New research from CBS Professor Harry Mamaysky reveals how negativity in the news and markets can escalate a financial crisis.
Adapted from “Global Value Chains in Developing Countries: A Relational Perspective from Coffee and Garments,” by Laura Boudreau of Columbia Business School, Julia Cajal Grossi of the Geneva Graduate Institute, and Rocco Macchiavello of the London School of Economics.
Adapted from “Online Advertising as Passive Search,” by Raluca M. Ursu of New York University Stern School of Business, Andrey Simonov of Columbia Business School, and Eunkyung An of New York University Stern School of Business.
This paper from Columbia Business School, “Meaning of Manual Labor Impedes Consumer Adoption of Autonomous Products,” explores marketing solutions to some consumers’ resistance towards autonomous products. The study was co-authored by Emanuel de Bellis of the University of St. Gallen, Gita Johar of Columbia Business School, and Nicola Poletti of Cada.
Co-authored by John B. Donaldson of Columbia Business School, “The Macroeconomics of Stakeholder Equilibria,” proposes a model for a purely private, mutually beneficial financial agreement between worker and firm that keeps decision-making in the hands of stockholders while improving the employment contract for employees.
At Columbia Business School, our faculty members are at the forefront of research in their respective fields, offering innovative ideas that directly impact the practice of business today. A quick glance at our publication on faculty research, CBS Insights, will give you a sense of the breadth and immediacy of the insight our professors provide.
As a student at the School, this will greatly enrich your education. In Columbia classrooms, you are at the cutting-edge of industry, studying the practices that others will later adopt and teach. As any business leader will tell you, in a competitive environment, being first puts you at a distinct advantage over your peers. Learn economic development from Ray Fisman, the Lambert Family Professor of Social Enterprise and a rising star in the field, or real estate from Chris Mayer, the Paul Milstein Professor of Real Estate, a renowned expert and frequent commentator on complex housing issues. This way, when you complete your degree, you'll be set up to succeed.
Columbia Business School in conjunction with the Office of the Dean provides its faculty, PhD students, and other research staff with resources and cutting edge tools and technology to help push the boundaries of business research.
Specifically, our goal is to seamlessly help faculty set up and execute their research programs. This includes, but is not limited to:
All these activities help to facilitate and streamline faculty research, and that of the doctoral students working with them.
We present a consensus-based checklist to improve and document the transparency of research reports in social and behavioural research. An accompanying online application allows users to complete the form and generate a report that they can submit with their manuscript or post to a public repository.
Although the gender wage gap in the U.S. has narrowed, women's career trajectories diverge from men's after the birth of children, suggesting a potential role for family-friendly policies. We provide new evidence on employer provision of these policies. Using the American Time Use Survey, we find that women are less likely than men to have access to any employer-provided paid leave and this differential is entirely explained by part-time status. Using the NLSY97, we find that young women are more likely to have access to specifically designated paid parental leave, even in part-time jobs.
In a sample of 110 countries over the period 1960–2009, we document a positive relation between the volatility and skewness of growth in the cross-section. This novel stylized fact is related to two distinct mechanisms: sudden growth spurts in emerging markets, and sharp financial crises-driven recessions in developed economies. The former phenomenon is driven by industrialization, macroeconomic stabilization, and the exploitation of natural resources. The latter is consistent with recent theories of financial frictions.
In a multi-armed bandit (MAB) problem a gambler needs to choose at each round of play one of K arms, each characterized by an unknown reward distribution. Reward realizations are only observed when an arm is selected, and the gambler's objective is to maximize cumulative expected earnings over some planning horizon of length T. To do this, the gambler needs to acquire information about arms (exploration) while simultaneously optimizing immediate rewards (exploitation). The gambler's policy is measured relative to a (static) oracle that knows the identity of the best arm a priori.
We examine economic consequences of US bank regulators' phased removal of the prudential filter for accumulated other comprehensive income for advanced approaches banks beginning on January 1, 2014. The primary effect of the AOCI filter is to exclude unrealized gains and losses on available-for-sale securities from banks' regulatory capital.
We develop a model of investment timing under uncertainty for a financially constrained firm. Facing external financing costs, the firm prefers to fund its investment through internal funds, so that the firm's optimal investment policy and value depend on both its earnings fundamentals and liquidity holdings. We show that financial constraints significantly alter the standard real options results, with the financial flexibility conferred by internal funds acting as a complement, and at times as a substitute, to the real flexibility given by the optimal timing of investment.
When people make decisions with a pre-selected choice option – a ‘default’ – they are more likely to select that option. Because defaults are easy to implement, they constitute one of the most widely employed tools in the choice architecture toolbox. However, to decide when defaults should be used instead of other choice architecture tools, policy-makers must know how effective defaults are and when and why their effectiveness varies.
We estimate the benefit of life-extending medical treatments to life insurance companies. Our main insight is that life insurance companies have a direct benefit from such treatments as they lower the insurer's liabilities by pushing the death benefit further into the future and raise future premium income. We apply this insight to immunotherapy, treatments associated with durable gains in survival rates for a growing number of cancer patients. We estimate that the life insurance sector's aggregate benefit from FDA approved immunotherapies is $9.8 billion a year.
Over the past decade, data has transformed everyday life. While it has changed the way people shop and businesses operate (Goldfarb and Tucker, 2019), it has only just begun to permeate economists thinking about the aggregate economy. In the early twentieth century, economists like Schultz (1943) analyzed agrarian economies and land-use issues. As agricultural productivity improved, production shifted more to manufacturing. Modern macroeconomics adapted with models featuring capital and labor, markets for goods, and equilibrium wages (Solow, 1956).
We test the hypothesis that the arrival of new medical ideas played a major role in the long-run increase in US cancer survival and decline in cancer mortality, by investigating whether the types of cancer (breast, colon, lung, etc.) subject to greater penetration of new ideas, measured using the MEDLINE/PubMED database, had larger subsequent survival gains and mortality reductions, controlling for changing incidence.
Pricing greenhouse-gas (GHG) emissions involves making tradeoffs between consumption today and unknown damages in the (distant) future. While decision making under risk and uncertainty is the forte of financial economics, important insights from pricing financial assets do not typically inform standard climate–economy models. Here, we introduce EZ-Climate, a simple recursive dynamic asset pricing model that allows for a calibration of the carbon dioxide (CO2) price path based on probabilistic assumptions around climate damages.
We find that an increase in the "unusualness" of news with negative sentiment predicts an increase in stock market volatility. Similarly, unusual positive news forecasts lower volatility. Our analysis is based on more than 360,000 articles on 50 large financial companies, published in 1996–2014. Unusualness interacted with sentiment forecasts volatility at both the company-specific and aggregate level. These effects persist for several months. Furthermore, unusual news is reflected in volatility more slowly at the aggregate than at the company-specific level.
Although consumer behavior theory has traditionally regarded evaluations as instrumental to consumer choice, in reality consumers often assess and express what they like and dislike even when there is no decision at stake. Why are consumers so eager to express their evaluations when there is no ostensible purpose for doing so? In this research, we advance the thesis that this is because consumers derive an inherent pleasure from assessing and expressing their likes and dislikes.
Background: We analyzed the role that the launch of new drugs has played in reducing the number of years of life lost (YLL) before three different ages (85, 70 and 55 y) due to 66 diseases in 27 countries.
Methods: We estimated two-way fixed-effects models of the rate of decline of the disease- and countryspecific age-standardized YLL rate. The models control for the average decline in the YLL rate in each country and from each disease.
Motivated by the proliferation of user-generated product-review information and its widespread use, this note studies a market where consumers are heterogeneous in terms of their willingness-to-pay for a new product. Each consumer observes the binary reviews (like or dislike) of consumers who purchased the product in the past and uses Bayesian updating to infer the product quality.
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.
Human enhancement products allow consumers to radically enhance their mental abilities. Focusing on cognitive enhancements, we introduce and study a novel factor dehumanization (i.e., denying a person emotional ability and likening them to a robot) which plays a key role in consumers' reluctance to use enhancement products. In study 1, consumers who enhance their mental abilities beyond normal levels were dehumanized, whereas consumers who use the same products to restore lost abilities were not.
The main objectives of this commentary are to discuss the replication study of Adam and Galinsky (2012, Experiment 1) by Burns, Fox, Greenstein, Olbright, and Montgomery, clarify the main idea behind enclothed cognition, supplement the literature review presented by Burns et al., discuss why our original study failed to replicate, and offer potential avenues for future research. Overall, we believe the replication study was conducted competently, and thus the results cast doubt on our finding that wearing a lab coat decreases errors on the Stroop test. At the same time, Burns et al.
Prior research attributes the positive effects of passion on professional success to intrapersonal characteristics. We propose that interpersonal processes are also critical because observers confer status on and support those who express passion. These interpersonal benefits of expressing passion are, however, contingent on several factors related to the expresser, perceiver, and context. Six studies, including entrepreneurial pitches from Dragons' Den and two pre-registered experiments, establish three key findings.
Clinical studies have shown that the use of certain drugs can reduce disability. Access to prescription drugs varies across countries. Even when the total number of drugs launched in two countries is similar, the specific drugs that were launched, and the diseases those drugs are used to treat, may differ.
This paper investigates how book rate of return under GAAP relates to risk and the required return for investing. A standard view sees the book rate of return as a measure of profitability to be compared to the required return to evaluate the success of an investment. A contrasting view sees the book rate of return as indicative of the required return, consistent with the standard risk-return tradeoff. There clearly is some sorting out to do.
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.
Using Census microdata on multi-state firms and their organizational forms, we estimate the impact of state taxes on business activity. For C corporations, employment and the number of establishments have short-run corporate tax elasticities of -0.4 to -0.5, and do not vary with changes in personal tax rates. Pass-through entity activities show tax elasticities of -0.2 to -0.4 with respect to personal tax rates, and are invariant with respect to corporate tax rates. Capital shows similar patterns. Reallocation of productive resources to other states drives around half the effect.
The paper's introduction offers a high-level review of Bitcoin's features, especially its governance by protocol. The paper proceeds to summarize Bitcoin's analysis as a payment system. It pays particular attention to a comparison between Bitcoin and a firm-run payment system.
There are two types of prescription drug cost offsets. The first type of cost offset—from prescription drug use—is primarily about the effect of changes in drug quantity (e.g. due to changes in out-of-pocket drug costs) on other medical costs. The second type of cost offset—the cost offset from prescription drug innovation—is primarily about the effect of prescription drug quality on other medical costs.
The 30-year U.S. swap spreads have been negative since September 2008. We offer a novel explanation for this persistent anomaly. Through an illustrative model, we show that underfunded pension plans optimally use swaps for duration hedging. Combined with dealer banks' balance sheet constraints, this demand can drive swap spreads to become negative. Empirically, we construct a measure of the aggregate funding status of Defined Benefit pension plans and show that this measure is a significant explanatory variable of 30-year swap spreads.
User-generated content has become ubiquitous and very influential in the marketplace. Increasingly, this content is generated on smartphones rather than personal computers (PCs). This article argues that because of its physically constrained nature, smartphone (vs. PC) use leads consumers to generate briefer content, which encourages them to focus on the overall gist of their experiences. This focus on gist, in turn, tends to manifest as reviews that emphasize the emotional aspects of an experience in lieu of more specific details.
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 fi nd 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.
The completion of the Human Genome Project was heralded as a step towards “personalized medicine,” offering patients individualized treatments based on genomic profiling. More recently, this vision has been eclipsed by the promise of “precision medicine” (PM), emphasizing benefits to patients from more precise diagnosis and treatment based on a range of biomarkers, along with data about patients’ environment, lifestyle, and behaviors.
Research on symbolic consumption and status signaling has primarily examined how consumers spend money on possessions that display their identity and status. We review research suggesting that the way in which consumers spend their time can also serve as a form of conspicuous consumption. In particular, we examine status inferences based on how consumers allocate time between work and leisure, and how consumers choose to spend their discretionary leisure time.
We examine how signals of a candidate’s capability affect perceptions of that person’s commitment to an employer. In four experimental studies that use hiring managers as subjects, we test and show that managers perceive highly capable candidates to have lower commitment to the organization than less capable but adequate candidates and, as a result, penalize high-capability candidates in the hiring process.
Consumer robots are predicted to be employed in a variety of customer-facing situations. As these robots are designed to look and behave like humans, consumers attribute human traits to them—a phenomenon known as the “Eliza Effect.” In four experiments, we show that the anthropomorphism of a consumer robot increases psychological warmth but decreases attitudes, due to uncanniness. Competence judgments are much less affected and not subject to a decrease in attitudes.
Do men and women generate the same benefits from using their social ties? This study addresses this question by examining how resources are allocated within social networks. Prior research has commonly attributed observed gender differences in network benefits to the tendency for women to be embedded in networks that are poorer in social and economic resources. Implicit in this explanation is that if women had access to more valuable networks they would receive similar benefits as do men.
While most research explaining the persistence of gender inequality has focused on how decision makers’ own biases perpetuate inequities, a growing body of work points to mechanisms of bias that may arise when a decision maker is concerned with satisfying a third party or audience. Using data from 2007 to 2013 on 2,310 members of a popular networking organization for entrepreneurs, I examine the extent to which the presence of third parties leads to gender inequality in resource exchange, or connections to potential clients.
Admission control and service rate speedup may be used during periods of congestion to minimize customer waiting in different service settings. In a healthcare setting, this can mean sending patients to alternative care facilities that may take more time and/or provide less ideal treatment. While waiting can be detrimental to patient outcomes, strategies used to control congestion can also be costly. In this work, we examine a multi-server queueing system that considers both admission control and speedup.
Across a field study and four experiments, we examine how social norms and scrutiny affect decisions about adding members of underrepresented populations (e.g., women, racial minorities) to groups. When groups are scrutinized, we theorize that decision makers strive to match the diversity observed in peer groups due to impression management concerns, thereby conforming to the descriptive social norm. We examine this first in the context of U.S. corporate boards, where firms face pressure to increase gender diversity.
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.
This study proposes and tests a theoretical framework that relates a firm’s imitation strategy and its interaction with R&D resources to incremental and radical innovation. The analysis of a panel dataset of 1381 Chinese manufacturing firms in the period 2008–2014 shows that imitation strategy is positively related to incremental innovation but has an inverted U-shaped relationship with radical innovation.
This appendix provides a contrast to the variance decomposition approach for identifying the two types of news in accounting data. This approach, explained in Callen (2009), assumes the Vuolteenaho (2002) model, implemented in a vector autoregressive (VAR) scheme to capture the linear dependencies among multiple time series of indicator variables.
This paper modifies the standard returns-earnings regression in accounting research to show that financial reports convey both cash-flow news and discount-rate (expected-return) news. The paper points to the realization principle, associated as it is with the resolution of risk, as the accounting feature that conveys expected-return news. The modified returns-earnings regressions indicate that the information so conveyed pertains to priced risk.
This article provides a critical review of what is known about affect regulation in relation to consumption behavior. Based on numerous findings from psychology, communication research, and consumer research, we identify a core set of general principles of affect regulation in consumer behavior. First, we define affect regulation, clarify its relations to the concepts of coping and compensatory consumption, and refine the emerging concept of “displaced coping.” We then review the generic strategies used in the regulation of general negative affective states.