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Electronic health records and the impact on workflow and costs

Healthcare practitioners and hospitals were initially slow to implement electronic health records (EHR) due to the perceived cost. The financial incentives from Medicare/Medicaid to adopt EHRs helped alleviate some of that concern, but the actual impact on workflow and profits, irrespective of those incentives, are still under investigation. In a research study, Steven D. Culler, adjunct associate professor of finance, along with David J. Ballard (Baylor Health Care System); Edmund R. Becker (Emory University); Dunlei Cheng (U of Texas); Briget da Graca (Baylor Health Care System); Neil S. Fleming (Baylor Health Care System); and Russell McCorkle (HealthTexas Provider Network) analyzed administrative, payroll, and billing data from 26 primary care practices in a Dallas-Fort Worth, Texas-based fee-for-service network that implemented EHRs from June 2006 through December 2008. In the 12-month period following implementation, staffing expenses increased 3 percent and practice costs increased 6 percent. The data revealed that “productivity, volume, and net income decreased initially, but recovered to/close to preimplementation levels after 12 months.” Given the recent rollout of EHRs across the country, the researchers noted the need for a longer-term investigation of the impact on productivity and costs. Source:

Understanding the influence of mobile promotions

Michelle Andrews, assistant professor of marketing, and coauthors Jody Goehring (RetailMeNot), Sam Hui (U Houston), Joseph Pancras (U Conn), and Lance Thornswood (JCPenney) cull together divergent streams of research to provide a framework to better understand how mobile promotions influence the in-store shopping behavior of consumers. Online promotions allow merchants to reach shoppers easier and faster, enabling traditional stores to text out online discounts or highlight specific products. Merchants can also use geolocation on mobile phones to text and target shoppers once inside of their store to feature merchandise or advertise a special offer. The authors identify a number of key areas for additional research to “enable long-term, value enhancing relationships between consumers and marketers.” For instance, they note the need for a better understanding of the role of privacy concerns on personal data collection via mobile devices. Andrews and coauthors also find that a deeper investigation of such things as return on investment, loyalty programs, upselling, proximity to purchase, and global promotions are required to get a true sense of the effectiveness of mobile promotions. Source:

Managing style and product design

Mobile phones look very different now than they did ten years ago. With access to all of the design patents available from the US Patent & Trademark Office (including ones from products in the telecommunications industry), Tian Heong Chan, assistant professor of information systems & operations management, and coauthors Jürgen Mihm (INSEAD) and Manuel E. Sosa (INSEAD) show how one can cluster them according to their visual similarities. The process results in an evolutionary timeline charting the successive styles of mobile phones from “clamshell” to “touchscreen slate” and everything in between. This approach creates a novel data platform from which researchers can start testing hypotheses about how product forms evolve. With the data, the authors show that there is increasing turbulence (or unpredictability in the change in product forms) across all product categories. In other words, it is much harder now than in the past to predict what the next hot style will be based on current trends. This is especially salient in non-tech categories, such as furniture and fashion. The authors conclude that companies with the capability to manage this increasing uncertainty will have a significant competitive advantage in the future. Source:

Social media mentions of television advertising

Television advertising is an expensive proposition, so media planners and advertisers are devoting considerable attention to social media mentions of their advertising and the real-time feedback it can provide. David A. Schweidel, associate professor of marketing, and coauthor Beth L. Fossen 16PhD (Indiana U) study this trend by using data from actual television advertising on the broadcast networks and brand and program mentions of those same ads on Twitter. The pair found that television advertising does impact the volume of online word-of-mouth for the advertised brand and the program showing the ad. Ad and brand characteristics played a huge role in creating social media “chatter.” For instance, movie advertisements generated the largest increase in online word-of-mouth. Ads for phones, computers, notebooks, and tablets also created substantial increases in social media mentions. In contrast, apparel, dental care, nonprofit ads, and PSAs benefited the least in terms of online brand chatter. Higher rated programs resulted in more online chatter for the ads shown, likely due to the fact that these programs draw larger viewing audiences. Source:

Financial covenant violations and private debt contracts

In new research, Edward Owens 03MBA, assistant professor of accounting, and Peter R. Demerjian (U of Washington) offer an improved methodology for predicting financial covenant violations in private debt contracts. A financial covenant is a condition on a commercial loan that requires a borrower to maintain certain financial ratios, and there are many covenants that exist in any one loan. Covenant violations often reflect the borrower’s riskiness or the degree of conflict between lender and borrower. Prior research has struggled to measure the probability of covenant violations. Although the preeminent database used in debt contracting research, Thomson Reuters’ DealScan, provides details about which financial covenants exist on a given loan, it does not provide specific measurement definitions of individual covenants. Owens and Demerjian use a subset of loans for which covenant definitions are available to determine standard covenant definitions that researchers can apply to broader loan samples. Further, Owens and Demerjian propose an intuitive, comprehensive measure of the probability of loan covenant violation that is more accurate than previously considered measures, which should open up additional avenues for researchers in the field of debt contracting. Source:

Dubious loan origination and the housing collapse

Gonzalo Maturana, assistant professor of finance, and coauthor John M. Griffin (U of Texas) argue that securitization was not the only factor in the recent housing crisis. Their new research indicates that questionable mortgage origination practices played a significant role in the distortions in the 2003 to 2012 real estate boom and bust. Specifically, the underreporting of the true risk profiles of borrowers, including the misreporting of second-liens, helped to drive housing demand and, ultimately, contributed to the crisis. They note, “The process of underreporting key loan attributes can have the by-product of facilitating credit to borrowers who have little ability to repay.” The researchers tested their theory by using county deed records, securitized loan information, house price statistics, and home loan application data from a number of reliable sources to detail the 2003 to 2006 run-up of housing prices and its subsequent 2007 to 2012 collapse. After controlling for securitization, they determined that “originator malfeasance” in certain areas also served to raise the credit supply. Maturana and Griffin concluded that dubious originator practices helped to cause house prices in certain zip codes to increase relative to other areas and eventually led to larger price crashes. Source:

Risk and returns for private equity and venture capital funds

The early success of some well-known private equity and venture capital funds has led to their rapid growth. According to research from Narasimhan Jegadeesh, the Dean’s Distinguished Chair in Finance, Roman Kraussl (U of Luxembourg), and Joshua M. Pollet (U of Illinois), investors should carefully evaluate the future risk and return potential of this asset class and avoid investing primarily because of past successes. Some private equity indices compiled by the industry suggest that these funds offer bigger returns than the public equity market, but prior academic studies offer mixed evidence on performance. Jegadeesh and his coauthors devised a new approach to determine the actual risk and returns by using market prices of funds that primarily invest in unlisted PE and VC funds listed on several European stock exchanges. This approach has a distinct advantage because it uses publicly available market prices rather than self-reported data, which were previously used in other academic studies. Their findings indicate that unlisted PE and VC funds as an asset class are unlikely to yield extraordinary returns as suggested by some self-reported data. They may even yield about the same return as the stock market but are illiquid. Source:

Misreporting in securitized loans

Nonagency mortgage-backed securities (MBSs) and collateralized debt obligations (CDOs) derived from MBSs and their role in the recent financial and housing crisis remain a subject of discussion. An MBS is an asset-backed security secured by a mortgage or grouping of mortgages. Non-agency MBSs are not guaranteed by any government-sponsored organization, such as Freddie Mac or Fannie Mae, or the federal government. According to research from Gonzalo Maturana, assistant professor of finance, and John Griffin (U of Texas), the complexity of these structured products made it difficult to learn the true value of the underlying assets. They analyzed “apparent fraud among securitized nonagency loans, looking at unreported second liens, owner occupancy misreporting, and appraisal overstatements.” The study data comes from Lewtan’s ABSNet Loan and HomeVal data sets, along with DataQuick’s Assessor and History files, for the time period between January 2002 and December 2011. The researchers discovered that “48% of loans exhibited at least one indicator of misrepresentation.” The level of misreporting was similar for low- and full-documentation loans. Also, loans with a misreporting were 51% more likely to be delinquent. Maturana and Griffin’s research points to apparent fraud by loan originators and MBS underwriters, and it also suggest that MBS underwriting banks were aware of some of the MBS representations at issuance. Source:

The impact of corporate vs. independent foundations

Debate continues as to whether corporate or independent foundations are more impactful, despite the shared interest in supporting charitable services. In research from Justin Koushyar, doctoral candidate in organization and management (2017), Wesley Longhofer, assistant professor of organization and management, and Peter Roberts, professor of organization and management, the trio determines that the answer is mixed. They used data from a matched random sample of corporate and independent foundations that operated across the United States in 2005 and 2009. With deeper pockets, corporate foundations were able to raise more funds than their nonprofit counterparts. Company sponsorship of a philanthropic foundation also meant that they could operate with lower overhead. However, Koushyar, Longhofer, and Roberts found that corporate foundations are “more dispersed and less relational, and they tend to be governed by more ephemeral groups of officers and trustees.” Simply put, corporate foundations have fewer longterm attachments to the charitable organizations they support. Additionally, “market-based motivations” may influence how they give. Corporate foundations do tend to provide smaller individual grant amounts than independent foundations. These “stakeholder effects” are even more dramatic for the foundations linked to larger publicly traded companies. Source:

Accounting data and volatility predictions

Generally speaking, financial research has studied how past equities and options volatility can help to predict future volatility in the markets. However, new research from Suhas Sridharan, assistant professor of accounting, investigates the impact of supplementing past volatility data with actual financial statement information to forecast future realized volatility. Sridharan used a large sample of 47,398 quarterly observations from 3,078 firms taken from 1996 to 2012. Her results indicate that incorporating accounting-based information, such as “standard deviation of the earnings yield, standard deviation of the change in premium of market value over book value, and the covariance of the two,” into forecasting models lowers forecast errors compared to models based solely on past realized volatility. She finds, “Equity returns volatility is significantly positively related to the earnings yield volatility and the volatility of the change in market to book premium. Volatility is significantly negatively related to the covariance of the earnings yield and change in market to book premium.” Sridharan also discovered that using accounting-based fundamental information in trading strategy could help to predict option returns. Source: