Organizations & Markets

We develop a classification methodology for the context and content of news articles to predict risk and return in stock markets in 51 developed and emerging economies. A parsimonious summary of news, including topic-specific sentiment, frequency, and unusualness (entropy) of word flow, predicts future country-level returns, volatilities, and drawdowns. Economic and statistical significance are high and larger for year-ahead than monthly predictions. The effect of news measures on market outcomes differs by country type and over time.

Media economics provides a basis for Eli Noam in setting out the logic behind a series of expectations he shares about how the transition from regular linear TV to online video will lead to major changes in culture, politics, and society. His perspective on the dramatic implications of this shift suggests comparisons with the fundamental changes brought about by the introduction of first-generation TV over seventy years ago, with both exciting advances and also disturbing problems.

We propose the standard neoclassical model of investment under uncertainty with short-run adjustment frictions as a benchmark for earnings-return patterns absent accounting influences. We show that our proposed benchmark generates a wide range of earnings-return patterns documented in prior accounting research. Notably, our model generates a concave earnings-return relation, similar to that of Basu [1997], and predicts that the earnings-return concavity increases in the volatility of firms' underlying shock processes and decreases in investment levels.

We propose a simple measure of de facto financial market integration based on a factor model of monthly equity returns, which can be computed back to the first era of financial globalization for 17 countries. Global financial market integration follows a "swoosh" shape — i.e. high pre-1913, still higher post-1990, low in the interwar period — rather than the other shapes hypothesized in earlier literature. We find no evidence of financial globalization reversing since the Great Recession as claimed in other recent studies.

This paper evaluates the effect of Paid Family Leave (PFL) on breastfeeding, which we identify using California's enactment of a 2004 PFL policy that ensured mothers up to six weeks of leave at a 55 percent wage replacement rate. We employ synthetic control models for a large, representative sample of over 270,000 children born between 2000 and 2012 drawn from the restricted-use versions of the 2003-2014 National Immunization Surveys.

We develop a theory of optimal government debt in which publicly-issued and privately-issued safe assets are substitutes. While government bonds are backed by future tax revenues, privately-issued safe assets are backed by the future repayment of pools of defaultable private loans. We find that a higher supply of public debt crowds out privately-issued safe assets less than one for one and reduces the interest spread between borrowing and deposit rates.

We develop an empirical model of exchange rate returns, applied separately to samples of developed (DM) and developing (EM) economies’ currencies against the dollar. Monetary policy stance of the global central banks, measured via a natural-language-based approach, has a large effect on exchange rate returns over the ensuing year, is closely linked to the VIX, and becomes increasingly important in the post-crisis era.

The present research examines intercultural accuracy—people's ability to make accurate judgments about outgroup values—and the role of social projection processes. Across four studies, U.S. and British participants showed low overall levels of intercultural accuracy for Chinese students’ individualistic and collectivistic values. In line with recent changes toward individualism in China, we observed different levels of intercultural accuracy, hinging on whether the criterion values of Chinese were assessed before (2001) or after (2015) this shift.

The ongoing convergence of technology, media, and telecommunications has not only transformed the media industry, but also the management practices. This chapter outlines specific challenges for the management of media companies and discusses what convergence means from the perspective of managing media firms.