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What Does the GameStop Buying Spree Tell Us?

Villanova School of Business assistant professor Keith Wright was in the chat rooms when individual investors were discussing pumping up the GameStop stock and forcing the hedge fund shorts to have to cover, losing millions of dollars. "At the time, David was clearly beating Goliath," says Wright, adding that some of the young people on Reddit had done extremely well. "They made significant money on their investments. Some of them were a little late; you don’t want to be the last one in who takes the position at the top." He adds, "I have a feeling that this may actually be something revolutionary, and we're seeing the bottom of the pyramid—which is Generation Z, the Millennials, the Robin Hood investors—really changing the game." "Going forward, you've got this group that's collaborating, and that makes them extremely powerful," says Wright. "If they all follow each other into a position, they can really move markets in any direction they choose... Are they powerful enough as a group to defeat the hedge funds? Now, maybe they win this battle and they lose the war. Or maybe they win this battle and they decide to try a couple of others. This is not the only occurrence; this is one stock, but it's happening in a couple of other positions as well." As to whether a group of people should have this type of an effect on the stock market, Wright suggests that maybe it's a good thing. "We live in an economy where wealth is very unbalanced. You have a lot of people at the very top who are doing extremely well. But there is some inequity, and these short sellers used to crush the average retail investor, but no longer. Maybe this will create some equity, and maybe it will even the playing field a little bit."

Why are U.S. corporate boards under-diversified?

Research tells us that firms with diverse workforces generally outperform those that do not. And in recent years, corporate America has taken significant strides towards greater heterogeneity in the employee base. But a problem remains at the top. U.S. boardrooms remain overwhelmingly Anglo Saxon and male. No less than 81 percent of the Standard & Poor (S&P) 1500 Index directors in America today are white men. White women account for 11 percent, while ethnic minority men make up 6 percent. Meanwhile, female minority board members account for just 2 percent of the total. For businesses, this is becoming problematic, not least because institutional investors and regulators like the Securities and Exchange Commission have started asking firms to open up about their processes in selecting board members. Where diversity is a criterion, firms are required to be transparent about specifications and frameworks. Shedding light on this issue is new research from Grace Pownall, professor of accounting, and Justin Short, assistant professor of accounting, at Emory University’s Goizueta Business School. Together with Zawadi Lemayian of Washington University, they parsed 12 years of data on gender, ethnicity, and salaries from the S&P 1500 to build a composite picture of who’s who and who’s paid what in U.S. boardrooms. What they found points to a systemic shortage of female and minority executives making it onto shortlists for board appointments. But that’s not all. Once women and minority men do make it onto the board, there’s another roadblock waiting for them: they are not getting promoted at the same rate as their white, male counterparts. There seem to be two complex dynamics at play, said Short: a glass ceiling effect hampering the upward trajectory of Black, female, and other minority executives, and what he and his co-authors call “myopic” bias on the part of corporate America. “We developed two hypotheses that might explain what’s behind the lack of diversity on boards,” explained Short. “The glass ceiling hypothesis comes from what we see as a shortfall of women and ethnic minorities in the workforce relative to white men—so the theory here is that these groups just aren’t getting promoted to the point where they would be considered for board positions.” “The alternative hypothesis we worked on was that there might actually be a plentiful supply, but that companies just don’t see directors from different backgrounds as being as valuable in the same way,” he said. “And we would put this down to some kind of institutional myopia or bias at the very highest echelons of business.” To put these hypotheses to the test, Short and his colleagues first collected demographical data on American board members from a database compiled by Institutional Shareholders Services. Here they were able to determine the gender and ethnicity of individuals. They also ran a simple statistical regression on salaries using data from S&P. Then they compared the two. “Economic theory tells us that if there’s a high demand for diverse directors—women and ethnic minorities—and there’s a low supply of them, then these directors will be able to command higher salaries than others,” said Short. “It’s a simple case of supply and demand, and minorities will come at a greater premium.” Looking at the S&P 1500 data, they found that female and minority directors were indeed getting paid more on average than white male counterparts in other companies. And when they analyzed this more closely, Short and his co-authors found that these salaries were in general being paid by larger, more successful firms. “We can see that women and minorities are commanding higher compensation than the average white male director across the S&P universe of 1500 companies, and it’s the bigger, better paying firms that are hiring them,” Short said. “So that tells us that the top companies are proactively trying to build diversity in their boardrooms. At the same time, it shows there is a deficit of supply in this talent pool—the so-called glass ceiling dynamic.” To understand whether bias or institutional myopia might also be limiting the prospects of Black, female, and ethnic directors, Short et al. also looked at differences in compensation within the same company, and here they found something striking. While they made more on average than the typical white male director in U.S. firms, minority directors were being paid around 3 percent less than their direct counterparts – the white male directors on the same board. All this scrutiny begs the questions: What is going on in the American boardroom? And why is there still such a stark lack of diversity in the upper echelons of business in the U.S. today? “This tells us something important,” said Short. “Once these directors make it to the board, for most of them that’s it. They don’t advance or achieve promotion at the same rate.” This could be due to bias or what Short calls a Rolodex effect: “Maybe it’s because they didn’t go to the same school as the chairman of the board, or weren’t connected socially in the same way, so they don’t appear in the Rolodex of candidates with right or familiar credentials to get promoted within the board,” he said. “We know it’s not about hard skills or aptitudes because the data shows us that women and minority directors typically hold more qualifications than their counterparts. But for whatever reason, once they are on the board, they fail to advance in the same way as white men.” Interestingly, Short and his colleagues found that there was a very small number of women and minority directors sitting on the boards of multiple companies in the U.S. “Pulling it all together, we see that there’s a generalized shortage of women and ethnic group candidates in the U.S.,” Short said. “Successful companies are proactively on the lookout for them and offer higher compensation to attract them. “But there seems to be a glass ceiling effect acting as a bottle neck for talent. We also see that minority directors become a bit stuck once they’re on a board. The upward momentum tails off relative to their white, male colleagues. This could be due to bias or myopic thinking.” All of this should provide rich food for thought for the most senior decision-makers in U.S. enterprises, according to Short and his co-authors. With the pressure on to drive board-level diversity in corporate American, leaders need to be cognizant of the roadblocks or cut-off points to tie to ethnicity and gender. “Diversity is something we urgently need to enable and nurture in the United States. Without diversity, creativity and innovation can stall, and in business you run the risk of deferring to group think—sourcing ideas and perspectives from the same small pool of shared experience or expertise,” said Short. “It’s encouraging to see that diversity has increased over time and the largest companies are proactive. But there are still vast gaps of representation on the board compared to the workforce. There’s still work to be done because diversity in American business should be commonplace.” If you are a journalist looking to cover this research or to learn more about the diversification of corporate boards in America, then let our experts help. Grace Pownall, professor of accounting, and Justin Short, assistant professor of accounting, at Emory University’s Goizueta Business School are both available for interviews; simply click on either expert's icon to arrange a time today.

Hitting all the right notes - Georgia Southern music industry degree ready to launch

Georgia Southern University’s Department of Music earned national accreditation for a new music industry degree, the final step for an innovative program that combines music, technology and entrepreneurship. Launching in the fall of 2021, the new music industry program will prepare musicians for evolving careers in music. The program curriculum combines a traditional degree with 21st-century technology and performance opportunities. Accreditation from the National Association of Schools of Music (NASM) allows the new program, Bachelor of Arts in Music with a concentration in music industry, to be offered at the Armstrong Campus in Savannah. Students will have the option of declaring an emphasis area in music technology or music business. “We could not be more excited about this program,” said Steven A. Harper, Ph.D., chair of the Department of Music. “For many years, the music program has been itching to expand its reach and regional impact. Savannah is perfectly suited for a degree of this type and we couldn’t be more pleased to have this degree come to fruition.” The music industry program includes courses in music management, live sound, recording studio techniques, digital audio workstations and music entrepreneurship. “The numerous music industries in Savannah include music manufacturers, performing organizations/venues and major music festivals. These industries can provide ample internship possibilities for hands-on experience in a chosen area,” Harper said. “We are able to reach a student body we’ve never been able to serve before. We can prepare students for a whole different set of in-demand careers and we can create ties with the music industry in Savannah in a way that’s never been possible for us until now. It’s going to be a huge boon for the department, the college, the university and the Armstrong Campus.” One professor key to the program will be Stephen Primatic, DMA, who teaches percussion, theory, jazz and music technology. His versatility is evidenced by the books he has written: two on percussion pedagogy and another on instrument maintenance and repair. “This program will be beneficial to our students, the University and the community of Savannah, offering education and training for music careers in the 21st century,” said Primatic. If you are a journalist looking to know more about the Bachelor of Arts in Music with a concentration in music industry or would like to interview Steven A. Harper, Ph.D., chair of the Department of Music or Professor Stephen Primatic -- simply reach out to Georgia Southern Director of Communications Jennifer Wise at jwise@georgiasouthern.edu to set and time and date.

IU Kelley School finance expert available to discuss GameStop, Robinhood

Charles Trzcinka, the James and Virginia Cozad Chair of Finance at the Indiana University Kelley School of Business and an expert on financial markets and investments, is closely following developments involving individual investors and Game Stop and available to talk with reporters. He can discuss the impact of retail investors using the popular Robinhood brokerage and Reddit’s “Wall Street Bets” page on the stock of low priced companies like Gamestop, AMC and stocks such as BlackBerry, Bed Bath and Beyond and Nokia. Several brokerages halt buying of those and other stocks on Thursday. Trzcinka teaches behavioral finance and is familiar with Robinhood's model is to use game technology to trade stock and how it makes money by selling the right to trade against the orders to hedge funds and high frequency traders. In order to schedule an interview, contact George Vlahakis, associate director of communications and media relations at the Kelley School, at vlahakis@iu.edu or 812-855-0846.

Inauguration day - Trump's legacy, Biden's priorities

Speaking this morning on BBC radio, Dr McCrisken said: "President Trump’s legacy is being written right now. He’s ending his presidency under such dark clouds - he’s been impeached, there’s going to be a trial in the Senate that could convict him and prevent him from becoming a candidate again for the Presidency, so he’s leaving with lots of controversy – which of course is something that he’s always cultivated to a large extent, he wants to make everything about him. "Even today, by not showing up at the inauguration, by having a separate departure address, by issuing pardons including to his close former adviser Steve Bannon, he’s still cultivating that attention. That’s going to be the biggest Trump legacy - the degree to which he has attempted to shake up American politics – but the normality of American politics continues, we’re going to have a handover of power today through this inauguration, in the way that it always happens, every 4 years and the pendulum will swing again politically back to the Democrats. "There’s lots of pomp and circumstance around the Inauguration but the main moment is at noon, when Joe Biden will take the oath of office to become President of the United States – place his hand on a bible and say the sacred words with the Supreme Court Chief Justice presiding, and then Kamala Harris, very significantly, will also be sworn in as Vice President. She’s the first woman to become VP and the first VP of Black and South Asian heritage. It’s a really significant moment for both of them. "After the swearing in the next significant moment is the Inaugural Address, the first time Joe Biden speaks to the country as President. He’ll try and set the tone for his presidency – we can expect him to seek unity and healing but also assert his policy positions and his approach and set himself apart from the last four years under Trump. "Biden wants to hit the ground running, as soon as all the ceremonies are over today he’s going to be heading up to the White House and he’ll start business as President. One of the first things he’ll do, which a lot of Presidents do when they take office, is issue a series of Executive Orders – these are orders that are given directly by the President to the rest of the Executive Branch to implement policy in particular ways, and he’s going to use these to very quickly overturn some of the things that Trump did, like re-joining the Paris Climate Agreement, changing policies around immigration, changing policies around COVID-19 as well. "But he’s also putting forward some really significant legislative proposals to Congress, he’s seeking a very quick economic stimulus, another 1.9 trillion dollars of COVID relief, and a new immigration policy is in the offing. COVID-19 particularly is the thing he really wants to challenge as quickly as possible and try to turn around the situation in the United States where the virus is still ripping though the country – from his position as President, he’s going to try and get 100 million vaccinations in his first 100 days, that’s what he’s promising. "There’s a lot of challenges here and it’s going to be very difficult for him - particularly being overshadowed perhaps by the impeachment trial – so it will be an interesting few weeks and months ahead at the start of his Presidency." 20 January 2021

Renowned educator and author Gloria Ladson-Billings to present Georgia Southern 2021 Fries Lecture

Gloria Ladson-Billings, Ph.D., renowned pedagogical theorist, teacher educator and author, will present the 2021 Norman Fries Distinguished Lecture, hosted by Georgia Southern University’s College of Education. In her lecture, “Culturally Responsive Pedagogy: Educating Past Pandemics,” Ladson-Billings will discuss how pandemics provide opportunities for revisioning and reimagining culturally relevant teaching practices. She suggests that instead of “getting back to normal,” it is time to get on to new and more equitable ways of educating all students and creating a more democratic society. Ladson-Billings is the former Kellner Family Distinguished Professor of Urban Education in the Department of Curriculum and Instruction and faculty affiliate in the Department of Educational Policy Studies at the University of Wisconsin-Madison. She also served as the 2005-06 president of the American Educational Research Association (AERA). Ladson-Billings’ research examines the pedagogical practices of teachers who are successful with Black students. She also investigates critical race theory applications to education. She is the author of critically acclaimed books The Dreamkeepers: Successful Teachers of African American Children and Crossing Over to Canaan: The Journey of New Teachers in Diverse Classrooms, as well as numerous journal articles and book chapters. About Ladson-Billings Former editor of the American Educational Research Journal and a member of several editorial boards, Ladson-Billings’ work has won multiple scholarly awards including the H.I. Romnes Faculty Fellowship, the National Academy of Education/Spencer Postdoctoral Fellowship and the Palmer O. Johnson Outstanding Research Award. She is a 2018 recipient of the AERA Distinguished Research Award and was elected to the American Academy of Arts and Sciences in 2018. About the Norman Fries Distinguished Lectureship series The annual Norman Fries Distinguished Lectureship series began in 2001. It is funded by an endowment in honor of Norman Fries, founder of Claxton Poultry. In his more than 50 years of business, Fries built the company from a one-man operation into one of the largest poultry production plants in the U.S. Past Fries lecturers include David Oreck of Oreck Vacuums, South African apartheid author and lecturer Mark Mathabane, NASA director James W. Kennedy, Pulitzer Prize-winning author and historian Gordon S. Wood, Nobel Prize laureate William D. Phillips, Ph.D., bestselling author Susan Orlean, concussion expert Dr. Russell Gore, and PricewaterhouseCoopers Network chief operating officer Carol Sawdye. The lecture will take place virtually via Zoom on Feb. 8 at 7 p.m. The event is free and open to the public. If you are a journalist looking to know more about the Norman Fries Distinguished Lectureship or would like to interview Gloria Ladson-Billings  -- simply reach out to Georgia Southern Director of Communications Jennifer Wise at jwise@georgiasouthern.edu to set and time and date.

Lockdown teleworking impacts productivity of women more than men

When the COVID-19 pandemic led countries all over the world to lock down their economies in early 2020, there was an unprecedented global shift to teleworking in white collar sectors. A trend that had been gathering traction was suddenly and exponentially accelerated and many of the world’s largest corporations, Google and Facebook among them, have announced plans allowing employees to work from home well into 2021 or indefinitely. Remote working not only appears to work, but it appears to have a number of advantages—savings in office maintenance costs and time spent commuting, not to mention enabling organizations to safeguard productivity when there’s a major shock or crisis. But is it all good news? Or good news for all? A new paper by Ruomeng Cui, assistant professor of information systems and operations management at Emory’s Goizueta Business School, reveals an important drop in the productivity of female academics around the world in the wake of the COVID-19 lockdowns. In fact, in the ten weeks following the initial lockdown in the United States, their productivity fell by a stunning 13.9 percent relative to that of male colleagues. And it’s likely to do with the disproportionate burden of responsibility for household needs and childcare that persistently falls on women, Cui said. “We know that gender inequality persists both in the workplace and at home, and we were curious to see how the lockdown scenario would attenuate or exacerbate the situation for women,” Cui said. Anecdotal evidence from her own field—academia—showed that in the weeks following the stay at home mandate in March, there was an upswing of around 20 to 30 percent of papers submitted to journals. However, the overwhelming majority of these were being authored by men. Intrigued, Cui teamed up with Goizueta doctoral student Hao Ding and Feng Zhu from Harvard Business School to conduct a systematic study of female academics’ productivity and output during this period. “We knew that the lockdown had disrupted life for everyone, including academics. With schools and kindergartens closed and people taking care of work and household obligations at home, we intuited that women would be affected more than men as they are disproportionately burdened with domestic and childcare duties,” Cui said. For female academics this would theoretically be particularly acute, as the critical thinking that goes into research calls for quiet, interruption-free environments. To put this to the test, Cui and her co-authors created a large data set covering all the new social science research papers produced by men and women, across 18 disciplines and submitted to SSRN, a research repository, between December 2018 to May 2019 and then from December 2019 to May 2020. From this set, they were able to extract information on titles, authors’ names, affiliations, and addresses to identify their countries and institutions, as well as faculty pages to distinguish between men and women. In total they collected just under 43,000 papers written by more than 76,000 authors in 25 countries. Looking at the data, Cui and her colleagues were able to compute the total number of papers produced by male and female academics each week and then compare the productivity of both before and after the start of the lockdown. Prior to the pandemic, the 2019 period showed no significant changes in productivity in either gender. But in the 10 weeks following the shock of lockdown, a clear gap emerges between men and women, with female academics’ productivity falling by just under 14 percent in comparison to their male colleagues. Interestingly the effect was more pronounced in top-ranked research universities. This is likely because top schools require faculty to publish research as the primary requisite for promotion, so men would be motivated to continue authoring papers before and after the lockdown. These findings lend solid, empirical clout to the notion that women do take a hit to productivity when care and work time are reorganized, Cui noted. “We see clearly that women are producing less work as a consequence of working from home. In the field of academia, that has huge implications as achieving a permanent position, or tenure, is generally linked to your research output,” she said. “So, there is a serious fairness issue there. If women are producing less because the burden of household responsibility is greater for them than for men, then you’re likely to see fewer female academics get tenure through no fault of their own.” Indeed, one of the other findings of the study shows that while productivity fell, the quality of female-authored research measured by downloads and citations did not. Then there’s the issue of teleworking and gender. With a significant proportion of the world’s white-collar organizations still working from home and unlikely to head back to the office any time soon—and as many schools and childcare facilities remain closed due to the pandemic—Cui is concerned that productivity as a measure of value and a marker of success might mean the odds are further stacked against women. And not just in academia. “We looked at universities in particular, but our findings can really be externalized to any other industry because the underlying issues here are universal. So, with remote working becoming normalized, I think there’s a real onus on organizations of every type to think about how to mitigate these unintended consequences,” she said. “There needs to be more thought about how we measure value or potential of employees.” Cui calls for organizations and institutions to consider these factors when they evaluate male and female workers in the present context and looking to the future. Among the kinds of proactive moves they might consider are to make training programs for male and female employees that explore fairness and encourage a more even distribution of responsibility in the home and for children. “There’s nothing to be gained in prioritizing productivity as a tool for evaluation and just giving women more time, say, to produce as much,” Cui warned. “You’re just left with the same scenario of women doing more than their fair share. Solving this issue is really much more about being aware of it, getting educated about it, and changing your mindset.” If you are a journalist looking to cover this research or speak with Professor Ciu about the subjects of telework and productivity, simply click on her icon now to arrange an interview today.

The Alexa Effect: How the internet of things (IoT) is increasing retail sales

Imagine this scenario. You’re out of coffee but with the click of a button or a simple voice command, you reorder a two months’ supply that will arrive the same day. And that almond milk you like? Well, imagine your fridge already knew you were running low on supplies and independently sent the order to restock before you ran out. The stuff of science-fiction until only recently, internet of things (IoT) technology is beginning to change the way we live and work. Simply put, IoT is a system of interrelated devices—things that can include gadgets, digital objects, or machines, wearables and so on—which have the capacity to send and receive data over a network without human agency or human interaction. As a technology, IoT is novel, and it’s poised to reconfigure a range of sectors and industries—among them, the world of retail. Amazon is a leader in the consumer-facing space with an ecosystem of apps like Alexa, Fire TV, and the now-defunct Dash Button. Meanwhile, tech-savvy retailers are using IoT to facilitate operations. Smart shelves in stores can detect the status of perishable goods or inventory requirements; radio frequency identification (RFID) sensors can actively track the progress of produce through the supply chain. Retailers can even use IoT to send customers personalized digital coupons when they walk into the store. As IoT continues to gain traction around the globe, the potential for efficiency-boosting innovation in retail is clear. Less clear, however, is its actual impact on consumer choices and behaviors. Sure, IoT can save time and mental effort, but how does that translate into real-world business outcomes? This is the question that underscores new research by Vilma Todri and Panagiotis Adamopoulos, both assistant professors of information systems and operations management at Emory’s Goizueta Business School. They were keen to understand whether consumer behavior is significantly changed under the regime of this new technology as it continues its roll out across the world. Specifically, they wanted to know if IoT technology actually increases demand for products. And it turns out that it does. “IoT technology in retail is really in its infancy, so understanding its impact on users and business is key,” Adamopoulos said. “We wanted to shed light on these dynamics at this early point to spark interest and generate more debate around how retailers can leverage this technology.” Together with Stern’s Anindya Ghose, he and Todri put together a large data-set with information about sales of certain products in countries with existing IoT retail markets and in others where the technology has not yet been introduced. “We needed to take into account these sorts of variables to really understand the effect,” Todri said. “So, we had our control group of non-IoT retail markets, and we were able to compare sales data for the same products in countries where the technology has been adopted.” The researchers also controlled for time trends, looking at the impact on sale prior to and post IoT adoption. “Looking at the data over time and pinpointing the exact moment when a product has been made available for sale via IoT sales channels across different countries and at different moments, we were able to infer the effect of the technology on product sales,” Todri said. In total, they looked at sales for the same or similar products in six countries between 2015 and 2017. They also compared sales across different retailers. “By analyzing the same sales information for different products in different markets using different channels across the world, we can see differences in the data that can only be attributable to this new technological feature,” Adamopoulos said. And the differences are significant. The concept is fascinating, and if you are interested in learning more, a complete article about this topic is attached: If you are a journalist or looking to learn more about IoT, our experts can help. Vilma Todri and Panagiotis Adamopoulos, both assistant professors of information systems and operations management at Emory’s Goizueta Business School. Both experts are available to speak with media; simply click on either expert's icon to arrange an interview today.

Is hospital advertising actually good for our health?

Hospitals and healthcare organizations in the U.S. spend $1.5 billion on advertising every year. It’s a topic that provokes lively debate and a certain amount of controversy. Medical bodies, policy makers, and scholars alike question the ethics and efficacy of using (constrained) budgets to promote hospitals to patients. Diwas KC, professor of information systems & operations management at Emory University’s Goizueta Business School, and Tongil Kim, an assistant professor of management at Naveen Jindal School of Management in Texas, conducted a large-scale study of hospitals and patients in the state of Massachusetts to better understand the impact of hospital advertising. What they found is striking: Not only does television advertising work, it significantly drives demand, attracting patients living far from the hospital and beyond its regular area. And that’s not all. KC and Kim discovered that limiting hospital advertising or imposing an outright ban, as some groups have called for, might actually have serious negative effects on patient healthcare. “There has been a lot of discussion about banning advertising over recent years because of uncertainties around wasting money and resources,” KC said. In the paper “Impact of hospital advertising on patient demand and outcomes,” KC shows that there is a correlation between the amount spent on TV advertising and the quality of the hospital in question. Healthcare facilities that invest more in advertising tend to be “better” hospitals, he adds; they offer higher caliber care and services and, as such, they see much lower patient readmission rates—a key quality metric in healthcare. To get to these insights, KC and Kim looked at more than 220,000 individual patient visits to hospitals in the state of Massachusetts over a 24-month period. Among the data they collected were things like hospital type, location, and dollars spent on advertising. Patients were documented in terms of medical conditions, insurance, zip codes (to determine residence), and median household income. They were able to contrast those hospitals that invested in television advertising and those that did not. With the former, they uncovered a significant uptick in patient visits, with people coming from far further afield. This was particularly true of wealthier patients. Then there’s the question of patient outcomes. Here the data showed unequivocally that it’s the high-quality, low-readmission hospitals that advertise more—something that KC attributes to the natural tendency to get “more bang for the advertising buck when the quality of your product or service is better.” As for banning advertising, this would negatively impact these hospitals, he argues, limiting their ability to attract patients. It could also lead to an increase in population-level readmission rates. “Patient readmission rates are one of the key metrics along with mortality rates that tell us how well a healthcare facility is working,” said KC. “If a patient gets discharged but has to come back to a hospital in, say, 30 days, unless it’s a chronic condition or ongoing treatment, it’s a good indication that the patient didn’t get the level of care they should have the first time.” Indeed, “when we looked at all of the data, we found that the hospitals where there were fewest revisit rates were those that advertised more,” he said. KC finds that a blanket ban on hospital advertising could lead to an extra 1.2 readmissions for every 100 patients discharged. It’s a significant and “surprising” finding. And one that should inform the debate around healthcare advertising spend in the U.S. “There’s also the idea that this is a zero-sum game because if a patient doesn’t go to hospital A, they’re just going to go to hospital B—the one that advertises more—splitting the pie in different ways but not increasing that pie,” KC said. “What our study finds is that yes, advertising does draw patients away from one facility and towards another, but that the latter generally delivers better patient outcomes,” he said. “So, there is a social welfare benefit right there that suggests that you should not ban hospital advertising. There are real health benefits in allowing [advertising] to happen.” If you are a journalist looking to cover this topic - then let our experts help. Diwas KC is a Professor of Information Systems & Operations Management at Emory University’s Goizueta Business School. He is an expert in the areas of  Data Analytics, Operations, and Healthcare. If you are interesting in arranging an interview - simply click on his icon to set up a time today.

Heads up CFOs: The capital asset pricing model still rules

Firms invest in various things: bonds, stocks or other assets—new stores, new premises or even other firms. And they do so to earn maximum value from available cash that would otherwise be idle. For example, for the last five years Walmart generated an annual cash flow of more than $25 billion from its operations. The retailer has the option to channel this cash into opening new stores, ultimately growing its business and profits. Alternatively, Walmart can pay the cash out to its shareholders in the form of dividends, or through share repurchases. So far, it’s been productive. However, this win-win scenario is contingent on successfully navigating a number of complexities. Primary among these is that to invest optimally, you first need to determine the correct hurdle rate for that investment. Hurdle rates are the minimum rates of return that firms seek on their investments. The hurdle rate is the appropriate compensation commensurate with the investments’ risk. Therefore, the higher the risk, the higher the hurdle rate needs to be. For instance, a hurdle rate of 10% means that for every $100 invested, you would expect to earn an average of $10 average per year. But it’s tricky. You have to calculate the right hurdle rate that would add the most value for your shareholders—the optimal rate of return for you and your business. Too high and there’s risk of missing out on a good investment. If your right hurdle rate is 10%, but you mistakenly opt for 15%, you’re likely to ignore any investment that is projected to earn you less than 15%, but more than 10% is likely to be missed. As a result, you’ll end up leaving money on the table. Too low a hurdle rate and you’re in danger of burning money. Again, supposing your hurdle rate should be 10%, but you set it at 5%, you’re likely to end up investing in things with a suboptimal return. In the end, you’re wasting your cash on low value investments when you could be paying it directly to your shareholders in dividends and giving them the chance to earn 10% return on their own. For the last 50 years, the financial world has built models to calculate hurdle rates and rates of return. But which one works best? Shedding critical new light on this is a recently published paper by Narasimhan Jegadeesh, Dean’s Distinguished Chair of Finance at Goizueta, entitled “Empirical tests of asset pricing models with individual assets.” Jegadeesh and his co-authors developed new statistical methods to differentiate among a raft of new models that have been developed in recent years and to compare their efficacy to that of the Capital Asset Pricing Model (CAPM), a model introduced in the 1960s. What they found is that none of the newer models work any better than the CAPM in determining the appropriate hurdle rate or rate of return of an asset. That paper is attached and is required reading for CFOs and anyone interested in the Capital Asset Pricing Model. If you are looking to know more, or if you are a journalist interested in covering this important aspect of business and investing – then let our experts help. Narasimhan Jegadeesh is Dean’s Distinguished Chair of Finance at Goizueta. He is a renowned expert in this field and has been published extensively in the Journal of Finance, the Journal of Financial Economics, the Review of Financial Studies and other leading academic finance journals. His research has been discussed in several publications including Businessweek, The Economist, Forbes, Kiplinger's Personal Investments, Money, New York Times, and Smart Money.