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.
The article offers the authors' views on expatriate management programs and the benefits from executives interacting with the people and institutions of the host country. The idea that international experience or interaction between foreign managers and local people will help managers become more creative, entrepreneurial, and successful is discussed. The concept of integrative complexity in bi-cultural managers which enhances job performance is mentioned.
The Kidney Case is multi-person exercise that involves the allocation of a single kidney. Students read profiles of eight candidates for the kidney and make a first allocation decision. Each candidate was designed to be high on some allocation principles but low or unknown on others (e.g., best, match, time in cue, age, personal responsibility for disease, future benefits to society, etc.). Then, students are put into groups and assigned to advocate for one of the candidates. Each group will prepare and give a 3-minute presentation on why their candidate should receive the kidney.
Emissions abatement alone cannot address the consequences of global warming for weather disasters. We model how society adapts to manage disaster risks to capital stock. Optimal adaptation — a mix of firm-level efforts and public spending — varies as society learns about the adverse consequences of global warming for disaster arrivals. Taxes on capital are needed alongside those on carbon to achieve the first best.
What are the sources of the returns to education? We study the allocation of higher education graduates from public institutions in Ohio across firms. We present three results. First, we confirm findings in the earlier literature of large pay differences across degrees. Second, we show that up to one quarter of pay premiums for higher degrees are explained by between-firm pay differences. Third, higher education degrees are associated with greater representation at the best-paying firms.
This article focuses on the role of threats in negotiations. Broadly speaking, a threat is a proposition that issues demands and warns of the costs of noncompliance. Even if neither party resorts to them, potential threats shadow most negotiations. Researchers have found that people actually evaluate their counterparts more favorably when they combine promises with threats rather than extend promises alone. Whereas promises encourage exploitation, the threat of punishment motivates cooperation.
The accruals anomaly—the negative relationship between accounting accruals and subsequent stock returns—has been well documented in the academic and practitioner literatures for almost a decade. To the extent that this anomaly represents market inefficiency, one would expect sophisticated investors to learn about it and arbitrage the anomaly away. Yet, we show that the accruals anomaly still persists and its magnitude has not declined over time.
Design competitions are commissioned for many reasons, almost none of which have to do with design and all of which have to do with political motivations. A political agenda always presides over the important but ancillary search for new design possibilities, innovative solutions, or a compelling architectural or urban vision. Though political agendas vary quite a lot, they are lodged in the fundamental need to create or cultivate a strong constituency and garner the necessary resources to advance a desired project.
Managing word-of-mouth has become a significant marketing activity, as marketers try to identify opinion leaders and take advantage of the influence they wield over potential consumers.
Changes in nominal interest rates must be due to either movements in real interest rates, expected inflation, or the inflation risk premium. We develop a term structure model with regime switches, time-varying prices of risk and inflation to identify these components of the nominal yield curve. We find that the unconditional real rate curve is fairly flat at 1.3%. In one real rate regime, the real term structure is steeply downward sloping. An inflation risk premium that increases with maturity fully accounts for the generally upward sloping nominal term structure
The better able you are to "get inside the head" of your opponent, the better your negotiated outcomes are likely to be. But very few of us are born with the ability to take on the perspective of others effectively. Fortunately, this skill can be learned. The authors of this article show you how to use perspective taking — the active consideration and appreciation of another person's viewpoint, role, and underlying motivations — to understand your counterpart better and improve the quality of your deals.
Objectives: Significant variation in emergency department (ED) patient arrival rates necessitates the adjustment of staffing patterns to optimize the timely care of patients. This study evaluated the effectiveness of a queueing model in identifying provider staffing patterns to reduce the fraction of patients who leave without being seen.
Time preference is a key determinant of occupational choice and investments in human capital. Since careers are characterized by different wage growth prospects, individual discount rates play an important role in the relative valuation of jobs or occupations. We predict that individuals with lower discount rates are more likely to select into jobs or occupations with steeper wage profiles. To test this hypothesis we use smoking as an instrument for time preference.
We show that the accrual anomaly documented by Sloan (1996) [Do stock prices fully reflect information in accruals and cash flows about future earnings? The Accounting Review 71: 289–315] is concentrated in firms with high idiosyncratic stock return volatility making it risky for risk-averse arbitrageurs to take positions in stocks with extreme accruals. Moreover, the accrual anomaly is found in low-price and low-volume stocks, suggesting that transaction costs impose further barriers to exploiting accrual mispricing.
How can the poorer countries of the world be helped to help themselves through freer, fairer trade? In this challenging and controversial book Nobel prize-winning economist Joseph E. Stiglitz and his co-author Andrew Charlton address one of the key issues facing world leaders today. They put forward a radical and realistic new model for managing trading relationships between the richest and the poorest countries.
America's health care system is the envy of the world, but it faces serious challenges. The costs of care are rising rapidly, the number of uninsured Americans is at an all-time high, and public dissatisfaction is steadily increasing. How can we preserve the strengths of our current system while correcting its weaknesses? Three of American's leading health-care scholars answer that question in Healthy, Wealthy, and Wise. Poorly conceived federal tax policies, insurance regulations, and barriers to entry have distorted health-care markets and inhibited competition.
A novel economic model for reducing deforestation is being proposed by the Coalition for Rainforest Nations at the current United Nations climate change conference in Montreal. A new player in the climate change game, the coalition is proposing economic incentives for conserving tropical forests while contributing to climate stability. The coalition's proposal seeks to create new markets while reforming outmoded market and regulatory mechanisms. From the perspective of tropical countries, this change would make conservation a financially viable policy, with real economic returns.
This monograph reviews the U.S. Army's standard methods for problem solving and decisionmaking to see how they might take more account of a commander's intuition at every step. The ideas offered here go beyond the Army's current view of intuition in its latest version of Field Manual 5-0. That version presents "analytical" and "intuitive" as two different types of decisionmaking, for different situations. This divide between analysis and intuition reflects an outmoded view of the human mind that science no longer supports.
We study how multi-product queueing systems should be controlled so that sojourn times (or end-to-end delays) do not exceed specified leadtimes. The network dynamically decides when to admit new arrivals and how to sequence the jobs in the system. To analyze this difficult problem, we propose an approach based on fluid-model analysis that translates the leadtime specifications into deterministic constraints on the queue length vector.
Membership in certain intergovernmental organizations (IGOs), such as the World Trade Organization, has long been argued to stimulate trade. Yet, evidence linking IGOs to trade is mixed. We argue that identifying the influence of IGOs requires attention not only to the institutions IGOs enact, but to the network through which they enact them. We incorporate the full set of IGOs by using shared-IGO membership to create a network of connectivity between countries.
This research examines the dynamic process of inference updating. The authors present a framework that delineates two mechanisms that guide the updating of personality trait inferences about brands. The results of three experiments show that chronics (those for whom the trait is accessible) update their initial inferences on the basis of the trait implications of new information. Notably, nonchronics (those for whom the trait is not accessible) also update their initial inferences, but they do so on the basis of the evaluative implications of new information.
This paper develops a theory of control as a signal of congruence of objectives, and applies it to financial contracting between an investor and a privately informed entrepreneur. We show that formal investor control is (i) increasing in the information asymmetries ex ante, (ii) increasing in the uncertainty surrounding the venture ex post, (iii) decreasing in the entrepreneur's resources, and (iv) increasing in the entrepreneur's incentive conflict. In contrast, real investor control—that is, actual investor interference—is decreasing in information asymmetries.
A quarter-century ago, Miles and Ezzell (1980) solved the valuation problem of a firm that follows a constant leverage ratio L = D/S. However, to this day, the proper discounting of free cash flows and the computation of WACC are often misunderstood by scholars and practitioners alike. For example, it is common for textbooks and fairness opinions to discount free cash flows at WACC with beta input Beta(S) = [1 + (1 - Tax Rate)L]Beta(U), although the latter is not consistent with the assumption of constant leverage.
The aim of strategy is to master a market environment by understanding and anticipating the actions of other economic agents, especially competitors. A firm that has some sort of competitive advantage--privileged access to customers, for instance--will have relatively few competitors to contend with, because potential competitors without an advantage, if they have their wits about them, will stay away. Thus, competitive advantages are actually barriers to entry and vice versa. In markets that are exposed, by contrast, competition is intense.
Under what conditions do intricate pre-planned arguments enable negotiators to dominate the conversation and ultimately the outcome? We proposed the advantage occurs when the communication media involves the expectation of rapid turn-taking, because counterparts cannot generate rebuttals in time and end up making concessions. In an experiment with a negotiation task, sellers were provided with either intricate or simple arguments to support a competitive tactic and negotiated via either a quick-tempo (Instant Messaging) or slow-tempo (E-mail) medium.
Since 1980, Michael Porter's classic Competitive Strategy has provided the methodology that most big companies use for strategic analysis. But now, distinguished Columbia Business School professor Bruce Greenwald offers a bold new theory of competition - a theory that is far simpler than Porter's and much easier for strategic planners to apply in the real world. Porter identified a complex five-force model for studying competition in any market.
Focusing on asset returns governed by a factor structure, the APT is a one-period model, in which preclusion of arbitrage over static portfolios of these assets leads to a linear relation between the expected return and its covariance with the factors. The APT, however, does not preclude arbitrage over dynamic portfolios. Consequently, applying the model to evaluate managed portfolios is contradictory to the no-arbitrage spirit of the model.
Prof. Donald E. Sexton, in an exclusive write-up for OER, focuses on how a country brand affects behaviour through perceived value and what factors influence the branding investment process.
The authors demonstrate that in dyadic negotiations, negotiators with a promotion regulatory focus achieve superior outcomes than negotiators with prevention regulatory focus in two ways. First, a promotion focus leads negotiators to claim more resources at the bargaining table. In the first two studies, promotion-focused negotiators paid more attention to their target prices (i.e., their ideal outcomes) and achieved more advantageous distributive outcomes than did prevention-focused negotiators.
I analyze corporate social responsibility (CSR) from economic and financial perspectives, and suggest how it is reflected in financial markets. CSR is defined as a programme of actions to reduce externalized costs or to avoid distributional conflicts. It has evolved in response to market failures, a Coasian solution to problems associated with social costs. The analysis suggests that there is a resource-allocation role for CSR programmes in cases of market failure through private-social cost differentials, and also where distributional disagreements are strong.
We show that equity market liberalizations, on average, lead to a one percent increase in annual real economic growth over a five-year period. The effect is robust to alternative definitions of liberalization and does not reflect variation in the world business cycle. The effect also remains intact when liberalization is instrumented with quality of institutions-variables that explain liberalization but not growth and when a growth opportunity measure is included in the regression. Capital account liberalization has a less robust effect on growth than equity market liberalization has.
This paper examines inventory management from an incentive perspective. We show that when a manager has private information about future attainable revenues, the residual income performance measure based on historical cost can achieve optimal (second-best) incentives with regard to managerial effort as well as production and sales decisions. The LIFO (last-in—first-out) inventory flow rule is shown to be preferable to the FIFO (first-in—first-out) rule for the purpose of aligning incentives.
The current consensus on indirect tax reform in developing countries favors a reduction in trade taxes with an increase in VAT to raise revenue. The theoretical results on selective reform that underlie this consensus are, however, derived from partial models that ignore the existence of an informal economy. Once the incomplete coverage of VAT due to an informal economy is acknowledged, we show that, contrary to the current consensus, the standard revenue-neutral selective reform of trade taxes and VAT reduces welfare under plausible conditions.
We propose a measure of capital market integration arising from a conditional regime-switching model. Our measure allows us to describe expected returns in countries that are segmented from world capital markets in one part of the sample and become integrated later in the sample. We find that a number of emerging markets exhibit time-varying integration. Some markets appear more integrated than one might expect based on prior knowledge of investment restrictions. Other markets appear segmented even though foreigners have relatively free access to their capital markets.
We provide a formal treatment of both static and dynamic portfolio choice using the Disappointment Aversion preferences of Gul (1991. Econometrica 59(3), 667-686), which imply asymmetric aversion to gains versus losses. Our dynamic formulation nests the standard CRRA asset allocation problem as a special case. Using realistic data generating processes, we find reasonable equity portfolio allocations for disappointment averse investors with utility functions exhibiting low curvature.
We present an equilibrium production economy in which default occurs in equilibrium. The borrower chooses optimal default and consumption policies, taking into account that default is costly and the lender gains access to the technology upon default. We derive asset prices and default premia in this economy. The borrower's relative risk aversion in wealth increases with decreases in wealth due to the increased possibility of default at low wealth levels. This produces a time-varying pricing kernel and a countercyclical equity premium.
Dispersion in investor beliefs and short-selling constraints can lead to stock market bubbles. This paper argues that firms, unlike investors, can exploit such bubbles by issuing new shares at inflated prices. This lowers the cost of capital and increases real investment. Perhaps surprisingly, large bubbles are not eliminated in equilibrium nor do large bubbles necessarily imply large distortions. Using the variance of analysts?
We survey the literature analyzing the price formation and trading process, and the consequences of market organization for price discovery and welfare. We offer a synthesis of the theoretical microfoundations and empirical approaches. Within this framework, we confront adverse selection, inventory costs and market power theories to the evidence on transactions costs and price impact. Building on these results, we proceed to an equilibrium analysis of policy issues.
There are five topics of debate that I will cover today: 1) Does inflation targeting improve economic performance? 2) Is inflation targeting consistent with the dual mandate? 3) Can central bank transparency go too far? 4) Would a price level target be better than an inflation target? 5) Would a point target be better than a target range?
The recent media and political attention on service outsourcing from developed to developing countries gives the impression that outsourcing is exploding. As a result, workers in industrial countries are anxious about job losses. This paper aims to establish what are the hypes and what are the facts. The results show that although service outsourcing has been steadily increasing it is still very low, and that in the United States and many other industrial countries "insourcing" of services is greater than outsourcing.