, the study offers implications to small firm managers to be extremely cautious and prudent when they establish alliances with larger firms.

Linking Customer Attitudinal and Behavioral Metrics to Financial Outcomes: A Latent Growth Mixture Model Approach

Thu, 15 Oct 2009 12:09:30 GMT

Date: 05 May 2009(Tuesday)
Location: AC2 New MLT
Speaker: Sundar Bharadwaj
Abstract: Marketing expenditures are often treated as short term costs rather than long-term investments. This is especially true when marketing managers are faced with the trade-offs of competing marketing strategies such as focusing on customer satisfaction or brand value. Previous research linking customer attitudinal and behavioral metrics to financial outcomes is characterized by analyzing single linkages of the 'customer value chain'. This narrow focus leads to lack of causal evidence, inconclusive results and incorrect priorities for marketing managers. The purpose of this study is to provide valid results linking attribute performance perceptions and behavioral intentions to behavioral and financial outcomes. Survey data as well as longitudinal transaction data for 736 customers were matched. In this study, a recently developed technique called, latent growth mixture modeling was used to analyze the proposed chain of effects and to test for customer heterogeneity. Not only did the findings support the conceptual framework, but the results showed an 80:20 split in the growth curve of customer profitability (low/high). Subsequent analyses yielded a significant higher effect of brand attachment on customer lifetime value than satisfaction and a weak positive multiplicative effect of both constructs on the slope of the customer profitability trajectory.

Differences in approaches to economic reforms between China and India

Thu, 15 Oct 2009 12:09:30 GMT

Date: 07 Apr 2009(Tuesday)
Location: AC2 New MLT
Speaker: Dr Amitendu Palit
Abstract: Economic reforms have resulted in China and India emerging as the world's fastest-growing economies. Both economies have moved from inward-looking regimes to outward-oriented policies allowing greater space to market forces. However, the approaches to economic reforms have been markedly different between the two economies. These differences are noticeable in the pattern and sequencing of reforms in both product and factor markets. The seminar focusses on the reasons leading to such differences in terms of economic and non-economic factors. It also studies the challenges facing both economies and the core objectives of future reforms.

Naked Short Sellers: Angels or Barbarians?

Thu, 15 Oct 2009 12:09:30 GMT

Date: 24 Mar 2009(Tuesday)
Location: AC2 New MLT
Speaker: Pradeep K Yadav
Abstract: Regulatory and media concern has recently focussed heavily on the potentially manipulative distortion of market prices associated with naked short selling. While manipulation through the creation of a spurious phantom supply of stock is plausible, naked short selling can also have beneficial effects for pricing efficiency and for liquidity. We empirically investigate, for the first time, the impact of naked short selling on pricing efficiency, liquidity and other measures of market quality. We find that, while naked short selling involves a significant proportion of securities, phantom shares amount to less than 0.1% of shares outstanding for NYSE-listed securities. Focussing on a randomly selected sample of 300 NYSE securities during the first semester of 2007, we find that a one percentage point increase in the incidence of naked shorting has lead to an approximately 4% reduction in the standard error of stock price returns, a 1% reduction in bid-ask spreads, a 50% decline in order imbalances, a 3.5% decline in absolute pricing error and a 30% decline in positive pricing errors. We find that results hold even under adverse market conditions by replicating the study with a 2008 sample. We also examine naked short selling surrounding the demise of Bear Stearns, and find that naked short sellers, while active in trading the stock of the firm, were responding to public domain information about the firm rather than triggering the observed precipitous price decline. Overall, the negative regulatory and media concern about naked short selling is not supported by our empirical evidence.

Is Strategic Interaction important in Models of Entry? Implications for Sustainability of Competitive Advantage

Thu, 15 Oct 2009 12:09:30 GMT

Date: 23 Mar 2009(Monday)
Location: AC1 Board Room
Speaker: Anup Menon Nandialath
Abstract: Studies of competitive entry into new businesses, technological or international domains are common in strategic management research. This research has provided important results on the implications of market structure and heterogeneous resources for entry decisions. But most such empirical studies are not modeled to accommodate strategic interaction and, therefore, implicitly assume sustainability of competitive advantage upon entry. This is un- fortunate since this setting also oers a fertile ground for the debate on sustainable vs temporary competitive advantage. Firm advantages could be temporary on account of strategic interaction between entrants and incumbents as in a hypercompetitive environment. Previous research has been constrained by traditional empirical approaches which do not easily permit the analysis of such strategic interactions. In this paper we propose a new empirical methodology to analyse entry decisions that allows the analysis of strategic interactions while also taking into account resource heterogeneity among rms. Following the derivation of this empirical model, we use simulated data to illustrate our results. We contrast the use of our suggested approach with that used in previous research under different conditions of sustainable or temporary advantages. It is shown that in conditions where rivals react to outmaneuver entrants, traditional empirical approaches provide biased results. Future studies can use our empirical model to answer fundamental questions about sustainability of competitive advantage and firm entry in the strategic management literature.

Sort-Cut: A Pareto Optimal and Semi-Truthful Mechanism for Multi-Unit Auctions with Budget-Constrained Bidders

Thu, 15 Oct 2009 12:09:30 GMT

Date: 12 Mar 2009(Thursday)
Location: AC2 New MLT
Speaker: R Ravi
Abstract: We study multi-unit auctions where each bidder has a private value for each unit, and a private budget which is the total amount of money she can spend. We propose a mechanism which is semi-truthful, i.e. the only way that a bidder can possibly benefit from lying is by overstating her value (i.e., it is weakly dominant strategy for agents to state their true budget and not understating their value). We prove that some equilibrium of the proposed mechanism optimize the revenue over all pareto-optimal (allocation) mechanisms. We show that every equilibrium of the mechanism, under some natural assumptions, differs by at most the budget of one bidder from this optimum revenue. Finally, we show that a natural greedy bidding strategy in the repeated version of the mechanism converges to an equilibrium that generates optimal revenue.

Imitators to Innovators - Exploring Sources of Innovation Capabilities in Firms from Developing Economies

Thu, 15 Oct 2009 12:09:30 GMT

Date: 07 Mar 2009(Saturday)
Location: AC1 Boardroom
Speaker: Raveendra Chittoor
Abstract: This study examines sources of firm-level innovation capabilities in developing economies in the post-liberalisation era characterised by institutional changes and global competition. Drawing from evolutionary economics, we develop a model incorporating the role of internationally acquired knowledge on indigenous innovation capabilities. We empirically test the hypothesised relationships on longitudinal data on 206 Indian pharmaceutical firms from 1995-2004. Our results show that while participation in global resource and product markets independently influence innovation capabilities, the relationship between resource internationalisation and innovation is partially mediated by product market internationalisation. More fine grained analysis of firms in our data set also suggests the conditioning role of a unique institutional aspect of developing economies namely business groups, on these relationships with firms' development of innovation capabilities.

Integrating Transactions Cost and Resource-Based Theories of Boundary Choices

Thu, 15 Oct 2009 12:09:30 GMT

Date: 07 Mar 2009(Saturday)
Location: AC1 Board Room
Speaker: Nilesh Khare
Abstract: This study examines Transaction Cost Economics (TCE) predictions between asset specificity and firms' boundary choices. In particular, we demonstrate that value imputed to the resources in the transaction, incremental cost of hierarchy, ex-ante opportunity cost, and bilateral considerations may non-trivially influence extant TCE predictions. We reproduce the extant predictions under only subsets of necessary and sufficient conditions, and reveal implicit assumptions and limits that may be difficult to reveal by the chains of verbal logic. While considering asset specificity alone may lead to firms' boundary choices that deviate from extant TCE predictions, integrating asset specificity with costly to copy resource perspective may result in situations where increasing asset specificity leads to non-integration.

Optimal Allocation of Marketing Efforts by Customer-Channel Segment

Thu, 15 Oct 2009 12:09:30 GMT

Date: 04 Mar 2009(Wednesday)
Location: AC2 New MLT
Speaker: Venkatesh Shankar
Abstract: As firms offer their products through multiple channels such as store, the Web, and catalog or direct mail and as more consumers buy them through different channels, the allocation of marketing efforts targeted at customers across channels is becoming a critical issue for many marketers. We propose a decomposition approach and a forward-looking model for optimal allocation of marketing efforts to each customer-channel segment of a multichannel direct marketer. We first develop response models for each component of firm profit, purchase frequency, purchase quantity, product return propensity, and contribution margin. We capture purchase frequency using the extended Beta Geometric/Negative Binomial Distribution model, purchase quantity and product return propensity using the Conditional Negative Binomial Distribution model, and contribution margin using the Gamma-Gamma model. We extend prior work by including the effects of marketing and other relevant covariates on purchase frequency, purchase quantity, return propensity, and contribution margin and by using a forward-looking optimisation model. The optimal marketing effort allocation to each customer-channel segment is a function of the model parameters for that segment. We jointly estimate the models through copulas, using customer level purchase, cost, and promotional data from a large marketer of shoes and apparel accessories across multiple channels, namely, the catalog, the store, and the Web. We solve the optimisation model using simulation. The results show that consumer response to firm marketing efforts varies significantly across the customer-channel segments for the different profit components, leading to differential allocation of marketing efforts to these segments. Using a holdout sample analysis, we show that firm profits can be substantially improved by optimally reallocating marketing efforts across the different customer-channel segments. In the revised allocation, the multichannel segment exhibits the highest percentage growth in budget and profit, highlighting the high profit potential of the multichannel segment. Our model outperforms alternative models, is generalizable and can be implemented by managers through an "easy-to-use" decision support system.

Disclosure as a Tool for Building Trust and Stimulating Investment

Thu, 15 Oct 2009 12:09:30 GMT

Date: 16 Feb 2009(Monday)
Location: AC2 New MLT
Speaker: Radhika Lunawat
Abstract: This study analyses the role of disclosure in trust settings. It examines both theoretically and experimentally how the opportunity to make voluntary disclosures enhances the building of trust and trustworthiness to facilitate institutions for exchange and investment. If there are some trustworthy managers who always disclose their private information (or there is simply a belief that there are some trustworthy managers), then a sequential equilibrium predicts that a rational manager will choose to disclose her private information in an attempt to earn a reputation for being trustworthy. However, the manager does so selectively instead of indiscriminately in order to ensure credibility associated with her choice. By allowing for such reputation building, an economy with disclosure will have higher investment as compared to one without disclosure. Disclosure allows rational agents to develop a reputation for being trustworthy types and thereby sets stage for greater investor confidence resulting in higher investment. A rational manager‟s strategic choice of selectively mimicking a trustworthy manager is corroborated by the experimental data. The experiment also introduces a screening round to identify trustworthy managers and thereby enable comparison of investment in economies with identical proportion of trustworthy agents but different disclosure institutions. The data corroborates higher investment in economies with disclosure.

Where there is a Will: Fertility Behavior and Sex Bias in Large Families

Thu, 15 Oct 2009 12:09:30 GMT

Date: 01 Feb 2009(Sunday)
Location: AC1 Board Room Level 2
Speaker: Tarun Jain
Abstract: Boys and girls in India experience large differences in survival and health outcomes. For example, the 2001 Census reports that the sex ratio for children under six years of age is 927 girls per thousand boys, an outcome that has been attributed to differences in parents' behavior towards their sons and daughters. Most studies rely primarily on cultural factors or biases in economic returns to explain these differences. In this paper, I propose an explanation where bequest motives drive fertility behavior that generates sex-based differences in outcomes even when parents do not explicitly prefer boys over girls. In India's patrilocal rural society, women do not inherit property and heads of joint families aim to retain assets within the family lineage for future generations. I hypothesize that this leads heads to bequeath more land to claimants with more sons, in turn generating a race for sons among adult brothers seeking to maximise their inheritance of agricultural land. I confirm this theoretical prediction using panel data from rural households in India. This strategic fertility behavior implies that girls have systematically more siblings compared to boys, and hence receive smaller shares of household resources, offering an explanation for sex-based differences in outcomes.

The Returns to Spring-loading

Thu, 15 Oct 2009 12:09:30 GMT

Date: 31 Jan 2009(Saturday)
Location: AC1 Board Room Level 2
Speaker: Rik Sen
Abstract: Abnormal returns following public disclosures of unscheduled grants to CEOs are positive and highly significant in the post Sarbanes Oxley period. This implies widespread springloading (awarding options ahead of good news releases), as backdating cannot affect abnormal returns after the disclosure date. Between September 2002 and March 2006, a trading strategy that buys stocks after news of unscheduled option grants to CEOs become public earns 1.1% monthly abnormal returns, implying the market did not realize that grants were spring-loaded. After March 2006, when it was no longer possible to spring-load grants in a clandestine fashion, this practice stopped. This suggests spring-loading was a means of providing secret compensation rather than prudent pay practice.

The Bright Side of Bidder Competition

Thu, 15 Oct 2009 12:09:30 GMT

Date: 27 Jan 2009(Tuesday)
Location: AC2 New MLT
Speaker: Amrita Nain
Abstract: Previous research shows that bidding competition drives up takeover premiums and has a negative impact on acquirer returns. In this paper, we provide evidence of a brighter side to competition. Specifically, we distinguish between acquirers competing with financial versus strategic (corporate) bidders. Though many papers examine how the presence of competition influences acquisitions, little is known about the impact of the competitor's identity. We find that corporate acquirers competing with financial bidders pay a larger fraction of the deal value in cash and finance a larger fraction of the deal value with debt relative to those competing with strategic bidders. Though theory suggests that cash bids deter competition, we find that the presence of a financial bidder encourages bidding competition, suggesting potential benefits to competing with financial bidders. We then investigate premiums and returns to confirm these benefits. We find that the bid premium needed to win against a financial bidder is lower than the bid premium needed to win against a corporate bidder. Firms who win targets coveted by financial bidders earn significantly higher abnormal returns than those that win targets pursued only by other corporate bidders. These results cannot be explained by observable target firm differences or acquirer abilities. Further, the results are strongest when the firm follows a bid by a financial bidder. We therefore conclude that competition with financial bidders is potentially value enhancing.

Telecom Service Provider Portal: Revenue Sharing and Outsourcing

Thu, 15 Oct 2009 12:09:30 GMT

Date: 20 Jan 2009(Tuesday)
Location: AC 2 New Mini LT
Speaker: Amiya Chakrabarti
Abstract: Online portals, where customers may purchase digital products, can be leveraged for economic advantage by telecommunication network operators. Many different business models, characterized by revenue flow and portal ownership, are possible. However, they may create different degrees of advantages to the participants: network operator, service providers, and subscribers. Assuming a price dependent demand, we study how the parties obtain economic equilibrium in price, number of services, and sales volume, with and without portal-outsourcing. Specifically, we seek to establish whether the pattern of revenue flow creates advantages for certain parties, whether the network operator should provide open access (of his customers) to the service providers, and whether he should acquire new subscribers from independent portals.

Teacher Performance Pay: Experimental Evidence from India

Thu, 15 Oct 2009 12:09:30 GMT

Date: 16 Jan 2009(Friday)
Location: AC 2 New Mini LT
Speaker: Karthik Muralidharan
Abstract: Performance pay for teachers is frequently suggested as a way of improving educational outcomes in schools, but the empirical evidence to date on its effectiveness is limited and mixed. We present results from a randomized evaluation of a teacher incentive program implemented across a representative sample of government-run rural primary schools in the Indian state of Andhra Pradesh. The program provided bonus payments to teachers based on the average improvement of their students' test scores in independently administered learning assessments (with a mean bonus of 3% of annual pay). At the end of two years of the program, students in incentive schools performed significantly better than those in control schools by 0.28 and 0.16 standard deviations in math and language tests respectively. They scored significantly higher on "conceptual" as well as "mechanical" components of the tests suggesting that the gains in test scores represented an actual increase in learning outcomes. Incentive schools also performed better on subjects for which there were no incentives. Group and individual incentive schools perform equally well in the first year of the program, but the individual incentive schools significantly outperform in the second year. Incentive schools performed significantly better than other randomly-chosen schools that received additional schooling inputs of a similar value.

Enterprise systems and Business Process Agility - A Case Study

Thu, 15 Oct 2009 12:09:30 GMT

Date: 30 Dec 2008(Tuesday)
Location: AC 2 New Mini LT
Speaker: Dr. Ravi Seethamraju
Abstract: Agility has become a key organizational capability today as businesses face an uncertain and volatile environment. Enterprise systems, a key component of IT infrastructure in a majority of orrganizations today, have delivered cost efficiencies, control and consistent execution. Using a case study approach, this research reports on the investigation of the influence of enterprise system-enabled environment on business process agility. According to study, integration, standardization, best practices and process orientation, the key characteristics of ES-enabled environment have mixed and varying effect on business process agility and that is dependent upon the extent and type of standardization and integration implemented in the organization and the nature of business processes. Tight coupling of systems, structures and processes resulting from ES implementation restricts a firm's ability to reconfigure and deploy business processes. Study noted the positive effect of process orientation on organizational ability to identify, reconfigure and deploy business processes. The study found that the best practices embedded in an enterprise system do not have any direct influence on process agility. Recognizing that it is not after all necessary for all processes to be agile, study pointed out some of the challenges in identification, configuration and effective deployment of agile processes.

Order Time, Ownership, and Short Selling in Security Price Adjustment

Thu, 15 Oct 2009 12:09:30 GMT

Date: 16 Dec 2008(Tuesday)
Location: AC 2 New Mini LT
Speaker: Malay K. Dey
Abstract: We investigate if order time and short selling have any bearing on how prices are formed and adjusted towards full information value in a securities market with information asymmetry. We model a competitive dealership market in which informed and liquidity traders, some of whom own stocks, arrive in a probabilistic fashion to trade a single risky security for cash with a market maker. The informed traders receive a private information signal about the future value of a security. The liquidity traders may trade for liquidity or not trade at all. Derived results from the model suggest that while buy or sell reveals private information, although asymmetrically, no-trade may provide information about the signal from public information depending on ownership interest in the firm. Security prices adjust to their full information value at a faster rate when short selling constraints are low. However, the speed and the nature of adjustment of security prices depend on the level of ownership interest in the firm.

Equity Value Implications of the SEC Exchange Act Rule 13a-14: A Litigation Cost Perspective

Thu, 15 Oct 2009 12:09:30 GMT

Date: 25 Nov 2008(Tuesday)
Location: AC 2 New Mini LT
Speaker: Mukesh Garg
Abstract: Prior studies examine equity value effects of SEC Exchange Act Rule 13a-14 on the submission dates of sworn testimonies in August 2002. The inconclusive results from these studies suggest a review of the event dates employed and/or the interpretation of economic implications of such ruling. We employ June 12, proposal of Rule 13a-14, and June 27, ruling of certification requirement, as event dates. We investigate litigation cost implication of proposal and ruling and focus on firms in industries that are highly exposed to class action lawsuits. Because the final ruling differed from what was previously proposed, examination of the implications of proposal on June 12, 2002, becomes crucial in evaluating the stock price effect of certification requirement. We find negative abnormal returns surrounding June 12, and positive abnormal returns surrounding June 27, for firms relieved from compliance requirement. The results are more profound for firms in high litigation risk industries.

Persistence In Trading Cost: An Analysis Of Institutional Equity Trades

Thu, 15 Oct 2009 12:09:30 GMT

Date: 11 Nov 2008(Tuesday)
Location: AC 2 New Mini LT
Speaker: Kumar Venkataraman
Abstract: We discover performance persistence in the equity transactions of institutional investors and their brokers over the period 1999-2005. Brokers (institutional clients) ranked as top performers based on execution quality outperform brokers (clients) ranked as bottom performers over adjacent periods. The broker and client persistence patterns are independent and cannot be explained by client investment style or soft dollar arrangements. The best brokers tend to specialize in certain industries, charge higher commissions, more often work the order, and can consistently execute trades with no price impact. The best performing clients tend to be larger, concentrate order flow with fewer brokers, and can robustly obtain negative trading costs, suggesting that their trading desks help create positive (investment) alpha through their trading strategies. We find that the worst brokers lose market share slowly and that the worst clients tend to specify low commission execution venues, suggesting they focus on explicit costs. Our findings imply that broker selection is an important dimension of an institution's Best Execution obligation, and that persistence in execution performance is important enough to explain a significant portion of mutual fund performance persistence.

A Comparison Of Penny Stock Initial Public Offerings And Reverse Mergers As Alternate Mechanisms To Going Public

Thu, 15 Oct 2009 12:09:30 GMT

Date: 04 Nov 2008(Tuesday)
Location: AC 2 New Mini LT
Speaker: Kuldeep Shastri
Abstract: This paper compares a group of firms that go public using penny stock initial public offerings (PSIPOs) to those using reverse mergers (RMs) and analyzes firm characteristics driving US firms to opt for RMs instead of PSIPOs. Since no offerings are conducted upon initiation of trading, we hypothesize that contrary to the going public literature, RMs can be highly information asymmetric firms. We analyze RMs' characteristics prior to going public and find that they are small, still in the development stage, illiquid, they exhibit losses, high short-term obligations and low expenses as they are early in their lifecycle. They have planned stock-financed acquisitions with the intention to acquire a greater market share. Their insiders maintain a high ownership stake after going public with no intention to cash out within the first two years after going public. We find that RMs exhibit shorter duration of negotiations, are frequently PIPE-financed and manage to be upgraded to one of the main US stock exchanges. We also find that the decision to go public using an RM is made to exploit private information advantages held by insiders that manifest themselves in future cash flows.

Liability Limit Management in Fixed Odds Numbers Game

Thu, 15 Oct 2009 12:09:30 GMT

Date: 21 Oct 2008(Tuesday)
Location: AC 2 New Mini LT
Speaker: Chung-Piaw Teo
Abstract: Most game operators handle the issue of risk exposure in their fixed odds numbers game by imposing a liability limit on the sales of each number - all future bets on numbers with accumulated sales hitting the liability limit will be rejected. This raises an associated question - how should the game operator set the liability limit in the optimal manner? In this paper, we address the issue of liability limit management from two angles - The players can exploit the liability limit to construct betting strategies to increase their odds of making a profit in the game. Using realistic parameters in a numbers game played in Singapore, we formulate a model to construct a betting strategy with at least 90\% chances of making a profit in the game. We also exploit a curious property (observed from empirical data) on the way players select numbers in these games, and use that to develop a method for the game operator to set the liability limit, based on total sales forecast. Our approach builds on anecdotal evidences and empirical studies which suggest that the players have a tendency to bet on ``small" numbers. This can be attributed to players choosing numbers that are closely related to events around them (e.g. birth dates, addresses etc.), and also due to cognitive biases for small numbers even when the players intend to choose the numbers at ''random". We quantify this phenomenon through its connection with the classical Benford's Law. Interestingly, the betting data on second significant digit shows more volatility which could not be explained by the classical law. We modeled this phenomenon by introducing a modified version of Benford's law, obtained by carefully mimicking the way players compose the numbers together in the game.

Exclusive Growth - Inclusive Inequality

Thu, 15 Oct 2009 12:09:30 GMT

Date: 23 Sep 2008(Tuesday)
Location: AC 2 New Mini LT
Speaker: Laveesh Bhandari
Abstract: There is an emerging debate in India on impact of reforms on inequality. This paperlooks at various measures of inequality to show that inequality in India is increasing even though poverty has been falling in the 1990s and 2000s. It finds that in almost all states of India, inequality, as measured by Gini coefficients has been rising. And this is true for both urban and rural areas. We find that states that have had greater per capita GSDP growth between 1993-94 and 2004-05 are more likely to have reduced absolute poverty levels (as defined by the Planning Commissions poverty line). Paradoxically, we also find a positive association between state-level per capita incomes and inequality as measured by Gini coeffieicnts, in that states that have grown more tend to have increased inequality levels during the period 1993-94 and 2004-05. Last, we find some, but not a significant enough link between poverty reduction and inequality. The paper then looks into other issues related to inequality - it finds that those at the bottom of the pyramid (whether measured on the basis of expenditure quintiles or educational characteristics) have had relatively greater income/expenditure growth than the middle classes. However, the uppermost segments (by quintiles or by educational profile) have hadhighest growth from 93-94 to 04-05. Analysis of occupational profile reveals that inequality levels tend to be lower among the self employed than the salaried classes, and that states that have high self-employment levels tend to have low inequality levels.The qualification is that we do not attempt to look for causality in this version of the paper. That work is ongoing.

The Impact of McDonald's Restaurant Franchises On Global Business Environment

Thu, 15 Oct 2009 12:09:30 GMT

Date: 17 Sep 2008(Wednesday)
Location: AC 2 New Mini LT
Speaker: Mahmood A. Khan
Abstract: The global impact of American Restaurant Franchises is evident in different parts of the world. Global markets in Pan-Pacific, European Union, Africa, Middle East, Asia, South America are all flooded with US franchises. This study examines the most notable impact of products and services provided by these franchises, using McDonald. Both beneficial and adverse impacts are systematically examined and presented. Under examination are cultural, social, economical, legal, technological, and environmental impacts. Case examples from different parts of the world are highlighted. Future impact and trends due to the growth on multinational enterprises are forecasted.Response to these impacts from various countries are comparatively assessed and outlined in this paper.

Sentiment Risk In Stock Markets

Thu, 15 Oct 2009 12:09:30 GMT

Date: 02 Sep 2008(Tuesday)
Location: AC 2 New Mini LT
Speaker: Vrinda Gupta
Abstract: Sentiment in stock market should be seen as a risk, especially when we define sentiments in the noise trader model framework. In this research, sentiment risk has been measured for 22 stock markets. We distinguish between local sentiments and global sentiments and rank which stock markets are most driven by local sentiments and which are most driven by global sentiments. We find that stock markets that have been established recently (compared to others in the sample) and are shallow in nature tend to be driven by sentiments to a larger extent than others. Another hypothesis that this research has tested is - with the spread of information technology and internet trading, stock markets will become more sentiment driven over time or sentiments would be pronounced in certain growth phases than others.This research doesn't find support for these hypotheses.

How Do Defaults Affect Lead Arranger Reputation And Activity In The Loan Syndication Market?

Thu, 15 Oct 2009 12:09:30 GMT

Date: 27 Aug 2008(Wednesday)
Location: AC 2 New Mini LT
Speaker: Vijay Yerramilli
Abstract: We use borrower bankruptcy filings (loan defaults) and their impact on the subsequent lending activity of lead arrangers to investigate the role of reputation and capital constraints in the loan syndication market. Consistent with reputation effects, following loan defaults, lead arrangers syndicate loans less often and retain a larger fraction of the loans that they do syndicate. The effects are smaller when the lead arranger is larger and when several other lead arrangers also experience loan defaults; the effects are larger for defaults of low yield loans and when defaults occur soon after loan origination. Lenders that participate in the lead arranger's syndicates following defaults are more likely to be smaller, less diversified and to have a strong existing relationship with the lead arranger. Overall, there is a significant decline in the lead arranger's lending activity following defaults. Our findings strongly support the notion that loan defaults damage the lead arranger's reputation and also lead to an erosion of its capital. The findings highlight the importance of reputation concerns in the loan syndication market,how such concerns vary in the cross-section, and the limitations of a reputation-based disciplining mechanism.

Valuing Early Stage Technologies

Thu, 15 Oct 2009 12:09:30 GMT

Date: 19 Aug 2008(Tuesday)
Location: AC 2 New Mini LT
Speaker: Mohan Rao
Abstract: I will discuss the valuation of complex intellectual property, especially the valuation of early stage technologies. Many transactions involving pharmaceutical and biotechnology firms occur when the underlying assets are in very early stages of development. These early stage technologies face a number of unique risks related to clinical research, the success of clinical trials, and the outcome of regulatory review, in addition to the usual risks of commercialization. A key problem in valuing these technologies is how to meaningfully risk adjust cash flows when the path to commercialization is extremely risky and is often 10+ years away. I will cover the practical challenges we face in using DCF and real options models in valuing early stage technologies.

What happens When Firms patent? New Evidence From US Manufacturing Census Data

Thu, 15 Oct 2009 12:09:30 GMT

Date: 12 Aug 2008(Tuesday)
Location: AC 2 New Mini LT
Speaker: Jagadeesh Sivadasan
Abstract: In this study, we present new evidence on the question of what happens when firms patent. We do so by creating a new dataset that links the NBER patent data to firm data from the US Census Bureau. Our linked dataset covers more than 48,000 unique assignees (compared to about 4,100 assignees covered by the Compustat-NBER link), representing almost two-thirds of all non-individual, non-university, non-government assignees from 1975 to 1997. Using this new dataset, we examine what happens when firms patent by looking at a large sample (about 9200) of first time patentees. We find that while there are significant cross-sectional differences in size and total factor productivity between patentee firms and non-patentee firms, changes in patent-ownership status within firms is associated with a contemporaneous and substantial increase in firm size, but little to no change in total factor productivity. This evidence suggests that patenting is associated with firm growth through new product innovations (firm scope) rather than through reduction in the cost of producing existing products (firm productivity). Consistent with this explanation, we find that when firms patent, there is a contemporaneous increase in the number of products that the firms produce. Estimates of (within-firm) elasticity of firm characteristics to patent stock confirm our results. Our findings are robust to alternative measures of size and productivity, and to various sample selection criteria.

Understanding Bank Runs: The Importance Of Depositor-Bank Relationships And Networks

Thu, 15 Oct 2009 12:09:30 GMT

Date: 05 Aug 2008(Tuesday)
Location: AC 2 New Mini LT
Speaker: Rajkamal Iyer
Abstract: We use a unique, new, database to examine micro depositor level data for a bank that faced a run. We use minute-by-minute depositor withdrawal data to understand the role of social networks, the effectiveness of deposit insurance, the role of relationships and other factors in influencing depositor propensity to run. We employ methods from the epidemiology literature which examine how diseases spread to estimate transmission probabilities of depositors running, and the significant underlying factors. Our results suggest that social network effects are important but are mitigated by other factors, in particular the length and depth of the bank-depositor relationship. Depositors with longer relationships, and those who have availed of loans from a bank are less likely to run during a crisis, suggesting that cross-selling acts not just as a revenue generator but also as a complementary insurance mechanism for the bank. We further find that deposit insurance is only partially effective in preventing bank runs. Finally, we find long term effects of a bank crisis in that depositors who run do not return back to the bank. Our results help understand the underlying dynamics of bank runs and hold important policy implications.

Pricing To Market In Indian Exports: The Role Of Market Heterogeneity And Product Differentiation

Thu, 15 Oct 2009 12:09:30 GMT

Date: 29 Jul 2008(Tuesday)
Location: AC 2 New Mini LT
Speaker: Sushanta Mallick
Abstract: This paper studies the pricing to market (PTM) behaviour of Indian exporters during the economic reforms period (1992-2005). A PTM model has been estimated using panel data at the four-digit level of classification for the G3 and three emerging markets (Brazil, China and South Africa), distinguishing also homogeneous from differentiated goods. Overall, we observe that there is clear evidence of incomplete exchange rate passthrough (ERPT) to buyers' currency prices. This degree of ERPT is net of changes in thelevel of protection faced by India's exporters (import tariffs in destination markets),inflation and openness in the export destination market, a macroeconomic policy index partly reflecting changes in exporter's costs, the share of the exporter in the destination market and the share of the product in the exporter's total exports. When distinguishing between G3 and emerging markets, the empirical results indicate that Indian firms do practice PTM and have some pricing power in G3 markets, but they fully pass-through the exchange rate changes in emerging markets. On the contrary, Indian exporters seem to be taking advantage of trade liberalisation in destination markets by marginally increasing the exporter currency prices into emerging markets but not into the G3. We also find a similar impact of trade liberalisation in the case of differentiated goods.

Targets' Earnings Quality And Bidders' Takeover Decisions

Thu, 15 Oct 2009 12:09:30 GMT

Date: 23 Jul 2008(Wednesday)
Location: AC 2 New Mini LT
Speaker: Lakshmanan Shivakumar
Abstract: This study examines how takeover decisions are influenced by the quality of information in target firms' earnings. We find that bidders are more likely to prefer negotiations in deals involving targets with poor earnings quality. Moreover, in such deals, earnings quality and takeover premiums are negatively related, suggesting that bidders obtain valuable private information through negotiations. Also, bidders share information risk with target shareholders by paying with more equity for targets with poor earnings quality. The results are stronger for private bidders than for public bidders, suggesting that private and public bidders respond differently to information risks in takeovers.

Carrier-Forwarder Contracts In The Air Cargo Industry

Thu, 15 Oct 2009 12:09:30 GMT

Date: 15 Jul 2008(Tuesday)
Location: AC 2 New Mini LT
Speaker: Diwakar Gupta
Abstract: Passenger airlines (carriers), who carry nearly two thirds of the worldwide airfreight, sell a significant portion of their cargo space through intermediaries called freight forwarders. Carriers also sell directly to shippers. In a typical carrier-forwarder contract, which can remain in effect anywhere from a few months to a year, a certain amount of capacity on specific recurring flights is pre-allocated (guaranteed) to the forwarder at a negotiated price per unit of capacity. Carriers often find it difficult to obtain full payment from the forwarders who typically pay freight charges only for the space actually used. Guaranteed allocations provide an incentive to forwarders to exert a greater effort on attracting demand. However, they limit a carrier's ability to realize the highest possible revenue from cargo capacity. In this talk, we propose two reasons why carriers offer guaranteed allocations - information asymmetry and moral hazard. We explore the latter in detail and study two contract mechanisms that fall within the general contracting framework prevalent in the air cargo business. We show that contract flexibility afforded by guaranteed allocations allows the carrier to achieve an efficient capacity allocation to the forwarder and the direct-ship demand streams under both mechanisms. Moreover, a carrier that charges a deposit for guaranteed allocation can induce the forwarder to simultaneously choose the optimal effort-level and earn maximum profit.

Uncertainty, Networks And Real Options

Thu, 15 Oct 2009 12:09:30 GMT

Date: 14 Jul 2008(Monday)
Location: AC 2 New Mini LT
Speaker: Sumit Joshi
Abstract: Two pervasive features of industries experiencing rapid technological progress are uncertainty (with regard to the technological feasibility and marketabilility of an innovation) and networks (the dense web of research alliances and joint ventures linking firms to each other). This paper connects the two disparate phenomena using the notion of real options. It visualizes firms as nodes and the links connecting them as call options that give each pair of interlinked firms the right, but not the obligation, to sink additional resources into a project at some future date conditional on favorable technical/market information. The formation of networks is endogenous as firms establish links with others by appraising their value using option pricing methods. Our model explains the following: why networks are particularly ubiquitous in industries that are subject to high uncertainty; why networks often display an interconnected "hubs and spokes" architecture; why small(or peripheral spoke) firms often sink resources into relatively higher risk higher return investment projects (and those too with only large, or hub firms); and why so many research alliances are continuously formed and dissolved. Our paper also outlines the conditions under which ex-ante symmetric firms end up ex-post forming complex asymmetric networks.

A Theory Of Combative Advertising

Thu, 15 Oct 2009 12:09:30 GMT

Date: 08 Jul 2008(Tuesday)
Location: AC 2 New Mini LT
Speaker: Jagmohan S Raju
Abstract: In mature markets with competing firms, a common role for advertising is to shift consumer preferences towards the advertiser in a tug-of-war, with no effect on category demand. In this paper, we analyze the effect of such "combative" advertising on market power. We show that, depending on the nature of consumer response, combative advertising can reduce price competition to benefit competing firms. However, it can also lead to a pro-competitive outcome where individual firms advertise to increase own profitability, but collectively become worse off. This is because combative advertising can intensify price competition such that an "advertising war" leads to a "price war." Similar to price competition, advertising competition can result in a prisoner's dilemma where all competing firms make less profit even when the effect of each firm's advertising is to enhance consumer preferences in its favor. Given such pro-competitive effects, we further show that cost of combative advertising could be a blessing in disguise - higher unit cost of advertising resulting in lower equilibrium levels of advertising, leading to higher prices and profits. We conduct a laboratory experiment to investigate how combative advertising by competing brands influences consumer preferences. Our experimental analysis offers strong support for our conclusions.

From Disasters To WoW: Understanding & Enabling Networks In 21st Century Organizational Forms

Thu, 15 Oct 2009 12:09:30 GMT

Date: 02 Jul 2008(Wednesday)
Location: AC 2 New Mini LT
Speaker: Noshir Contractor
Abstract: Recent advances in digital technologies invite consideration of organizing as a process that is accomplished by global, flexible, adaptive, and ad hoc networks that can be created, maintained, dissolved, and reconstituted with remarkable alacrity. This presentation describes a multi-theoretical multilevel (MTML) model of the socio-technical motivations for creating, maintaining, dissolving, and reconstituting knowledge and social networks. Using examples from his research in a wide range of activities such as disaster response, Communities of Practice at Procter & Gamble, public health and massively multiplayer online games (WoW - the World of Warcraft), Contractor will present a visual-analytic framework that can be used to Discover, Diagnose, and Design our knowledge networks in 21st century organizational forms.

The Effect Of Brand Commitment On The Evaluation Of Non-Preferred Brands: A Disconfirmation Process

Thu, 15 Oct 2009 12:09:30 GMT

Date: 17 Jun 2008(Tuesday)
Location: AC 2 New Mini LT
Speaker: Sekar Raju
Abstract: This research finds that high and low commitment consumers use different information processing strategies when exposed to competitive brand information. High commitment consumers use a disconfirmatory processing strategy, focusing on the dissimilarities between their preferred brand and the competitor brand. Low commitment consumers focus on the similarities between the advertised brand and their preferred brand. These processing differences lead to differences in evaluation of a competitive brand between high and low commitment consumers. However, priming high commitment consumers to focus on the similarities between their preferred brand and a competitor brand mitigates the ill effects of disconfirmatory processing; similarly, priming low commitment consumers to focus on the dissimilarities between the advertised brand and their preferred brand results in lowered evaluations of the advertised brand.

Law, Agency Costs And Project Finance

Thu, 15 Oct 2009 12:09:30 GMT

Date: 03 Jun 2008(Tuesday)
Location: AC 2 Mini LT
Speaker: Krishnamurthy Subramanian
Abstract: When corporations make large investments, what benefits do they derive from Project Finance vis-�-vis Corporate Debt Finance? In this paper, we provide empirical evidence that in the lender-borrower relationship, Project Finance mitigates agency costs from insider stealing. We argue that cash flows become verifiable in Project Finance because of: (i) the contractual arrangements made possible with a single, discrete project that is legally separate from the sponsor; and (ii) private enforcement of these contracts through a network of project accounts which ensures lender control of project cash flows. Since Project Financing primarily involves bank debt, we compare bank loans to Project Finance companies with bank loans to regular corporations for their large investments. First, we show across forty countries that Project Finance is more likely in countries where laws protecting against insider stealing are weaker. We highlight the causal channel for this e�ect by showing that in such countries, Project Finance is disproportionately more likely in industries with higher free cash flows. Second, since creditors' threat to seize collateral deters borrower opportunism, we predict that stronger creditor rights mitigate the marginal e�ect of weaker protection against insider stealing. We provide evidence for this prediction using exogenous country-level changes in creditor rights and using cross-country tests. Our study highlights that in the lender-borrower relationship, Project Finance emerges as an organizational and contractual substitute for investor protection. Further, our study suggests that enhancing investor protection can encourage Corporate Finance by reducing the need for specialized financing vehicles such as Project Finance.

Aesthetic Self-Design: Just Do It Yourself

Thu, 15 Oct 2009 12:09:30 GMT

Date: 27 May 2008(Tuesday)
Location: AC 2 Mini LT
Speaker: John Wesley Hutchison
Abstract: In two experiments, participants were asked to aesthetically self-design a product using a commercially successful online configurator (which we used as benchmark). Either one week or one month later, they were unexpectedly asked to recognize and evaluate their self-designed product along with 29 other alternatives. These self-designed products were confirmed to be (1) high in design heterogeneity, (2) often correctly recognized, and (3) strongly preferred (which we call the self-design effect). We identified three psychological factors (outcome accuracy,believed authorship, and process affect) that contribute to the self-design effect. We also developed a statistical model that used recognition types (hits, misses, false alarms and correct rejections) to separate the effects of the three factors. Results strongly supported the contribution of each factor to the self-design effect. Our experimental manipulations deviated from the benchmark by including a conceptually equivalent but perceptually "degraded" paper-and-pencil configurator (in experiment 1) and a "diluted," (two-person) team-design task (in experiment 2).Results showed that the three factors were differentially affected by these manipulations and provided pragmatically significant insights about the robustness of online configurators.

Generic Strategies Of India's Emerging Multinationals

Thu, 15 Oct 2009 12:09:30 GMT

Date: 19 May 2008(Monday)
Location: AC 2 Mini LT
Speaker: Ravi Ramamurti
Abstract: Indian firms expanded outward in two waves, the first occurring in the 1970s and 1980s, and the second occurring after 1995, shortly after India opened up to the global economy in 1991 following economic reforms. The second wave was not only bigger in terms of the scale and speed of outward foreign direct investment (FDI), but the firms involved used a broader range of strategies. One especially interesting feature was that in the second wave 60-70% of the outward FDI went "up-market," that is, to highly advanced countries, unlike the first wave in which almost the same proportion went "down-market," that is, to countries less developed than India (Lall 1983). In addition, there was some evidence that in 2006 and the first half of 2007, Indian firms invested more abroad than foreign MNEs invested in India-a surprising result for a poor country, although the data underlying these claims are a bit murky (Dunning & Narula, 1996).

Emerging Economy Multinationals: Role Of Inward Internationalization And Business Groups

Thu, 15 Oct 2009 12:09:30 GMT

Date: 25 Mar 2008(Tuesday)
Location: AC 2 New Mini LT
Speaker: Raveendra Chittoor
Abstract: This paper investigates the factors leading to multinationality of Indian information technology services firms, despite an institutional environment characterized by low resource munificence. The paper proposes that business group and internationalization of resource-bases serve as two unique mechanisms to overcome the internationalization barriers common to emerging economy firms. Using proprietary, longitudinal data on 63 firms from the Indian information technology services sector, we find that outward internationalization is enabled by firms accessing international financial resources and managerial resources. Further, we theorize and find support for our prediction that business groups constitute an inertial barrier and constrain emerging economy firms' initial internationalization efforts; however, through leveraging of group resources, groups facilitate firms' higher modes of international expansion such as multinationality.

Sustaining Leadership - Alice In Innovation Space

Thu, 15 Oct 2009 12:09:30 GMT

Date: 18 Mar 2008(Tuesday)
Location: AC 2 New Mini LT
Speaker: Soumodip Sarkar
Abstract: While innovation literature is rich in classifications and typology, little is offered by way of models of how innovation is connected to market outcome, which in turn would help in analyses of sustainability of innovation. The volatility at the innovator's table suggests that an important question is not just how to innovate, but also how to sustain this innovation In this paper, we explain the sustainability of innovation and leadership using an integrated innovation space, that connects the degree of innovation to market outcomes, which explains how constant incremental innovations enables sustenance of these market outcomes. The paper analyses the Apple iPod to illustrate how the different versions of the iPod have sustained its market leadership. An understanding of the model and the case illustration can be valuable in analyses of product innovation, as well as the growth of innovation from Asian countries.

Cooperative Advertising And Pricing In A Dynamic Stochastic Supply Chain: Feedback Stackelberg Strategies

Thu, 15 Oct 2009 12:09:30 GMT

Date: 12 Mar 2008(Wednesday)
Location: AC 2 New Mini LT
Speaker: Suresh P. Sethi
Abstract: Cooperative (co-op) advertising is an important instrument for aligning manufacturer and retailer decisions in supply chains. In this, the manufacturer announces a co-op advertising policy, i.e., a participation rate that specifies the percentage of the retailer's advertising expenditure that it will provide. In addition, it also announces the wholesale price. In response, the retailer chooses its optimal advertising and pricing policies. We model this supply chain problem as a stochastic Stackelberg differential game whose dynamics follows Sethi's stochastic sales-advertising model. We obtain the condition when offering co-op advertising is optimal. We provide in feedback form the optimal advertising and pricing policies for the manufacturer and the retailer. We contrast the results with the advertising and price decisions of the vertically integrated channel, and suggest a method for coordinating the channel.

The Subprime Crisis:A Primer

Thu, 15 Oct 2009 12:09:30 GMT

Date: 11 Mar 2008(Tuesday)
Location: AC 2 New Mini LT
Speaker: Mihir Rakshit
Abstract: The origins and manifestation of the crisis are to be analysed in terms of the interaction between real and financial factors, with special reference to the failure of the risk management and credit rating models.

Swift And Smart: The Moderating Effects Of Technological Capabilities On The Market Pioneering -Firm Survival Relationship

Thu, 15 Oct 2009 12:09:30 GMT

Date: 05 Mar 2008(Wednesday)
Location: AC 2 New Mini LT
Speaker: Mitrabarun Sarkar
Abstract: We extend the concept of first mover advantage to the context of high-technology industries with multiple product generations, and propose that the notion of first mover advantage needs to be viewed not only through a dynamic lens, but also in conjunction with technological capability. Our main finding is that first mover advantages are contingent upon the magnitude of the firm's technological capabilities; early entry is beneficial only for pioneers that are technically strong. However, pioneers that are low on technological capabilities suffered from poor survival rates vis-�-vis market responders or non-entrants into new product generations.

Securing The Containerized Supply Chain: An Economic Analysis Of C-TPAT

Thu, 15 Oct 2009 12:09:30 GMT

Date: 29 Feb 2008(Friday)
Location: AC 2 New Mini LT
Speaker: Nitin Bakshi
Abstract: We perform an economic analysis of the Customs-Trade Partnership Against Terrorism (C-PAT), modeling the strategic interaction between the U.S. Bureau of Customs and Border Protection (CBP) and trading firms as a Principal-Agent Stackelberg game in a queueing setup. We characterize the unique equilibrium outcome and perform comparative statics. We provide insights relevant to policy planners and to private sector trading firms. We find that, for a given level of inspection capacity, implementation of C-TPAT results in greater security and a Pareto reduction in costs. The membership level increases as the environment becomes riskier but is unaffected by changes in inspection capacity. The latter result implies that the program structure should be stable, and it indicates that it may be possible to decouple inspection problems across ports. At the same time, because CBP cannot base C-TPAT agreements upon observed outcomes (terrorist incidents) the program's equilibrium does not achieve an economic First Best.

Adoptive Expectations: Rising Son Tournaments In Japanese Family Firms

Thu, 15 Oct 2009 12:09:30 GMT

Date: 22 Feb 2008(Friday)
Location: AC 2 New Mini LT
Speaker: Vikas Mehrotra
Abstract: A uniquely Japanese custom of adopting male heirs into business families allows family firms in Japan to overcome the constraint of sub-optimal succession faced by family firms elsewhere. Using a very large panel of exchange-listed firms from post-war Japan, we show that heir-managed firms perform at least as well, and in most cases better than, non-family firms in Japan. We further show that adopted heirs display superior performance compared with direct descendents, with both groups outperforming non-family firms. Keiretsu-affiliated non-family firms stack at the bottom of the group in terms of performance as well as valuation. Adopted heirs, perhaps not surprisingly, have superior educational qualifications compared with direct descendents, who in turn are better educated than founders. The average tenure of adopted heirs is 18 years in the top executive's position, very similar to descendent heirs, and significantly longer than the tenure of professional CEOs (7 years).

Inter-Firm Learning From Operational Failure

Thu, 15 Oct 2009 12:09:30 GMT

Date: 18 Feb 2008(Monday)
Location: AC 2 New Mini LT
Speaker: Manpreet Hora
Abstract: Operational failures arise when there is a difference between expected and observed outcome in terms of cost, quality, flexibility, reliability, and delivery speed. The source of these operational failures can be frequent or rare. In cases of frequent operational failures, firms are in a position to continuously learn through organizational actions and response mechanisms. In contrast, because of a low probability of occurrence and thus a very small sample, it is challenging for learning to occur from rare operational failure. In line with this organizational challenge, the study examines the association between rare operational failure and inter-firm learning. More specifically, I empirically investigate the association between types of rare operational failures, industry structure (industry concentration, industry growth, and industry dynamism), and inter-firm learning. Drawing and building on extant research, this study argues inter-firm learning will be higher for firms in industries that have low industry concentration, high industry growth, and high industry dynamism. Moreover, inter-firm learning will also be higher for firms in industries that have experienced diverse types of past operational failures than for firms in industries that have faced similar types of operational failures. Results from using fixed effects panel regression and negative binomial regression on eleven-year failure data on industry sectors in the manufacturing and the financial services division, show that inter-firm learning is higher for industries that have low industry concentration, high industry growth, and varied types of operational failure.

Support Or Hindrance? Role Of Patent Owners In Influencing Adoption Of A Technical Standard

Thu, 15 Oct 2009 12:09:30 GMT

Date: 13 Feb 2008(Wednesday)
Location: Board Room, AC 1 level 2
Speaker: Ranjita M Singh
Abstract: The availability of a new standard poses a dilemma for potential adopters. On the one hand they risk giving up the current tried and tested standard, even lose their current market share, and on the other hand there is danger of losing their future market share and/or their survival by not adopting the new standard. But adopting a new standard involves evaluating the terms and costs of accessing the standard. In case of new standards' potential adopters are not sure about the commitment and motives of the players developing the standard. As the owners of a winning standard stand to gain from ensuring that the standard supported by them gains market acceptance, they may hide potential costs or problems with the standard. Potential adopters fear these hidden costs of adopting a standard, costs that they may be required to pay once the standard gains dominance in the market. It is also possible that some owners will stop contributing to the standard if they do not gain from their investment in the standard in which case the adopters will be left holding an inefficient standard. In this paper, I examine how ownership of a technical standard influences its adoption in the US cellular communications industry. In contrast to prior research I suggest that a standard's ownership is not dichotomous (open or proprietary) but there are different degrees of openness of a standard. I suggest that a potential adopter's decision to adopt is influenced by the patent owners' 1) interest in the standard, 2) number of new owners, and 3) the concentration of ownership. I use patents as a proxy to examine ownership of a standard and find broad support for my hypotheses.

Product Line Design Under Capacity And Competition

Thu, 15 Oct 2009 12:09:30 GMT

Date: 12 Feb 2008(Tuesday)
Location: AC 2 New Mini LT
Speaker: Muge Yayla-Kullu
Abstract: In this paper, we consider a capacity constrained monopoly offering two products that differ in their quality and vary in their unit costs and capacity consumption. In particular, we study the firm's product line choice, capacity allocation and pricing decisions. We show that incorporating capacity limitation may dramatically change the product line decision. In contrast to the existing literature that neglect capacity, when faced with increasing costs to quality, we show that the firm may be better off offering only one product type. Similarly,for decreasing costs to quality, while the existing literature suggests that the firm should offer only the high quality product, we show that it may be optimal for firm to offer both product types. Interestingly, acute shortage of capacity can completely change the focus and result in offering only the low quality product in this case.Among other results, we also show that capacity constraint may induce a monopolist to provide better than the socially efficient quality level to the higher end customer segment.

Divestment As A Real Option: Firm Choices Under Conditions Of Uncertainty

Thu, 15 Oct 2009 12:09:30 GMT

Date: 11 Feb 2008(Monday)
Location: Board Room, AC1 level 2
Speaker: Naga Lakshmi Damaraju
Abstract: This study shifts the focus of real options theory from investment decisions to divestment decisions. The key implications of the theory are developed and tested for business unit divestments as 'put' options on real assets. The results show that uncertainty in a business unit's environment is negatively related with the decision to divest. Further, this negative relationship remains when environmental uncertainty increases and disappears when environmental uncertainty falls. Together, these results suggest that firms' decisions to divest may be driven by option considerations when the environment of the business unit is uncertain.

Repayment Frequency, Cash Flows And Savings: Evidence From India

Thu, 15 Oct 2009 12:09:30 GMT

Date: 04 Feb 2008(Monday)
Location: AC 2 New Mini LT
Speaker: Shamika Ravi
Abstract: This paper provides evidence that access to savings instruments directly improves access to credit. In a typical framework, households borrow, invest and then repay loan with interest. If households can save without difficulty, they should be able to follow any repayment frequency. However, in reality it is likely that income gets diverted to miscellaneous expenses. If households realize this, then it is possible that they 'tie' the loan repayment schedule to their income schedule or the cash flow. In this paper, I provide a simple model and empirical support to illustrate this point. The results indicate that a household which does not save is 32 percent more likely to tie the loan repayment schedule to the household cash flow and pays 3.6 percent higher interest rate for a loan.

Leadership, Regulatory Fit And Justice For All!

Thu, 15 Oct 2009 12:09:30 GMT

Date: 31 Jan 2008(Thursday)
Location: AC 2 New Mini LT
Speaker: Sankalp Chaturvedi
Abstract: Following criticism of traditional leadership research as being 'leader centric', contemporary leadership theorists are becoming increasingly sensitive to the role follower plays in explaining leadership effects on followers. In this research, I focus attention on the interactive effects of leadership behavior and follower characteristics in predicting follower appraisals of treatment fairness. Drawing upon theories of economic and social exchange that highlight the instrumental and relational aspects of social relations, I examine the effects of transactional and transformational leadership behaviors on follower appraisals of distributive and interactional justice, respectively. Further, using a regulatory-fit framework, I address moderating effects of follower regulatory-focus (promotion- and prevention-focus) on these relationships. I test the proposed theoretical multi-level model in a field setting using hierarchical linear modeling. I find that the relationship between transactional leadership and distributive justice is stronger for employees with high prevention focus. Correspondingly, the relationship between transformational leadership and interactional justice is positively moderated by employee promotion focus. These findings have important implications for researchers and practitioners alike.

Using Multiple Sources Of Information Simultaneously For Solving Mixed Integer Programs

Thu, 15 Oct 2009 12:09:30 GMT

Date: 30 Jan 2008(Wednesday)
Location: AC 2 New Mini LT
Speaker: Santanu S Dey
Abstract: Branch-and-Cut algorithm is the cornerstone of successful Mixed Integer Programming (MIP) solvers.Any improvement in cutting plane algorithms will significantly improve the speed of these solvers. In this talk, we discuss techniques for generating cutting planes based on the principle: "use multiple sources of information simultaneously, rather than single sources of information separately". This principle is motivated by numerical studies on difficult MIP instances and by practical problems that are often beset with myriad complicating side constraints. Two mathematical paradigms are used to implement this principle: Group cutting planes and lifting.We conclude the talk by presenting some numerical results that illustrate the computational benefits of the proposed approach.

Momentum Strategies And Sophisticated Investor Preferences In India

Thu, 15 Oct 2009 12:09:30 GMT

Date: 14 Jan 2008(Monday)
Location: AC 2 New Mini LT
Speaker: Kaustav Sen
Abstract: In this paper, we examine the existence of earnings and price momentum anomalies for a sample of actively traded stocks in the Bombay Stock Exchange during 2001-2006. We also examine the relationship between these anomalies and the level of ownership by two distinct categories of sophisticated investors, domestic Mutual Funds (MF) and Foreign Institutional Investors (FII). Our findings indicate that using standard time series models, there is clear evidence of a post earnings announcement drift in the Indian market. In addition, after controlling for value and size, both earnings momentum and a three month price momentum exist. The level of ownership by FIIs mitigates the effect of earnings momentum and accentuates the effect of price momentum on stock returns. In contrast, there is no impact of the level of ownership by MFs. We also find that the changes in holdings by FIIs are driven by the price momentum whereas the changes in holdings by MFs are driven by the earnings momentum. We finally compare the performance of a MF ownership weighted portfolio with a FII ownership weighted portfolio. We find that the FII weighted portfolio has a higher beta and generates a lower beta adjusted return in comparison to the MF weighted portfolio. However, the turnover and holding patterns of the two portfolios are similar.

Outsourcing Discount Or Paradox? A Comparative Analysis Of The Long-Term Abnormal Stock Returns And Operational Performance Gains Across Outsourcing Contracts

Thu, 15 Oct 2009 12:09:30 GMT

Date: 03 Jan 2008(Thursday)
Location: AC 2 New Mini LT
Speaker: Deepa Mani
Abstract: We assess the long-term abnormal returns to the hundred largest outsourcing initiatives implemented between 1996 and 2005, and examine whether the choice of outsourcing contract explains the cross section of abnormal returns. Relative to a size-and book-to-market matched sample of control firms in the industry, the mean three year buy-and-hold abnormal return for fixed price contracts is 16.9 percent (p<0.05) while that for variable price contracts is -21.6 percent (p<0.10). However, variable price contracts are not inherently value destroying; after controlling for the observed contextual characteristics and private firm information that influences contract choice, we find that the negative returns to variable price contracts are the outcome of a paradoxical selection process where some of the very factors that increase the likelihood of choice of variable price contracts also decrease the abnormal returns to outsourcing investments. Our findings point to the benefits of efficient contract choices, and that the market is slow to recognize the extent of such benefit. Implications for theory and the practice of outsourcing are also discussed.

Gender, Mentoring And Career Success: The Importance Of Organizational Context

Thu, 15 Oct 2009 12:09:30 GMT

Date: 02 Jan 2008(Wednesday)
Location: AC 2 New Mini LT
Speaker: Aarti Ramaswami
Abstract: While mentoring is recognized as a key developmental tool in organizations, few attempts have been made to examine mentoring across cultures. Consequently, we do not know whether the hypothesized relations between mentoring and outcomes, established using Anglo/ Western samples, are generalizable to other socio-cultural settings. This dissertation compares mentoring relationships, specifically the relationship between mentor-prot�g� similarity and mentor behaviors, in India and the U.S. Since research indicates that mentor behaviors are positively related to prot�g�s' subjective and objective career outcomes, this research attempts to examine the antecedents of mentor behaviors. Considerable empirical evidence in the person-environment fit literature supports the positive relation between person-person similarity and the focal individual's attitudinal and behavioral outcomes. Alongside, the mentoring literature suggests that mentor-prot�g� similarity is a key antecedent to mentoring functions. However, little research attention has been paid to simultaneously examining the differential relations between multiple types of mentor-prot�g� similarity and mentoring functions, let alone examining the cross-cultural boundary conditions of such relations. Drawing on the diversity and cross-cultural management literatures, this dissertation addresses these gaps by a) examining the relationship between surface-level (e.g., demographics) and deep-level (e.g., personality, values) mentor-prot�g� similarity and mentor behaviors, and b) examining country (India vs. U.S.) differences in the mentor-prot�g� similarity - mentor behaviors relationship. The results of my study will help understand what types of mentor-prot�g� similarities are more or less strongly associated with mentor behaviors, and whether these associations are culturally idiosyncratic. Contributions of this dissertation to mentoring research and practice, and its implications for cross-cultural employee and leadership development will be discussed.

How Do Teams Learn? Shared Mental Models And Transactive Memory Systems As Determinants Of Team Effectiveness

Thu, 15 Oct 2009 12:09:30 GMT

Date: 31 Dec 2007(Monday)
Location: AC 2 New Mini LT
Speaker: Amit Nandkeolyar
Abstract: Shared mental models (SMM) and Transactive memory systems (TMS) have been advocated as the main team learning mechanisms. Despite multiple appeals for assimilation, research in both these fields has progressed in parallel and little effort has been made to integrate these theories. I propose to explore the relationship between SMM and TMS utilizing an information processing framework. I will test and contrast their impact on team processes (learning and creativity) and effectiveness outcomes (team performance, members' satisfaction and team viability). The studies will be carried out in field settings.

Sales Optimization At The National Broadcasting Company

Thu, 15 Oct 2009 12:09:30 GMT

Date: 24 Dec 2007(Monday)
Location: AC 2 New Mini LT
Speaker: Srinivas Bollapragada
Abstract: Broadcast television networks in the United States sell about 70 to 80% of their on air advertising time for the entire broadcast year in the Upfront market, a brief two to three week period starting in the last week of May. The remaining airtime inventory is sold during the rest of the year in the Scatter market. The advertising deals are priced based on numerous factors including the mix of shows and weeks in which the clients choose to advertise, the clients' flexibility, audience demographics, etc. We developed a number of optimization-based sales systems that NBC-Universal currently uses to maximize its revenues and improve productivity. These systems employ operations research and management science techniques to improve sales operations by removing bottlenecks caused by manual operations, helping NBC-Universal to respond quickly to client requests and enabling it to make the most profitable use of its limited inventory of valuable advertising slots. Since 1996 these systems increased revenues by over $500 million, improved sales-force productivity, reduced rework by over 80 percent and improved customer satisfaction. They have become an integral and essential part of NBC's advertising sales and commercial operations.

Bayesian Non-linear Methods And Its Applications

Thu, 15 Oct 2009 12:09:30 GMT

Date: 18 Dec 2007(Tuesday)
Location: AC 2 New Mini LT
Speaker: Veera Baladandayuthapani
Abstract: In the present day information age, a decision maker or analyst is frequently faced with dealing in large amounts of data. Examples of such high dimensional data include stock market returns,financial time series data and complex scientific experiments. In order to make a coherent inferential decision, one needs to account for the inherent intricate and complex underlying structure of the data in any statistical model. In this talk, I will present some novel nonlinear statistical methods that are especially useful in modeling such high throughput data. I will demonstrate how nonlinear/nonparametric methods are flexible enough unearth dependencies between variables that might be missed by linear/parametric approaches. The inference is essentially Bayesian and use Markov Chain Monte Carlo (MCMC) algorithms for estimation. The proposed methodology is illustrated via two case studies.

Manager Characteristics And Capital Structure:Theory And Evidence

Thu, 15 Oct 2009 12:09:30 GMT

Date: 11 Dec 2007(Tuesday)
Location: AC 2 New Mini LT
Speaker: Ajay Subramanian
Abstract: We investigate the effects of manager characteristics on capital structure. We first develop a dynamic structural model that incorporates managerial discretion in effort and financing, as well as agency conflicts between managers and outside investors. We derive the manager's dynamic contract and implement it through financial securities. This leads to a dynamic capital structure for the firm consisting of inside equity, outside equity, long-term debt and a cash reserve (or short-term debt). We calibrate the model to aggregate data and infer the key manager-specific parameters-ability, risk aversion and disutility of effort. Our theoretical analysis generates the following novel testable predictions: -The firm's long-term debt ratio declines with the manager's ability and with her equity ownership in the firm. -The firm's short-term debt ratio declines with the manager's ability and increases with her equity ownership. -The long-term debt ratio increases with earnings risk and decreases with project risk. Our empirical analysis provides significant support for the above testable implications. Broadly, our study shows that managerial discretion and manager-specific characteristics are important determinants of firms' financial policies.

The Age Of Reason: Financial Decisions Over The Lifecycle

Thu, 15 Oct 2009 12:09:30 GMT

Date: 29 Nov 2007(Thursday)
Location: AC 2 New Mini LT
Speaker: Sumit Agarwal
Abstract: The sophistication of financial decisions varies with age: middle-aged adults borrow at lower interest rates and pay fewer fees compared to both younger and older adults. We document this pattern in ten financial markets. The measured effects cannot be explained by observed risk characteristics. The sophistication of financial choices peaks around age 53 in our cross-sectional data. Our results are consistent with the hypothesis that financial sophistication rises and then falls with age, although the patterns that we observe represent a mix of age effects and cohort effects.

Secure Supply-Chain Collaborations

Thu, 15 Oct 2009 12:09:30 GMT

Date: 20 Nov 2007(Tuesday)
Location: AC 2 New Mini LT
Speaker: Vinayak Deshpande
Abstract: One of the major sources of inefficiency in supply-chains is information asymmetry;i.e.,information that is available to one or more organizations in the chain (e.g., manufacturer, retailer) is not available to others. There are several causes of information asymmetry, among them fear that a supplier-chain partner will take advantage of private information, that information will leak to a competitor, etc. We propose Secure Supply-Chain Collaboration (SSCC) protocols that enable supply-chain partners to cooperatively achieve desired system-wide goals without revealing the private information of any of the parties, even though the jointly-computed decisions require the information of all the parties. The result is a process that permits supply-chain partners to capture all of the benefits of information-sharing and collaborative decision-making, but without disclosing their ``private" signal (e.g., promotions) and cost information to one another. This work bridges three distinct research areas: Secure Multi-party Computation (SMC), Mechanism Design (MD) and Supply-Chain Management (SCM). Using three types of supply-chain interactions: Capacity Allocation; Collaborative Forecasting and Planning; and Price Masking in Outsourced Manufacturing as examples, we illustrate the challenges, research directions, and new applications of SMC to Supply-Chain Management.

Talking Ourselves To Efficiency: Coordination In Inter-Generational Minimum Effort Games With Private, Almost Common And Common Knowledge Of Advice

Thu, 15 Oct 2009 12:09:30 GMT

Date: 23 Oct 2007(Tuesday)
Location: AC 2 New Mini LT
Speaker: Ananish Chaudhuri
Abstract: Successfully coordinating the actions of multiple agents is crucial to achieving optimal outcomes in many economic phenomena. This paper experimentally investigates the use of public advice as a coordinating devise in an n-person stag-hunt game called the "Minimum Effort Game" first studied by Van Huyck, Battalio and Beil (1990). This is a coordination game with weak strategic complementarities and Pareto-ranked equilibria, and is played by non-overlapping generations of players who, after they are done, pass on advice to their successors who take their place in the game. It was our conjecture that such an inter-generational design would enable subjects to "talk themselves to efficiency" in the sense of converging to the payoff-dominant outcome. What we find is that it is extremely difficult to create the common knowledge necessary for coordination in such games. More precisely, if the advice offered to subjects is sufficiently exhortative in urging them to cooperate (i.e., to choose so as to coordinate on the Pareto efficient outcome),then as long as that advice is offered in a public manner (either as common knowledge or as what we call "almost common knowledge") we can expect coordination to follow.However, if the advice quality is insufficiently strong, then coordination is likely to result only if the advice is not only public but also distributed in a manner that makes it common knowledge.

Understanding The Role Of Trade-ins In Durable Goods Markets:Theory And Evidence

Thu, 15 Oct 2009 12:09:30 GMT

Date: 09 Oct 2007(Tuesday)
Location: AC 2 New Mini LT
Speaker: Raghunath Singh Rao
Abstract: The act of trading in a used car as partial payment for a new car resonates with practically all consumers. Such transactions are prevalent in many other durable goods markets ranging from golf clubs to CT scanners. What roles do trade-ins play in these markets? What motivates the seller to set up a channel to facilitate trade-ins? Intuitively, accepting a trade-in would appear to stimulate demand for the producer's product, but facilitating the resale of these used goods that substitute for new goods might also increase cannibalization. Although such transactions involve billions of dollars, we know little about this practice from the extant research literature. This paper develops an analytical model that incorporates key features of real-world durable goods markets; a) co-existence of new and used goods markets, b) consumer heterogeneity with respect to quality sensitivity, c) firms who anticipate the cannibalization problem arising from the co-existence of new and used goods, and d) lemons problems in resale markets, whereby sellers of used goods are better informed than buyers about the quality of their particular item. In our analysis, a trade-in policy amounts to an intervention by the firm in the used good market, which reduces inefficiencies arising from the lemons problem. It motivates owners to purchase new goods and reduces their proclivity to hold on to purchased goods because of the low price the latter would fetch in a lemons market. We also show that trade-in programs are more valuable for less reliable products because of the more acute lemons problem. Such programs increase the average quality of used goods offered for resale, which in turn increases used goods prices as well as the volume of transactions in the resale market. Trade-in programs are also more valuable for products that deteriorate more slowly, because the near-new quality of a used good allows it to compete more effectively for new good purchases. We test the key predictions of the model about price and volume of trade by assembling a dataset of transactions of US automobile consumers, and find broad support for our model. In particular, we find that a consumer buying a automobile with a trade-in receives an average discount of $644 (net of the value of the traded vehicle), and that this discount is larger for more unreliable make-models ($1,217) as well as for make-models that deteriorate slower ($1,251).The volume of used good trade is larger for more reliable make-models as well as for faster deteriorating make-models.

Organizational Re-design And Performance: Evidence From India

Thu, 15 Oct 2009 12:09:30 GMT

Date: 25 Sep 2007(Tuesday)
Location: AC 2 New Mini LT
Speaker: Ashok Som
Abstract: One central problem in management and organizations literature is that of designing complex organizations for superior performance through uncertainty avoidance, differentiation and integration mechanisms. This flows from the basis of understanding that complex processes within organisations can be decomposed into mechanisms.These mechanisms become more prominent with turbulence and uncertainty in the environment wherein organizations need to emplace appropriate formal re-design mechanisms. In the backdrop of the ongoing economic liberalization in India, a multiple-respondent survey of 69 Indian organizations was undertaken. The research question was to study the impact of changes in re-design mechanisms on firm performance. This research question was intimately related to broader issues of concern to organization theory including the usefulness and value of re-design efforts and the implications of organizational change processes. The results shows that mechanisms of uncertainty reduction,differentiation, and integration tend to enhance corporate performance in turbulent environments, while their absence or low usage depresses it. Integration mechanisms came out to be the most critical determinant of the effectiveness of design efforts. Several implications for contingency theory and design are discussed.

Leadership And Competition In Network Supply Chains

Thu, 15 Oct 2009 12:09:30 GMT

Date: 28 Aug 2007(Tuesday)
Location: AC 2 New Mini LT
Speaker: Pranab Majumder
Abstract: This paper considers network supply chains with price dependent demand by modelling them as large acyclic networks. Such large networks are common in the automobile and apparel industries.We develop a model to analyze the effect of these large scale problems involving long sequences of contracts, and show that contract leadership, as well as leader position in the network affect the performance of the entire supply chain. We generalize Spengler (1950) to a game on a "contract tree" for a particular supply chain and extend the concept of double marginalization so that it can be applied in the form of a transformation to each contract that is offered by one member to another in the "contract tree". We construct an algorithm to find the equilibrium solution, and derive the optimal location of the leader ("optimal" being that leader location which maximizes total supply chain profits). Our work formalizes many intuitive insights; for example, member profits are determined by system-wide rather than individual costs. Finally, we model Cournot competition between competing supply chains (both two heterogeneous trees and multiple identical trees) and show the effect of changes in leader position as well as cost structure on the equilibrium.

Earnings Management And The Cost Of Debt

Thu, 15 Oct 2009 12:09:30 GMT

Date: 07 Aug 2007(Tuesday)
Location: AC 2 New Mini LT
Speaker: Ramesh Rao
Abstract: This paper examines the relation between earnings management and the marginal cost of debt to the firm. The marginal cost of debt is captured by yield spreads on traded corporate debt, while earnings management is proxied by 3 alternative estimates of abnormal discretionary accruals. Using a sample of traded corporate bonds for the period 1994 to 2006, we find abnormal accruals are priced in the market. Non-investment grade bonds in particular are penalized more for abnormal accruals. The results are robust to alternative estimates of abnormal discretionary accruals and to alternative econometric methodologies. Thus, we find that creditors are able to see through managers' attempts to opportunistically influence earnings perceptions and penalize firms for doing so by demanding a higher rate of return.

Semiparametric Estimation Of Time Series Mean,Volatility And Correlations Models :Applications To Stock Returns

Thu, 15 Oct 2009 12:09:30 GMT

Date: 02 Aug 2007(Thursday)
Location: AC 2 New Mini LT
Speaker: Aman Ullah
Abstract: We propose a new combined semiparametric estimator, which incorporates the parametric and nonparametric estimators of the conditional variance in a multiplicative way. We derive the asymptotic bias, variance, and normality of the combined estimator under general conditions.We show that under correct parametric speciffication, our estimator can do as well as the parametric estimator in terms of convergence rates; whereas under parametric mis-speciffication our estimator can still be consistent. It also improves over the nonparametric estimator of Ziegelman(2002) in terms of bias reduction. The superiority of our estimator is verfied by Monte Carlo simulations and empirical data analysis.

Planning Container Drayage Operations At Congested Seaports

Thu, 15 Oct 2009 12:09:30 GMT

Date: 19 Jul 2007(Thursday)
Location: AC 2 New Mini LT
Speaker: Rajeev Namboothiri
Abstract: This research considers daily operations management for a fleet of trucks providing container pickup and delivery service to a port. Truck congestion at access points to ports may lead to serious inefficiencies in drayage operations, and the resultant cost impact to the intermodal supply chain can be significant. Port congestion is likely to continue to be a major problem for drayage operations given the growing volume of international containerized trade. Responding to growing access congestion and its resultant impacts, many U.S. port terminals have implemented appointment systems, but little is known about the impact of such systems on drayage productivity. This research seeks to develop optimization approaches for maximizing the productivity of drayage firms operating at congested seaports. Specifically, this research addresses two daily drayage routing and scheduling problems. In the first problem, we consider managing a fleet of trucks providing container pickup and delivery service to a port facility that experiences different access wait times depending on the time of day. In the second problem, we study methods for managing a drayage fleet serving a port with an appointment-based access control system. We develop a drayage operations optimization approach based on a column generation integer programming heuristic. For the first problem, this approach incorporates the time-dependent congestion delay function; and for the second problem, it explicitly models a time-slot port access control system. The approach determines pickup and delivery sequences with minimum transportation cost. Finally, we use the framework to develop an understanding of the potential impact of congestion delays and access appointment systems on drayage operations. Findings demonstrate the value of planning with accurate delay information; and also indicate that drayage productivity can be quite sensitive to small changes in time-slot access capacities at the port.

Managing On-Air Ad Inventory In Broadcast Television

Thu, 15 Oct 2009 12:09:30 GMT

Date: 16 Jul 2007(Monday)
Location: AC 2 New Mini LT
Speaker: Suman Mallik
Abstract: Motivated by the experiences of National Broadcasting Company (NBC),we present an analytical model for managing on-air ad inventory in broadcast television. The ad inventory in this industry is priced based on rating points or the number of viewers that watch a commercial. The rating points during a broadcast year are sold through two distinct processes: the Upfront, which occurs before the broadcast season, and the Scatter, which occurs during the broadcast season. A firm needs to allocate its total rating points inventory to these two markets before knowing either the performance rating of its shows or the Scatter market price, both of which are random. The networks offer ratings (performance) guarantees on the inventory that is sold in the Upfront market while such guarantees are seldom offered in the Scatter market. We propose an optimization model for the networks to manage their rating points inventory. Our model explicitly incorporates the performance uncertainty of the television shows as well as the revenue uncertainty of the Scatter market. We derive conditions for feasibility of the problem and characterize the optimal amount of rating points to sell in the Upfront market. Our model explains the current practice of selling around 60-80% of the total rating points for the season during the Upfront market and analyzes other common strategies used by the firms. In addition to providing key managerial insights, our work introduces quantitative methodologies to television networks in planning their Upfront markets.

Wealth-Robust Intertemporal Incentive Contracts

Thu, 15 Oct 2009 12:09:30 GMT

Date: 13 Jul 2007(Friday)
Location: AC 2 New Mini LT
Speaker: Suresh Govindaraj
Abstract: We study optimal incentive contracts in a continuous time principal-agent setting with hidden actions. The agent, whose e�ort controls the output, has a concave utility function which is non-separable in wealth and monetary cost of effort. The principalis risk neutral and optimally selects the effort to be induced and the contract design. Output follows a mean-reverting process with random coefficients. We characterize the class of W-robust compensation schemes that elicit a desired effort which is immune to the principal's mispecifications of the future wealth of the manager. We demonstrate the existence of a solution to the principal's problem, characterize the optimal effort policy, derive the optimal W-robust contract and show that our contract dominates randomized contracts.

Optimizing An Information Technology Project Portfolio With Time-Wise Interdependcies

Thu, 15 Oct 2009 12:09:30 GMT

Date: 10 Jul 2007(Tuesday)
Location: AC 2 New Mini LT
Speaker: Indranil Bardhan
Abstract: Although the use of real options for valuation of information technology (IT) investments has been well-documented, little research has been conducted to examine its relevance for prioritizing a portfolio of projects. When the effect of project interdependencies is considered, the complexity of optimally prioritizing even a small number of projects poses several challenges in applying real options. We develop a new methodology suite which integrates the results of real options analysis within a portfolio management framework. We propose a multi-period optimization model to combine the advantages of using real options analysis with the ease of an optimization program to make objective project funding decisions. Our integrated model helps IT managers make optimal project funding decisions. We demonstrate its advantages over traditional methods by using real world data from a utility company in the United States. The primary contributions are: (1) integration of real options analysis with portfolio optimization methods, so projects can be prioritized across a multi-period horizon, and (2) validation of our approach by showing its superiority over traditional portfolio management models.

Analyzing Contracts In B2B-Service Markets

Thu, 15 Oct 2009 12:09:30 GMT

Date: 06 Jul 2007(Friday)
Location: AC 2 New Mini LT
Speaker: Trichy V Krishnan
Abstract: In this paper we analyze how certain key variables affect the contracts in a B2B-Services market. We focus on contracts signed between, for example, the drilling companies that own drilling rigs and the oil companies that hire those rigs to drill in their oil fields. We develop a theoretical model that shows how various factors affect the optimal contract length. The main factors we consider include the market dynamics and uncertainty, unobserved relationship between the contracting parties, cost of forming a new relationship and contracting cost. Using the empirical evidence obtained from the offshore drilling industry we demonstrate the usefulness and applicability of our model in understanding how those critical factors affect the contracting process. The insights we derive are applicable to other B2B-Service industries such as shipping companies, real estate, airlines rentals.

Intentional Forgetting As A Facilitator For Recalling New Product Attributes

Thu, 15 Oct 2009 12:09:30 GMT

Date: 25 Jun 2007(Monday)
Location: AC 2 New Mini LT
Speaker: H.Shanker Krishnan
Abstract: When market changes alter what product attributes are deemed important, consumers may intentionally try to forget old product information in an attempt to remember new product information. In Experiment 1, the authors demonstrated that intentional forgetting of this nature temporarily inhibits retrieval of old product information and leads to a benefit to memory for new product information. The results show that, after a short delay, benefits continue in the absence of costs, which is supportive of a multiple-process account of intentional forgetting. Experiment 2 extends these effects using an advertising message to stimulate forgetting. Across both experiments, results also show that brand preference is based on learning of new attribute information.

Driving Business Integration: Chains, Shops And Networks

Thu, 15 Oct 2009 12:09:30 GMT

Date: 28 Mar 2007(Wednesday)
Location: AC 2 New Mini LT
Speaker: Espen Andersen
Abstract: Porter's model of the Value Chain forms the basis for much thinking about strategic and operational management, but is based on manufacturing companies. Two new models of strategic value creation - the Value Shop and the Value Network - extend Porter's model in problem solving and mediating industries. In this discussion, we will explore the concept of Value Configurations, show how business integration differs in each of the three value configurations (Chains, Shops and Networks), and explore research strategies with a basis in Value Configurations.

Images in Brand Culture

Thu, 15 Oct 2009 12:09:30 GMT

Date: 20 Mar 2007(Tuesday)
Location: AC 2 New Mini Lecture Theatre
Speaker: Jonathan Schroeder
Abstract: Brands occupy an increasingly prominent place in the managerial mind as well as the cultural landscape. Recent research has shown that brands are interpreted or read in multiple ways, prompting an important and illuminating reconsideration of how branding "works," and shifting attention from brand producers toward consumer response to understand how brands create meaning. Cultural codes, ideological discourse, consumer's background knowledge, and rhetorical processes have been cited as influences in branding and consumer's relationships to advertising, brands and mass media. Consumers are seen to construct and perform identities and self-concepts, trying out new roles and creating their identity within and in collaboration with, brand culture. Largely missing from these insights, however, is an awareness of basic cultural processes that affect contemporary brands, including historical context, ethical concerns, and representational conventions. In other words, neither managers nor consumers completely control branding processes - cultural codes constrain how brands work to produce meaning. This talk reveals how branding has opened up to include cultural, sociological, and theoretical enquiry, that both complements and complicates economic and managerial analysis of brand culture

Adverse Selection In Credit Markets: Evidence From Bidding Roscas

Thu, 15 Oct 2009 12:09:30 GMT

Date: 15 Mar 2007(Thursday)
Location: AC 2 New Mini LT
Speaker: Stefan Klonner
Abstract: In bidding Roscas (rotating savings and credit associations) participants contribute at regular meetings and bid to receive the collected pot. We use a natural experiment to test if riskier borrowers are willing to pay higher interest rates in these Roscas than safer borrowers are. In September 1993; the Indian government imposed a ceiling on bids (and hence on interest rates). We compare the difference in default rates between early and late recipients of the pot before and after this policy shock. We find signifficant evidence of adverse selection. By controlling for loan terms, we show that our findings cannot be explained by moral hazard. We also find that relaxing the bid ceiling in 2002 leads to opposite effects on default rates, exactly as predicted.

How Near-Misses Influence Decision Making Under Risk: A Missed Opportunity For Learning

Thu, 15 Oct 2009 12:09:30 GMT

Date: 08 Mar 2007(Thursday)
Location: AC 2 New Mini LT
Speaker: Catherine Tinsley
Abstract: Organizational failures are usually complex events that have a number of contributing factors, but common among many significant failures are the presence of near-misses prior to the major event. While many organizations recognize the value of learning after an obvious failure such as NASA and the Columbia tragedy in which seven astronauts perished, we argue it is harder for organizations to learn from near-misses, e.g., the foam problems on most of the previous shuttle missions. In this paper, we formalize the concept of near-misses - successes that could have been failures but for an element of luck. We hypothesize that organizations and managers fail to learn from near-misses for two reasons: first, they perceive and interpret near-misses as successes; second, labeling near-misses as successes encourages even riskier subsequent decisions. In our first study, we confirm the tendency to interpret near-misses as successes by having participants evaluate a project manager whose decisions result in either: a) mission success, b) near-miss, or c) failure. Results showed that managers received similar ratings in the near-miss and success conditions, which suggests that when problems emerge from a manager's decisions, but disaster is averted, the manager will not be held accountable for the near-miss, even when it is clear that the favorable outcome can be attributed only to good luck. Failure to hold the manager accountable for a near-miss is a foregone learning opportunity for both the manager and the organization. In our second set of studies, we confirm that information about a near-miss leads people to choose a riskier alternative and search for less information prior to making a decision. We explore the role of Bayesian updating in processing near-miss data, but ultimately suggest that managers and organizations succumb to a sense of invincibility or control because, having survived a near-miss, they discount the probability of a negative outcome-even when their decisions have grave consequences.

Approximate Dynamic Programming And Stochastic Approximation Methods For Revenue Management

Thu, 15 Oct 2009 12:09:30 GMT

Date: 06 Mar 2007(Tuesday)
Location: AC 2 New Mini LT
Speaker: Sumit M Kunnumkal
Abstract: We present new methods to make the capacity allocation decisions in revenue management problems. In the first part of the talk, we describe an approximate dynamic programming method to compute bid-price controls.Our method is based on relaxing certain constraints in the revenue manage- ment problem by associating Lagrange multipliers with them. We describe two relaxation ideas. Relaxing the constraints that link the different flight legs yields bid-prices that depend on the remaining leg capacities. Relaxing the capacity constraints yields bid-prices that depend on how much time is left until departure. When compared with the so-called deterministic linear program, both relaxations produce tighter upper bounds on the optimal objective value of the network revenue management problem. Computational experiments indicate that our methods can significantly improve upon other solution methods that are used to solve network revenue management problems in practice. In the second part of the talk, we consider the problem of optimally allocating seats on a single flight leg to the demands from multiple fare classes that arrive over overlapping time intervals. We describe a stochastic approximation method to compute the optimal protection levels under the assumption that the demand distributions are not known and we only have access to samples from the demand distributions. The novel aspect of our method is that it works with the nonsmooth version of the problem where capacity can only be allocated in integer quantities. We show that the iterates of our algorithm converge to the globally optimal protection levels.We discuss applications to the case where demand information is censored by the seat availability and present some numerical results.

When Do Analysts Adjust For Biases In Management Guidance? Effects Of Guidance Track Record And Analysts' Incentives

Thu, 15 Oct 2009 12:09:30 GMT

Date: 01 Mar 2007(Thursday)
Location: AC 2 New Mini LT
Speaker: Hun-Tong Tan
Abstract: Prior research indicates that analysts do not adjust for the general downward bias in earnings guidance issued by management. We report the results of three experiments designed to investigate how both cognitive and incentive factors and their interaction explain this phenomenon. Our results suggest that analysts do not adjust for the general tendency for companies to issue downwardly-biased guidance, but may adjust after they learn about a firm's specific bias pattern over time. However, the degree of adjustment depends on the interactive effects of analysts' incentives and the consistency and magnitude of bias revealed by its guidance track record. Analysts with accuracy incentives adjust for management's track record of downwardly-biased guidance, but those with relationship incentives do not. Furthermore, the difference in adjustment between analysts with relationship and accuracy incentives is larger when the bias track record is inconsistent than when it is consistent. Also, when guidance bias is larger (two cents versus one cent), analysts with relationship incentives partially adjust, as they appear to strike a balance between accuracy and their desire to please management. These findings have implications for investors, regulators, and the interpretation of prior research.

Non-cooperative Resource Sharing By Service Providers

Thu, 15 Oct 2009 12:09:30 GMT

Date: 28 Feb 2007(Wednesday)
Location: AC 2 New Mini LT
Speaker: Gireesh Shrimali
Abstract: We look at non-cooperative resource sharing, where individually rational providers contribute resources to a common pool that is then used by all providers. The key feature of our model is that usage of a resource is not explicitly regulated by the owner of the resource. Moreover, providers care about the aggregate disutility experienced by their customers. We show that participation in the sharing arrangement is possible in the absence of pricing and give a sufficient condition for it to occur. However, we also show that participation is not always guaranteed because of the free-riding problem, which motivates the study of pricing mechanisms.We study a two stage sequential Nash game with two providers who first set prices for executing peers' load and then choose to route their load according to the prices set and costs incurred by executing load on their resources. We show that rational providers will always participate in this game, and that one of the providers always has no incentive to utilize the resources of the other provider and effectively acts as a resource supplier. We contrast linear and nonlinear pricing schemes. Under nonlinear pricing, the effective supplier induces socially optimal routing but extracts the entire social surplus. Under linear pricing, both providers are better off even though the outcome is inefficient. Finally, under both pricing schemes, using common cost models that make the notion of capacity explicit, we show that the effective supplier has a greater incentive to upgrade the capacity of its resources when it is in a resource sharing relationship.

Career Concerns And Optimal Disclosure Policy

Thu, 15 Oct 2009 12:09:30 GMT

Date: 21 Feb 2007(Wednesday)
Location: AC 2 New Mini LT
Speaker: Arijit Mukherjee
Abstract: When a worker is raided, his initial employer is often better informed about his quality than the raiders. If the worker has career concerns and matching influence productivity, the initial employer can strategically disclose this information to influence incentives and matching efficiency. If the initial employer can use long-term complete contracts, perfect competition in the raider market ensures full disclosure. In contrast, an optimal short-term contract induces full disclosure if i) worker is risk neutral, ii) worker does not face any liquidity constraints, and iii) raider market is perfectly competitive. By relaxing any of the above conditions, one can find situations where full disclosure is no longer optimal.

The Relationship Between The Information Content Of Trades And Frequency Of Public Information Release: Mediating Effects Of Informed And Uninformed Trading

Thu, 15 Oct 2009 12:09:30 GMT

Date: 20 Feb 2007(Tuesday)
Location: AC 2 New Mini LT
Speaker: Srinivasan Sankaraguruswamy
Abstract: In this paper, we empirically document that the information content of trades in firms with more frequent public information release is lower on average. We further show that both informed and uninformed traders trade more in firms with more frequent public release. However, the trading by uninformed traders is of a greater order of magnitude than the trading by informed traders. This has the effect of reducing the information content of trades in firms with more frequent public releases. Our findings highlight the important role of public information in leveling the playing field for all investors.

To be announced

Thu, 15 Oct 2009 12:09:30 GMT

Date: 02 Feb 2007(Friday)
Location: AC 2 New Mini LT
Speaker: Nishad Kapadia
Abstract: To be announced

Directed Share Program In IPO Underwriting And Agency Problems

Thu, 15 Oct 2009 12:09:30 GMT

Date: 02 Feb 2007(Friday)
Location: MAX Lecture Theatre-AC 3 level 2
Speaker: Rina Ray
Abstract: In this paper I analyze directed share programs (DSPs) that are associated with the underwriting contracts of initial public offerings (IPOs). A DSP reserves IPO shares for officers, directors, employees, customers and vendors. About 87% of all IPOs had such a program between January 1999 and August 2003. DSPs have been criticized in the academic literature because they may create incentives to under-price IPOs. The popular press has called it a "disturbing phenomenon". Moreover, the NASDAQ/NYSE IPO Advisory Committee has recommended that regulatory restrictions be imposed on these programs. Contrary to this criticism, I find no evidence that the beneficiaries of these programs are expropriating wealth from non-beneficiary shareholders. Specifically, I find evidence inconsistent with larger DSPs causing more underpricing. On the other hand, expectation of higher underpricing increases the program size. Finally, revealed preference suggests that top underwriters with primarily institutional clientele lose from this underwriting contract feature.

One Size Does Not Fit All, After All: Evidence From Corporate Governance

Thu, 15 Oct 2009 12:09:30 GMT

Date: 02 Feb 2007(Friday)
Location: MAX Lecture Theatre-AC 3 level 2
Speaker: Sridhar Arcot
Abstract: We identify well-governed companies by accounting for heterogeneity in their governance choices by using a unique dataset. We find that companies that depart from governance best practice because of genuine circumstances outperform all others and cannot be considered badly-governed at all. On the contrary, we find that mechanical adherence to best practice does not always lead to superior performance.We thus argue that flexibility in corporate governance regulation plays a crucial role, because companies are not homogenous entities.

An Empirical Analysis Of Intra-group Financing Activities In The Indian Family Business Groups

Thu, 15 Oct 2009 12:09:30 GMT

Date: 29 Jan 2007(Monday)
Location: AC 2 New Mini LT
Speaker: Vijaya Marisetty
Abstract: We test three hypotheses to understand the rationale for the existence of intra-group financing activities in the Indian family business groups: the expropriation hypothesis, the co-insurance hypothesis, and the internal capital markets hypothesis. Using intra-group financing data of around 2000 Indian family business group affiliated firms that belong to around 300 family based business groups for the period between 2000 to 2005, we find that borrowing (lending) is always higher (lower) in those firms where the family stake is high (low). This questions that motive behind intra-group financing activities as it supports the expropriation hypothesis. There is only partial evidence to support co-insurance hypothesis and internal capital markets hypothesis. We find that profit making firms and firms that are overinvested provide loans in the internal capital market. However, the borrowing firms are not necessarily loss making firms or firms that are underinvested. In summary, we conclude that internal capital markets are not efficient in the Indian family business groups.

Adaptive Jackknife Estimators For Bias Reduction In Stochastic Programming

Thu, 15 Oct 2009 12:09:30 GMT

Date: 24 Jan 2007(Wednesday)
Location: AC 2 New Mini LT
Speaker: Amit Partani
Abstract: Stochastic programming facilities decision making under uncertainty, and has applications in a wide range of fields. We discuss example applications ranging from from communication-network design to pricing American-style options. Unfortunately, it is usually impractical to find optimal solutions to such stochastic programs. However, feasible candidate solutions, heuristically believed to be "good", can be obtained for certain classes of problems. In such cases, it is essential to be able to assess the quality of a solution. We estimate solution quality by forming probabilistic upper bounds on the solution's optimality gap. These confidence intervals are obtained using Monte Carlo approximations of the underlying stochastic program. However, the standard point estimate of the optimality gap contains bias due to the nature of the sampling-based approximation. We provide a method to reduce this bias, and hence provide a better, i.e., tighter, confidence interval on a candidate solution's optimality gap. Our new method requires less restrictive assumptions on the structure of the bias than previously-available estimators, and we establish desirable statistical properties of our estimators. Our estimators adapt to problem-specific properties, and we provide a family of estimators, which allows flexibility in choosing the level of aggressiveness for bias reduction. We theoretically and empirically compare our new estimator with known techniques on test problems from the literature.

Earnings Guidance And Managerial Myopia

Thu, 15 Oct 2009 12:09:30 GMT

Date: 19 Jan 2007(Friday)
Location: AC 2 New Mini LT
Speaker: K.R. Subramanyam
Abstract: We examine whether firms that frequently issue quarterly earnings guidance behave myopically, where myopic behavior is defined as sacrificing long-term growth for the purpose of meeting short-term goals (Porter [1992]). We find that dedicated guiders invest significantly less in research and development (R&D) than occasional guiders. This result is robust to controlling for other determinants of R&D investment as well as to the endogeneity between firms' guidance frequency and R&D intensity. We also find that, in comparison to occasional guiders, dedicated guiders meet or beat analyst consensus more frequently. However, we find that dedicated guiders' long-term earnings growth rates are significantly lower than those of occasional guiders. Overall, our results are consistent with dedicated guiders engaging in myopic R&D investment behavior and meeting short-term earnings targets with possible adverse effects for long-term earnings growth.

Integrating Commodity Markets In The Procurement And Distribution Policies Of A Supply Chain

Thu, 15 Oct 2009 12:09:30 GMT

Date: 11 Jan 2007(Thursday)
Location: AC 2 New Mini LT
Speaker: Ankur Goel
Abstract: In this research we seek to understand how the term structure of futures prices at a commodities market can be used in the formulation of procurement and distribution policies of supply chains under centralized decision making. The difference between spot and futures prices play an important role in the determination of the actual cost of holding a commodity; the cost of holding a unit of a traded commodity is a random variable whose values are determined by the stochastic evolution of prices at the commodity market, and it is exogenously imposed on the firm. The benefits derived from storing a unit of the commodity, on the other hand, are endogenous to each firm and depend on its operational characteristics. Our research objective is to understand how the internal operational decisions of the firm should be modified as a function of the spot and futures prices observed in the market. We model prices with a stochastic process that allows no risk-free arbitrage opportunities, and in this setting, we characterize optimal procurement and distribution policies for a serial distribution system and obtain approximations and bounds for more general distribution systems.

Asset Characteristics And The Impact Of It On Firm Scope And Performance

Thu, 15 Oct 2009 12:09:30 GMT

Date: 11 Jan 2007(Thursday)
Location: AC 2 New Mini LT
Speaker: Gautam Ray
Abstract: This research examines how the nature of firms' assets and information technology (IT) interact to influence the level of vertical integration and horizontal diversification. The analysis suggests that IT is associated with a greater decrease in vertical integration in firms with more tangible assets. The analysis also indicates that IT is associated with a greater increase in horizontal diversification in firms with more intangible assets. The general implication of this research is that firms with more tangible assets may use IT to become more vertically specialized, whereas firms with more intangible assets may deploy IT to become more horizontally diversified.

Optimal Scale-Up Of HIV Treatment In Resource-Constrained Settings

Thu, 15 Oct 2009 12:09:30 GMT

Date: 10 Jan 2007(Wednesday)
Location: AC 2 New Mini LT
Speaker: Sarang Deo
Abstract: HIV / AIDS is a serious public health concern in many developing countries with prevalence rates well over 20%. However, less than a fifth of the patients eligible for treatment and receive highly active antiretroviral therapy (HAART). Supply chain management and logistics is often cited as one of the biggest challenges in scaling up HAART. In addition to the aggregate shortage, clinics have to contend with uncertain supply resulting from inadequate supply management skills and a weak infrastructure. This supply uncertainty, combined with the clinical necessity of an uninterrupted treatment throughout patients' life, complicates the issue of treatment rationing and scaling up HAART programs. In this paper, we use stochastic dynamic programming to derive the optimal treatment rationing and scale-up policy in the case of both finite and infinite horizon. Using numerical analysis we illustrate that the rationing policies used in practice can substantially under-perform compared to the optimal policy. We also use our model to draw implications for the resource allocation decision in non-profit organizations where continuity of service is crucial to meeting the organization's social objective.

Intellectual Property Rights and Digital Goods: Findings On Software And Music Piracy

Thu, 15 Oct 2009 12:09:30 GMT

Date: 08 Jan 2007(Monday)
Location: AC 2 New Mini LT
Speaker: Ram Gopal
Abstract: Unauthorized duplication or piracy of products in digital formats has raised significant concern in industries such as software, music and movies. However, there continues to be a vigorous debate on the net impact and the extent of impact of piracy on the market for legitimate products. A significant body of research has addressed the effectiveness of various measures to combat piracy including technological, legal and economic schemes. In the talk I will outline and contrast our work on software piracy and more recently music piracy. Key findings of our work on software piracy relate to the important factors that explain the significant disparities in piracy rates across countries and the effectiveness of economic instruments such as price discrimination and product bundling on managing software piracy. Our work on music piracy focuses on the relationship between piracy and search costs related to product uncertainty and differential impact of piracy on superstars and relatively unknown artists. Armed with micro-level individual data on piracy behaviors on p2p networks we shed important new light on the impact of music industry's legal actions against individual file sharers and measure the impact of the level of piracy on the success of music albums on the Billboard charts.

Design Architecture And Introduction Timing For Rapidly Improving Industrial Products

Thu, 15 Oct 2009 12:09:30 GMT

Date: 04 Jan 2007(Thursday)
Location: AC 2 New Mini LT
Speaker: Karthik Ramachandran
Abstract: Technological advances present firrms in many industries with opportunities to substantially improve their product's capabilities in short periods of time. Customers who invest in these products may, however, react adversely to rapid improvements that obsoletes their previous versions by deferring their purchase. In industrial markets, there is an emerging trend of se- quentially improving products designed to be upgraded in a modular fashion. We study in this paper the impact of product architecture and introduction timing on the launch of rapidly improving products. We find that by localizing performance improvements in a sequence of upgradable modules of the product, a firm can better manage the introduction of rapidly im- proving products. Specifically, we show that modular upgradability can reduce the need for slowing the pace of innovation or foregoing upgrade pricing. The additional flexibility in pricing and timing makes the modular upgradable approach preferable over an integrated architecture, even in some situations where there may be distinct performance or cost-related disadvantages to pursuing the modular architecture. We differentiate between proprietary and non-proprietary approaches to modular upgradability and consider the implications for profits. Our central con- tribution in this paper is the innovative integration of product architecture with pricing and timing decisions for managing the introduction of rapidly improving products.

Coordination In The Remote Delivery Of Services

Thu, 15 Oct 2009 12:09:30 GMT

Date: 30 Dec 2006(Saturday)
Location: AC 2 New Mini LT
Speaker: Kannan Srikanth
Abstract: How do organizations coordinate interdependent activities across geographic distance? We analyze 121 surveys of offshored processes to understand both the sources of difficulty in the remote delivery of services as well as how organizations overcome these difficulties. We find that contrary to conventional wisdom, system dependence of a process is a much greater hindrance to the offshoring service delivery than process stickiness. We also find that firms could overcome system dependence by either investing in generating common ground across locations to coordinate over interdependence. However, our findings indicate that investing in modularity or in facilitating ongoing communication across locations does not lead to coordination across geographic distance. We find differences between simple and complex processes on the use of these coordination mechanisms.

The Role Of Managerial Choice In Theories Of Equity Ownership: Do Managers Choose According To Theory?

Thu, 15 Oct 2009 12:09:30 GMT

Date: 30 Dec 2006(Saturday)
Location: AC 2 New Mini LT
Speaker: Prashant Kale
Abstract: We use the policy capture methodology to assess the importance of managerial choice as a mechanism in theories that focus on resource value (e.g., Resource-based Theory) and transactional hazards (e.g., Transaction Costs Economics) respectively in explaining equity ownership in inter-firm relationships. Our results show that managerial choices are consistent with theories that draw on resource value as well as transaction hazard considerations, although they more strongly aligned with theories that emphasize resource value as the key antecedent of ownership choices. Further, resource value considerations also explain managers' choices regarding the level of ownership, in terms of minority ownership, non-majority ownership or majority equity ownership in these relationships, whereas transaction hazards do not. Finally, resource value and transactional hazard considerations jointly influence managers' ownership choices in inter-firm relationships, such that the impact of resource value in explaining ownership choices is moderated by transaction hazard considerations. These findings suggest possible opportunities to refine and integrate these existing theories used to explain ownership.

Industry Learning Environments And The Heterogeneity Of Firm Performance

Thu, 15 Oct 2009 12:09:30 GMT

Date: 28 Dec 2006(Thursday)
Location: AC 2 New Mini LT
Speaker: Natarajan Balasubramanian
Abstract: This talk characterizes inter-industry heterogeneity in rates of learning-by-doing and examines how industry learning rates are connected with the heterogeneity of firm performance. Using data from the US Census Bureau and Compustat, we measure the industry learning rate as the coefficient on cumulative output in a production function. We find that learning rates vary considerably among industries and are higher in industries with greater R&D,advertising, and capital intensity. More importantly, we find that higher rates of learning are associated with wider dispersion of Tobin's q and profitability among firms in the industry. Furthermore, we find that controlling for industry R&D and capital intensity, performance differences between new plants of incumbents and de novo entrants tend to increase with industry learning rates.Together,these findings suggest that learning intensity represents an important characteristic of the industry environment.

Ushering Buyers Into Electronic Channels

Thu, 15 Oct 2009 12:09:30 GMT

Date: 20 Dec 2006(Wednesday)
Location: AC 2 New Mini LT
Speaker: Nishtha Langer
Abstract: The Internet has emerged as a viable sales channel that influences the behavior of individual and institutional buyers. Recognizing this, many firms are adopting electronic channels in addition to the traditional (physical) channels for sales. The use of electronic channels raises several questions for sellers. When should products be sold through the physical channel and when should they be sold through the electronic channel? What type of product can be best sold through the electronic channel? How does buyers' use of the electronic channel change over time? Does introducing the electronic channel increase firm revenue?We develop a structural econometric model to examine these research questions in a particular setting: the sales of product from a medium-sized return center. The setting is especially well suited to study the dynamics of buyer behavior and its impact on firms' channel choice. We observe buyer and seller behavior in both channels. Moreover, there are no differences across channels in the extent of information asymmetry between buyer and seller. We use archival data for over 43 months to conduct two sets of analyses. First, we understand and categorize buyers' response model by estimating the firm's current model. Later, we demonstrate potential improvements from understanding buyer response by using our structural model to simulate outcomes from a proposed policy change. We contribute to the growing body of research on electronic markets in the following ways. First, we empirically identify buyer shifts between electronic and physical channels. We use archival data to model existing sales processes and analyze seller's channel inertia and buyers' channel loyalty. We assess the impact of buyer heterogeneity on firm profitability. Finally, we show that mere adoption of the electronic channel may not lead to higher profits: a firm needs to adapt its strategy based on buyers' response to channel selection.

Strategic Implications For Leasing Or Selling Durable Goods Through Competing Intermediaries

Thu, 15 Oct 2009 12:09:30 GMT

Date: 19 Dec 2006(Tuesday)
Location: AC 2 New Mini LT
Speaker: Sreekumar Bhaskaran
Abstract: In spite of the fact that many durable products are sold through dealers, the literature has largely ignored the issue of how product durability affects the interactions between a manufacturer and her dealers. We seek to fill this gap by considering a durable goods manufacturer that uses independent dealers to get her product to consumers. In contrast to much of the literature, we specifically consider the possibility that if the manufacturer sells her product, then the dealers can either sell or lease it to the final consumer. One of our more interesting findings is that, when the level of competition among dealers is high, the manufacturer prefers to lease the product to her dealers, which forces them to lease to consumers. This complements existing results that show that when suppliers of durable goods interact directly with consumers, then selling becomes the dominant strategy when competitive intensity is high. In addition, our result helps to explain differences in the selling / leasing policies that are observed in the office equipment and automobile industries.

Mars-Venus Marriages: Culture and Cross-Border M&A

Thu, 15 Oct 2009 12:09:30 GMT

Date: 14 Dec 2006(Thursday)
Location: AC 2 New Mini LT
Speaker: Rajesh Chakrabarti
Abstract: Analyzing cross-border acquisitions during the 1990's, we find that contrary to general perception, cross-border acquisitions perform better in the long-run if the acquirer and the target come from countries that are culturally more disparate. We use the Hofstede measure of cultural dimensions to measure cultural distance but also examine alternative measures. The positive effect of cultural distance persists after controlling for several deal-specific variables and country-level fixed effects, and is robust to alternative specifications of long-term performance. Cash and friendly acquisitions tend to perform better in the long-run. There is also some evidence of synergies when acquirers from stronger corporate governance regimes acquire targets from weaker regimes.

Institutional Environments Staffing Strategies And Subsidiary Performance

Thu, 15 Oct 2009 12:09:30 GMT

Date: 11 Dec 2006(Monday)
Location: AC 2 New Mini LT
Speaker: Ajai Gaur
Abstract: We use an institutional perspective to advance our understanding of how the host country environment influences subsidiary staffing strategy. We propose and find that firms rely more on parent company nationals in institutionally distant environments for reasons related to the efficient transfer of management practices and firm-specific capabilities. Further, we find that the positive influence of expatriate staffing levels on subsidiary performance is dependent on the institutional distance between the host and home country, and subsidiary experience. We base our findings on our analysis of expatriate employment levels and performance in 13,015 foreign subsidiaries of 2,952 Japanese firms in 48 countries.

Ethical Behaviors Of Entrepreneurs And Stakeholder Resource Commitments To Ventures

Thu, 15 Oct 2009 12:09:30 GMT

Date: 04 Dec 2006(Monday)
Location: AC 2 New Mini LT
Speaker: Rama Velamuri
Abstract: We examine the role of the ethical values of founders in influencing the emergence of stakeholder networks in the nascent and early stages of their firms, and specifically seek to explain 1) the diversity of stakeholder groups making resource commitments, and 2) the diversity of their motivations. We propose that this relationship is mediated by the salience for stakeholders of the firm's ethical values, and that this salience in turn is influenced by entrepreneur attributes and behaviors, industry characteristics, and the broader socio-political and economic environment. We propose a theoretical model based on our findings.

Components of Optimal Price Under Logit Demand - An Approximation

Thu, 15 Oct 2009 12:09:30 GMT

Date: 28 Nov 2006(Tuesday)
Location: AC 2 New Mini LT
Speaker: Tridib Mazumdar
Abstract: Components of Optimal Price Under Logit Demand Demand for durables can be modeled using a logit framework in which a customer chooses one brand from several alternatives, or buys nothing at all. In this framework, optimal prices for competing brands can be expressed as a system of nonlinear equations, which, however, do not have closed form solutions. Although the optimal price can be determined by numerical search, the solution offers limited understanding of its components. In this article, we develop a linear approximation of the Nash equilibrium optimal price of a brand as its marginal cost plus a weighted sum of: (1) the inverse of the price sensitivity of the market, (2) the average value added by all brands in the market, and (3) the value advantage (or disadvantage) of the brand. The weights depend primarily upon the number of competing brands, with price insensitivity having the strongest impact, followed by value advantage of the brand, and average value added by all brands. This approximation for optimal price is found to be robust under a wide range of conditions. Additionally, we demonstrate that using the approximation results in only marginal deviation of profits from the theoretical Nash optimal.

Analysis and Improvement of Delivery Operations at the San Francisco Public Library

Thu, 15 Oct 2009 12:09:30 GMT

Date: 24 Nov 2006(Friday)
Location: AC 2 New Mini LT
Speaker: Uday Apte
Abstract: Urban public library systems have always transported and delivered library materials within their branch systems. In recent years, however, the introduction of internet-based, online library catalog systems has allowed users to search the library's catalog, select and reserve a book or a video, and have it delivered to the branch of their choice. Consequently, the demand for delivery services is increasing at rapid rate in large urban public libraries systems. Having experienced a similar growth in the demand for delivered items, the San Francisco Public Library (SFPL) commissioned a study to improve its delivery operations. Using operations management concepts such as pre-sorting of material to avoid double handling, cross docking to reduce cycle time of delivery, and workload balancing among delivery routes to effectively increase delivery capacity, the delivery operations were restructured. We developed optimization models for library delivery operations that specifically accounted for pre-sorting, cross docking and route balancing. We also developed heuristics for solving these models and implemented them to redesign the delivery operations at SFPL. The redesigned delivery operations will reduce the cycle time and the cost of delivery by almost half. Furthermore, through balanced utilization of existing truck capacities, the delivery operations will be able to handle significantly larger delivery volume and thereby accommodate future delivery service growth without additional investments. The operations management concepts and techniques illustrated in this paper through the example of SFPL should prove to be useful to other urban, multi-branch library systems as they deal with their delivery challenges.

Maintaining Diagnostic Knowledge-based Systems: A Control Theoretic Approach

Thu, 15 Oct 2009 12:09:30 GMT

Date: 31 Oct 2006(Tuesday)
Location: AC 2 Mini LT
Speaker: Vijay Mookerjee
Abstract: Diagnostic knowledge-based systems are used in a variety of application domains to support classification decisions. The effectiveness of such systems often decreases as the application environment or user preferences change over time. Hence frequent adjustments to the system with knowledge by a human expert become necessary. We study the problem of determining the optimal amount of effort a human expert should expend to maintain the system over a planning horizon (finite or infinite). Using the ROC curve to derive a measure for system accuracy, we minimize total costs by balancing misclassification costs on the one hand with the cost of human intervention on the other. The problem is cast as an optimal control model in which the goal is to choose the rate at which human effort must be expended to minimize total cost. We find that the optimal solution usually follows a bang-bang plus singular structure. The singular structure of the solution is especially interesting because it corresponds to a steady level of human effort for problems with a sufficiently large time horizon. The maintenance problem is also solved as a discrete, impulse control problem.

Contingent Free Shipping And Repeat Buying On The Internet

Thu, 15 Oct 2009 12:09:30 GMT

Date: 26 Oct 2006(Thursday)
Location: AC 2 Mini LT
Speaker: Skander Esseghaier
Abstract: Internet retailers frequently experiment with different shipping policies. Free shipping and free shipping "with conditions" are considered to among the most effective marketing tool in e-tailing, yet their impact on consumer shopping behavior is not well understood nor their impact on the firm's profit has been carefully analyzed. This research addresses these issues by modeling the optimal shopping policy for a rational, surplus-maximizing shopper, who repeatedly purchases a non-durable product from an Internet site. We focus on value-contingent free shipping, where the site waives the shipping fee once expenditures reach a given threshold. Free shipping and fixed-fee shipping are analyzed as benchmark cases. We find that value-contingent free shipping policies allow the firm to generate larger order sizes and have a higher profit impact than either of free shipping and fixed-fee shipping policies. Our analysis then focuses on understanding the interaction between price and free shipping threshold under a value-contingent free shipping policy. From the shopper perspective, we highlight some non-intuitive results on the impact of changes in threshold levels and prices on the shopper's welfare. From a firm's perspective, we highlight how the optimal choice of threshold, price and shipping fee critically depends on the firm's order processing costs. Additional implications on price dispersion for homogenous goods are discussed along with comScore data which are consistent with predictions from the model.

Retail Supply Chain Rationing With Customer Learning Behavior

Thu, 15 Oct 2009 12:09:30 GMT

Date: 17 Oct 2006(Tuesday)
Location: AC 2 Mini LT
Speaker: Senthil Veeraraghavan
Abstract: We consider a firm selling a product that has uncertain quality through both direct and indirect channels. Each arriving customer observes private, imperfect information about the quality. Customers also estimate the probability of getting a product, based on their choice behavior. A customer arriving at one channel complements his private information about the quality of the product by the inventory levels. We answer (i) how the inventory levels influence the customer purchasing behavior and (ii) how the manufacturer can strategically allocate his production capacity. We study how the rationing policies to retailers widely differ if the customers were to make their decisions strategically.

Side-by-Side Management Of Hedge Funds And Mutual Funds

Thu, 15 Oct 2009 12:09:30 GMT

Date: 19 Sep 2006(Tuesday)
Location: AC 2 Class Room
Speaker: Tom Nohel
Abstract: We examine situations where the same fund manager simultaneously manages mutual funds and hedge funds. We refer to this as side-by-side management of mutual funds and hedge funds. We document 112 such cases involving 207 hedge funds and 304 mutual funds. The 155 side-by-side managed mutual funds in our sample in existence in 2004 managed a total of $123 billion, raising significant concerns for regulators. Proponents of this practice argue that it is essential to hire and retain star performers. Detractors argue that the temptation for abuse is high and the practice should be banned. More than 60% of the side-by-side arrangements identified are since 1999. Moreover, it is an arrangement we especially see with managers of growth-oriented equity funds. An analysis based on Sharpe ratios, 4-factor alphas, and a pooled time-series cross-sectional regression suggests that side-by-side managers significantly outperform peer funds, consistent with this privilege being granted primarily to star performers. We conclude that proposed disclosure of side-by-side relationships is sufficient to allay fears of investor exploitation.

Efficient Computation Techniques For Pricing American Options Using Function Approximations

Thu, 15 Oct 2009 12:09:30 GMT

Date: 29 Aug 2006(Tuesday)
Location: AC 2 Mini LT
Speaker: Sandeep Juneja
Abstract: Monte Carlo simulation techniques that use function approximations have been successfully applied to approximately price multi-dimensional American options. However, for many pricing problems the time required to get accurate estimates can still be prohibitive and this motivates the development of variance reduction techniques. In this talk, we describe a zero-variance or `perfect' control variate and a zero variance or `perfect' importance sampling distribution to price American options. We also observe the natural connection between the perfect control variate with additive duality and the perfect importance sampling with multiplicative duality in American options. We then discuss how function approximations may be used to approximate the perfect control variate and the perfect importance sampling distribution. Empirically, we observe that both the techniques give significant computational benefits in pricing single and multi-dimension options.

Productivity and Technical Changes In The Indian Auto Component Industry

Thu, 15 Oct 2009 12:09:30 GMT

Date: 23 Aug 2006(Wednesday)
Location: AC 2 Mini LT
Speaker: Haritha Saranga
Abstract: Links between firm level externally validated changes in quality such as certificates, awards, etc. and their impact on firm productivity in the Indian auto component industry are studied through this research. A non parametric approach based on Data Envelopment Analysis is used to estimate productivity change for each year during the eleven year period 1993-2003 for a sample of 50 firms in the Indian auto component industry. Productivity improvement is decomposed into gains due to technical change and improvement in relative efficiency. The study shows that the average productivity of the industry increased by nearly 40% over this period, which is essentially due to technical gains of 40.5% and a negative contribution from relative efficiency change of -0.5% during this period. There is an almost equal growth in productivity and technical changes during the periods 1993-1998 (25.4% & 22.75%) and 1998-2003 (22.5% & 25.69%). However, there is an increase in relative efficiency of 2.6% during 1993-1998, offset by a decrease of 3.1% during 1998-2003, which ultimately resulted in the negative growth in relative efficiency of 0.5% for the entire period. Next, we use parametric methods to study the impact of certification and quality awards on estimated productivity, technical and relative efficiency gains, controlling for factors such as age, export orientation, and firm size. We find that award winning firms, whose initial characteristics were no different than the rest of the industry, do not show significantly higher productivity gains during either period. Firms that were certified after 1998 are associated with significantly higher technical and relative efficiency gains. In addition, it is found that larger firms exhibited higher technical gains, and newer firms exhibited both technical and relative efficiency gains. In summary, we find that there is a positive correlation between quality initiatives and productivity improvement in the Indian auto component industry, but the results suggest the need for further analysis to understand the financial benefits of quality improvement in the Indian auto component industry.

Finance And The Efficiency Of Capital Allocation: Do Bank Branching Regulations Matter?

Thu, 15 Oct 2009 12:09:30 GMT

Date: 18 Aug 2006(Friday)
Location: Max Lecture Theatre( AC 3 level 2)
Speaker: Viral Acharya
Abstract: We use portfolio theory to quantify the efficiency of state-level sectoral patterns of production in the United States. For each state, we calculate the efficient frontier for investments in the real economy, the efficient Sharpe ratio, and the corresponding weights on investments in different industries. We study how rapidly different states converge to an efficient allocation, depending on access to finance. In particular, convergence is faster - both in terms of distance to the efficient frontier and improving Sharpe ratios - following intra- and inter-state liberalization of branching restrictions in the banking sector. The realized industry shares of output converge faster to efficiency following liberalization, particularly for industries that (i) depend on external finance, and (ii) are characterized by young and small .rms. In contrast, we do not find any strong effect of liberalization on convergence of the level of output growth for the state. The results suggest that financial development has important consequences for the efficiency and specialization (or diversification) of investments, in a manner that depends crucially on the variance-covariance properties of investment returns, rather than on their average only.

Event Study With Private Information And Imperfect Competition:Earnings Announcements Revisited

Thu, 15 Oct 2009 12:09:30 GMT

Date: 16 Aug 2006(Wednesday)
Location: AC 2 Mini LT
Speaker: Murgie Krishnan
Abstract: We implement an event study in a financial market with imperfect competition and private information characterized by a Kyle-type model. We invert the equilibrium mapping from the unobservable primitive variance parameters to parameters of observable variables such as price changes and order flows. Using intraday trades and quotes data, we compute MLEs of these primitive parameters (the variance of fundamentals given only public information, the variance of errors in private signals, and the variance of uninformed liquidity trading (noise)). An out of sample test shows that the Kyle-type model we use is a good candidate for describing the setting generating our data. Consistent with models that predict that liquidity traders trade around public announcements, we find that liquidity noise is higher within an earnings announcement window. The variance of beliefs given only public information is also higher within an earnings announcement window, in line with the Fischer-Stocken (2004) argument that agents with more ability and opportunity to manipulate a disclosure cause the disclosure to be more variable. The variance of private information error is smaller in an event window, consistent with greater information acquisition to try and interpret a public announcement. We also document that Kyle's λ is higher in an event window, showing an overall increase in information asymmetry. We also find that the acquisition of private information is not significantly related to abnormal trading volume. We observe that a greater diffuseness of beliefs given public information alone, and even more so, liquidity noise, are the primary drivers of abnormal trading volume in an event window.

Earnings Quality at Initial Public Offerings

Thu, 15 Oct 2009 12:09:30 GMT

Date: 01 Aug 2006(Tuesday)
Location: AC 2 Mini LT
Speaker: Lakshmanan Shivakumar
Abstract: Financial reporting around the time of IPOs is consistent with listed firms reporting more conservatively than previously as private firms, consistent with the results in Ball and Shivakumar (2005). We hypothesize that IPO firms supply the higher quality financial reports demanded by public investors, who face higher information asymmetry than private investors. The market mechanisms for enforcing this demand include monitoring by internal and external auditors, boards, analysts, rating agencies, the press and other parties. Once public, firms are subject to greater regulatory scrutiny and penalties. From the point of releasing the public prospectus document onwards, IPO firms face a greater threat of shareholder litigation and regulatory action if they do not meet higher reporting standards. The evidence is overwhelmingly in favor of this hypothesis. We show that the evidence reported by Teoh, Welch and Wong (1998) in support of the alternative hypothesis, that IPO firms opportunistically inflate earnings to influence the IPO price, is unreliable for a variety of reasons. We provide cleaner evidence, from samples of U.K. and U.S. IPOs, that IPO prospectus financials are conservative by several standards. We conjecture that the types of bias we observe in conventional estimates of "discretionary" accruals occur in a broad genre of studies on earnings management around large transactions and events.

Financial Contagion on the International Trade Network

Thu, 15 Oct 2009 12:09:30 GMT

Date: 26 Jul 2006(Wednesday)
Location: AC 2 Mini LT
Speaker: Raja Kali
Abstract: We combine data on international trade linkages with a network approach to map the global trading system as an interdependent complex network. This enables us to obtain indicators of how well connected a country is into the global trading system. We use these network-based measures of connectedness to explain stock market returns during recent episodes of financial crisis. We find that a crisis is amplified if the epicenter country is better integrated into the trade network. However, target countries affected by such a shock are in turn better able to dissipate the impact if they are well integrated into the network. A network approach can help explain why the Mexican, Asian and Russian financial crises were highly contagious, while the crises that originated in Venezuela and Argentina did not have such a virulent effect. We suggest that a network approach incorporating the cascading and diffusion of interdependent ripples when a shock hits a specific part of the global trade network provides us with an improved explanation of financial contagion.

Measuring Brand Value in an Equilibrium Framework

Thu, 15 Oct 2009 12:09:30 GMT

Date: 21 Jul 2006(Friday)
Location: AC 2 Mini LT
Speaker: Sridhar Moorthy
Abstract: We propose a structural approach to measuring brand value in an equilibrium framework using observational data. Brand value is defined as the difference in equilibrium profit between the brand in question and its counterfactual unbranded equivalent on search at- tributes. Our structural model allows us to make this computation rigorously, taking into account competitors' and retailers' reactions in the real and in the counterfactual situations. We illustrate our method on aggregate and individual-level data in two product categories, ready-to-eat cereal and ketchup, and compare our brand value estimates with those obtained from previously offered reduced-form methods.