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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:

Team leader experience in improvement teams

According to research from George Easton and Eve Rosenzweig, both associate professors of information systems & operations management, a team leader’s social capital and experience leading projects of the same type are factors in the effectiveness of an improvement team. By using six years of six sigma improvement project data from a Fortune 500 consumer products manufacturer, the researchers reached a rather surprising finding regarding a team leader’s social capital. Improvement teams do not appear to benefit from the leader’s experience working with the current team members on prior projects. What matters instead is the team leader’s experience working with a variety of people on prior improvement projects. The researchers suggest that the experience of dealing with many different individuals allows improvement team leaders to better identify suitable people to join their teams. Such a variety of experience also likely makes team leaders more politically astute when determining projects to pursue. In addition, the professors found that a team leader’s experience with the same type of project is important during the early stages of a six sigma implementation. The importance of this kind of experience declines as the system becomes more mature. The professors suggest that in a mature six sigma deployment, the organization’s cumulative body of documented learnings may well substitute for a team leader’s own prior experience leading a particular project type. Source:

CFOs & earnings misrepresentation

The quality of a company’s earnings is determined by controllable factors, such as internal controls and corporate governance, and noncontrollable factors, such as industry and economic conditions. But CFOs also have considerable influence over the communication and presentation of those earnings. In a new research study, Ilia Dichev, Goizueta Foundation Chair, professor of accounting, and coauthors John Graham (Duke U), Campbell R. Harvey (Duke U), and Shiva Rajgopal (Columbia U) note that discretion in accounting methods allows CFOs to misrepresent earnings. CFOs are motivated to misrepresent earnings in order to increase stock price and meet earnings targets, as well as boost their own compensation and career profile. The authors conducted a survey of 375 CFOs to explore their definition of earnings quality and ways to determine earnings misrepresentation. The authors concluded that “in any given period, a remarkable 20% of companies intentionally distort earnings, even while adhering to GAAP (generally accepted accounting principles).” The study found a number of red flags for earnings misrepresentation, including “a lack of correspondence between GAAP earnings and cash flows from operations, and unexplained deviations from peer and industry norms.” Source:

Mobile advertising and crowded locations

As marketers look for new ways to target consumers on their smartphones, they are capitalizing on the ability to use location for mobile advertising. Today, retailers send mobile coupons and alert shoppers to sale items as they roam the aisles of the store. New research from Michelle Andrews, assistant professor of marketing, and coauthors Zheng Fang (Sichuan U), Anindya Ghose (NYU), and Xueming Luo (Temple U), investigates the impact of another type of location on mobile ad effectiveness. The authors studied real-time data from one of the world’s largest telecom providers, compiling responses to mobile advertising by 14,972 mobile phone users on crowded and noncrowded subway trains. Surprisingly, commuters in packed subway trains were twice as likely to respond to and make a purchase from a mobile ad than travelers in less crowded subway trains. The researchers write, “A plausible explanation is mobile immersion: As increased crowding invades one’s physical space, people adaptively turn inwards and become more susceptible to mobile ads.” The research indicates that “hyper-contextual mobile advertising” needs to be a bigger consideration for marketers looking to improve their mobile advertising. Source:

Synergies between product placements and TV ads

As television watchers get inundated with commercials, the temptation to flip the channel grows. In the hopes of better connecting with consumers, advertisers are increasing their efforts to get product placements directly into TV shows. In a research study, David Schweidel, Goizueta Term Chair, Caldwell Research Fellow, and associate professor of marketing, and coauthors Natasha Zhang Foutz (U of Virginia) and Robin J. Tanner (U of Wisconsin) took a look at how the synergy between product placements and traditional commercials can keep viewers from flipping past the ad. The trio found that by simply putting a product in a television show and then immediately following it up with a commercial featuring the same product, viewers were more likely to stay tuned to the commercial. “The audience loss during the ad decreases by 5%,” they note. The effect was intensified when differing products from the same brand were shown in a program and then in a commercial immediately following the TV show. They write, “This indicates a positive synergy between the two activities that can reduce audience decline by more than 10%.” When products of different brands were featured in a television program and in a subsequent commercial, audience loss increased. Source:

Identity and the digital world

According to research from Jagdish Sheth, Charles H. Kellstadt Professor of Marketing, and Michael Solomon (UNC), the idea of identity is evolving, impacted by the growing influence of the digital world. The authors’ groundbreaking study builds on a seminal paper from Russell Belk, written in 1988, which identified the role that possessions play in an individual’s life and how external elements are critical to how people self-identify. The duo uses Belk’s findings on consumer behavior, taking it a step further by applying his concepts to current day, with the online world in mind. Sheth and Solomon found that traditional boundaries between an individual’s offline and online life are increasingly blurred, resulting in what they term the “digital extended self.” People are creating a new sense of identity, courtesy of the information posted, the persona created, and the relationships developed online. They write, “A social footprint is the mark a consumer leaves after she occupies a specific digital space (e.g., today’s Facebook posts), while her lifestream is the ongoing record of her digital life across platforms (e.g., registrations in virtual worlds, tweets, blog posts).” Not surprisingly, the notion of just what defines a consumer is changing. User-generated content and online consumer reviews have altered the nature of relationships between the producer and consumer. The authors’ findings have critical implications for marketers looking to get a better understanding of consumer behavior. Source:

Integrating knowledge in outsourced software development

Despite the prevalence of using outside vendors to handle a company’s software development, little is known about the best way to effectively share the knowledge critical to a project’s success among the client and vendor software team members. In research from Anandhi Bharadwaj, professor of information systems & operations management (ISOM) and Goizueta Term Chair in ISOM, and coauthor Nikhil Mehta (U of Northern Iowa), the duo determined that knowledge integration on outsourced projects is further complicated by the uncertainty often inherent in software development. Bharadwaj and Mehta analyzed 139 vendor development teams taken from sixteen Indian software companies for their research. The authors found that the manner in which software teams share and protect the information resources they have impacts the knowledge integration ability of the team. Since software teams operate under conditions of resource scarcity and dependence, team leaders need to ensure that their software development teams have not only the requisite technical skills but also the ability to import needed skills and knowledge from external sources and share it effectively within the team. An important implication of Bharadwaj and Mehta’s research is that organizations should develop holistic performance appraisal policies that assess software developers for both intergroup and within-group activities. Source:

Investor conferences and analyst advantage

In a research paper, T. Clifton Green, associate professor of finance and doctoral area coordinator, and coauthors Russell Jame 10PhD (U of Kentucky), Stanimir Markov (Southern Methodist U), and Musa Subasi (U of Maryland) focused their investigation on broker-hosted investor conferences to determine their impact on investor research. They studied 68,194 presentations by 4,394 companies at 2,749 investor conferences led by 107 brokerages for the period January 2004 to December 2010. According to the data, Green and his coauthors concluded that brokerage research analysts were more likely to provide better research for firms that participated at their conferences. Conference-hosting brokers were more likely to provide “more informative stock recommendations and more accurate earnings forecasts” than non-hosts. They discovered that firms participating in “broker-hosted investor conferences have a closer relation with the hosting analyst than with non-hosts, resulting in more private interactions (e.g., more company visits and meetings with management) and a continual flow of value-relevant information throughout the sample period.” Source:

Increased trading activity and declining returns

Improved trading technologies are changing the markets, facilitating the boom in algorithmic trading and the growth of hedge funds. Liquidity and trading volume continue to hit record levels. In a research study, Tarun Chordia, R. Howard Dobbs Professor of Finance, and coauthors Avanidhar Subrahmanyam (UCLA) and Tong Qing (Singapore Management U) analyzed whether or not increased liquidity and the trading activity of hedge funds has had an impact on financial market anomalies. Anomalies are return patterns that are inconsistent with the basic risk-return paradigm of finance. Increased arbitrage is a possible factor in attenuating the impact of anomalies, including momentum, reversals, accruals, etc. To find the link, Chordia and his coauthors studied proxies for arbitrage trading, including “the impact of the decline in the tick size due to decimalization and the impact of hedge fund assets under management, short interest, and share turnover.” The researchers referenced a wide sampling of equity market anomalies for more than three decades to show that increased liquidity and hedge fund trading activity did ultimately result in the decrease of the “economic and statistical significance of these anomalies.” Source: