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.
This article provides an applied introduction to Bartik instruments. The instruments attempt to reduce familiar endogeneity concerns in differential exposure designs (e.g., panel regressions with unit and time fixed effects). They isolate treatment variation due to the differential impact of common shocks on units with distinct pre-determined exposures. As a result, the instruments purge the treatment variation of possibly confounding factors varying across units over time.
Smartphones have made it nearly effortless to share images of branded experiences. This research classifies social media brand imagery and studies user response. Aside from packshots (standalone product images), two types of brand-related selfie images appear online: consumer selfies (featuring brands and consumers’ faces) and an emerging phenomenon the authors term “brand selfies” (invisible consumers holding a branded product).
We propose a new valuation method for private equity investments. First, we construct a cash-flow replicating portfolio for the private investment, using cash-flows on various listed equity and fixed income instruments. The second step values the replicating portfolio using a flexible asset pricing model that accurately prices the systematic risk in listed equity and fixed income instruments of different horizons.
We show that dealer market power impedes the pass-through of monetary policy in repo markets, which is an important first stage of monetary policy transmission. In the European repo market, most participants do not have access to trade on centralized exchanges. Rather, they rely on OTC intermediation by a small number of dealers that exhibit significant market power. As a result, the passthrough of the ECB's policy rate to repo markets is inefficient and unequal.
The social cost of nitrous oxide does not account for stratospheric ozone depletion. Doing so could increase its value by 20%. Links between nitrous oxide and other nitrogen pollution impacts could make mitigation even more compelling.
As the prospect of average global warming exceeding 1.5°C becomes increasingly likely, interest in supplementing mitigation and adaptation with solar geoengineering (SG) responses will almost certainly rise. For example stratospheric aerosol injection to cool the planet could offset some of the warming for a given accumulation of atmospheric greenhouse gases (1). However, the physical and social science literature on SG remains modest compared with mitigation and adaptation.
We study the use and economic impact of artificial intelligence (AI) technologies among U.S. firms. We propose a new measure of firm-level AI investments, using a unique combination of detailed worker resume and job postings datasets. Our measure reveals a stark increase in AI investments across sectors in the last decade. AI-investing firms see higher growth in sales, employment, and market valuations.
We examine innovation after the Great Depression using data on a century’s worth of U.S. patents and a difference-in-differences design that exploits regional variation in the severity of the economic crisis. Harder-hit areas experienced large and persistent declines in independent patenting, which lasted for the next 70 years. This decline was larger for young and inexperienced inventors and lower-quality patents. In contrast, large firms had relative innovation increases, especially for inventors with the largest declines in independent patenting.
It is tempting to dismiss personal responsibility for lowering one’s carbon footprint. After all, it was bp that popularised the concept in the mid-aughts, telling everyone that it was “time to go on a low-carbon diet”.
Stabilizing the world’s climates means cutting carbon dioxide pollution. There’s no way around it. But what if that’s not enough? What if it’s so late in the game that even cutting carbon emissions to zero, tomorrow, wouldn’t do?
Enter solar geoengineering.
The principle is simple: attempt to cool Earth by reflecting more sunlight back into space. The primary mechanism, shooting particles into the upper atmosphere, implies more pollution, not less. If that doesn’t sound scary, it should. There are lots of risks, unknowns, and unknowables.
Online allocation problems with resource constraints are central problems in revenue management and online advertising. In these problems, requests arrive sequentially during a finite horizon and, for each request, a decision maker needs to choose an action that consumes a certain amount of resources and generates reward. The objective is to maximize cumulative rewards subject to a constraint on the total consumption of resources.
When an inventory manager attempts to construct probabilistic models of demand based on past data, demand samples are almost never available: only sales data can be used. This limitation, referred to as demand censoring, introduces an exploration-exploitation trade-off as the ordering decisions impact the information collected. Much of the literature has sought to understand how operational decisions should be modified to incorporate this trade-off. We ask an even more basic question: when does the exploration-exploitation trade-off matter?
We propose a tractable model of dynamic investment, division sales (spinoffs), financing, and risk management for a multi-division firm that faces costly external finance. The model highlights the importance of considering the intertwined nature of the different policies.
Bitcoin provides its users with transaction-processing services which are similar to those of traditional payment systems. This article models the novel economic structure implied by Bitcoin’s innovative decentralized design, which allows the payment system to be reliably operated by unrelated parties called miners. We find that this decentralized design protects users from monopoly pricing. Competition among service providers within the platform and free entry imply no entity can profitably affect the level of fees paid by users.
The chapter proposes an ‘open video system’ to deal with digital dominance in the online streaming video sector. TV, in its third generation, is becoming online-based and, due to the fundamental technology and economics of the medium, controlled by a few global platforms. The extent is shown by market concentration numbers developed in the chapter. How to deal with this problem? Instead of following the breakup or public utility models, the chapter advocates the enablement of information intermediaries that would act on behalf of consumers.
We provide an applied introduction to Bayesian estimation methods for empirical accounting research. To showcase the methods, we compare and contrast the estimation of accruals models via a Bayesian approach with the literature’s standard approach. The standard approach takes a given model of normal accruals for granted and neglects any uncertainty about the model and its parameters. By contrast, our Bayesian approach allows incorporating parameter and model uncertainty into the estimation of normal accruals.
Big data technologies change the way in which data and human labor combine to create knowledge. Is this a modest technological advance or a data revolution? Using hiring and wage data, we show how to estimate firms' data stocks and the shape of their knowledge production functions. Knowing how much production functions have changed informs us about the likely long-run changes in output, in factor shares, and in the distribution of income, due to the new, big data technologies.
Are extreme price swings part of a longer-term trend in the transition towards a greener future?
The high-yield bond market has just experienced an extreme cycle of bust and boom in the debt of energy companies.
We study the performance of many traditional and novel, text-based variables for in-sample and out-of-sample forecasting of oil spot, futures, and energy company stock returns, and changes in oil volatility, production, and inventories. After controlling for small-sample biases, we find evidence of in-sample predictability. Our text measures, derived using energy news articles, hold their own against traditional variables.
The rise of information technology and big data analytics has given rise to "the new economy." But are its economics new? This article constructs a dynamic equilibrium model where firms accumulate data, instead of capital. We incorporate three key features of data: 1) Data is a by-product of economic activity, 2) data is information used for prediction, and 3) uncertainty reduction enhances firm profitability.
We examine how organizations of different types --public, non-profit and for-profit -- engage in consumer-benefiting misconduct (CBM) by examining which patients benefit from hospitals of the three types gaming the market for liver transplants. Consistent with our theory, we find that public firms are the least likely of the three organization types to engage in CBM.
This article empirically examines the magnitude of risk premiums for direct real estate investments on a global basis. As this article analyzes ex-ante risk premiums over more than 25 years consistently across the world, it enhances current knowledge about the regional differences between risk premiums and helps long-term investors with their global portfolio allocation over time. On a global level, the authors find a risk premium of 4.1% for Gordon’s growth and 3.7% for two-stage growth model. The periodic growth model shows a slightly lower risk premium of 3.1%.
The major cities of the world have attracted a flurry of out-of-town (OOT) home buyers. Such capital inflows affect housing affordability, the spatial distribution of residents, construction, labor income, wealth, and ultimately welfare. We develop a spatial equilibrium model of a city with substantial heterogeneity among residents. We calibrate the model to the New York and Vancouver metro areas. The observed increase in OOT purchases is associated with 1.1% (5.0%) higher house prices and a 0.1% (0.34%) welfare loss in New York (Vancouver).
Population growth has declined markedly in almost all major economies since the 1970s. We argue this trend has important consequences for the process of firm dynamics and aggregate growth. We study a rich semi-endogenous growth model of firm dynamics and show analytically that a decline in population growth reduces creative destruction, increases average firm size and concentration, raises market power and misallocation, and lowers aggregate growth in the long-run.
Hotter temperature can reduce labor productivity, work hours, and labor income. The effects of heat are likely to be a joint consequence of both exposure and vulnerability. Here we explore the impacts of heat on labor income in the US, using regional wealth as a proxy for vulnerability. We find that one additional day >32 °C (90 °F) lowers annual payroll by 0.04%, equal to 2.1% of average weekly earnings. Accounting for humidity results in slightly more precise estimates.
To augment the growth of a restaurant’s business, its owner began selling coupons on a New York City deals website. However, the owner wondered whether selling these steeply discounted coupons was a sound business decision. In this case, students are presented with a spreadsheet with 34 months of sales data and are asked to develop a regression model of sales as a function of key variables. This case is accompanied by a Solutions note that details the steps in developing a model of sales as a function of seasonality, a time trend, and current and past promotional activity.
We follow a representative panel of millions of consumers in the U.S. from 2007 to 2017 and document several facts on the long-term effects of the Great Recession. There were about six million foreclosures in the ten-year period after Lehman's collapse. Owners of multiple homes accounted for 25% of these foreclosures, while comprising only 13% of the market. Foreclosures displaced homeowners, with most of them moving at least once. Only a quarter of foreclosed households regained homeownership, taking an average four years to do so.
We study optimal team design. In our model, a principal assigns either heterogeneous agents to a team (a diverse team) or homogenous agents to a team (a specialized team) to perform repeated team production. We assume that specialized teams exhibit a productive substitutability (e.g., interchangeable efforts with decreasing returns to total effort), whereas diverse teams exhibit a productive complementarity (e.g., cross-functional teams).
A two-factor model explains returns for a variety of test portfolios, including those based of CAPM beta and those underlying factors in extant pricing models. The two-factor model involves the market factor and a factor based on firms’ fundamentals that has the feature of providing a hedge in down markets and a reverse-hedge in up markets. For a wide range of test portfolios, returns are described by sensitivity to the market factor with a beta of one and positions in the hedging factor.
Many think that they understand the secrets to the success of the biggest tech companies: Facebook, Amazon, Apple, Netflix, and Google. It's the platform economy, or network effects, or some other magical power that makes their ultimate world domination inevitable. Investment banker and professor Jonathan Knee argues that the truth is much more complicated--but entrepreneurs and investors can understand what makes the giants work, and learn the keys to lasting success in the digital economy.
Climate scientists have long emphasized the importance of climate tipping points like thawing permafrost, ice sheet disintegration, and changes in atmospheric circulation. Yet, save for a few fragmented studies, climate economics has either ignored them or represented them in highly stylized ways. We provide unified estimates of the economic impacts of all eight climate tipping points covered in the economic literature so far using a meta-analytic integrated assessment model (IAM) with a modular structure.
This paper studies lockdown policy in a dynamic economy without government commitment. Lockdown imposes a cap on labor supply, which improves health prospects at the cost of economic output and consumption. A government would like to commit to the extent of future lockdowns in order to guarantee an economic outlook that supports efficient levels of investment into intermediate inputs. However, such a commitment is not credible, since investments are sunk at the time when the government chooses a lockdown. As a result, lockdown under lack of commitment deviates from the optimal policy.
This symposium aims to deepen and expand our understanding of the relationship between the way organizations and managers understand and provide narratives related to inequality and their subsequent diversity practices. The four papers presented in this symposium offer new theoretical insights and mechanisms for the conditions under which organizations are more (less) apt to redress inequality.
This paper aims to unpack the pro-social motivations of green innovators. In a field experiment inviting SBIR grantees to learn more about and apply to MIT Solve, we provide scientifically valid scenarios varying the time-frame and scale of human cost of climate change. Innovators' response in clicks and applications increases with both scale and immediacy treatments. Our structural model estimates a welfare discount rate of 0.76%, providing a measure of innovators' value of future generations, and an elasticity to lives lost of 0.23, implying diminishing marginal concern to human loss.
Turning around distressed operations is an alternative response to underperformance — as contrasted with using transactions such as divestitures or resource redeployment to deal with troublesome assets during corporate renewal. Taking the perspective of private-equity owners whose interests are primarily financial, we explain how their approach to turnarounds of troubled companies may differ from that of managers within publicly traded firms who may envision the realization of longer-term sources of operating synergy among their firms' lines of business.
An historical review of managers' corporate renewal decisions reveals an evolving pattern away from using operating turnarounds in favor of making changes in corporate scope via transactions. One explanation for this progression away from operations is that financial valuation considerations supplant other inputs to managers' strategic logics — a reflection of the rising influence of financial institutions as activist owners.
The Covid-19 pandemic crisis is ongoing, and it its wake has brought tremendous loss of life and economic loss, disruption and uncertainty. It has simultaneously brought to the surface important challenges about global healthcare systems, political systems and institutions and their response to the multi-faceted crisis, the connectedness and dependencies of modern economies through global supply chains, and issues of inequity, as manifested in segments of the population that have been most affected in terms of health and economic outcomes through the crisis.
In modern equity markets, participants have a choice of many exchanges at which to trade. Exchanges typically operate as electronic limit order books under a "price-time" priority rule and, in turn, can be modeled as multi-class FIFO queueing systems. A market with multiple exchanges can be thought of as a decentralized, parallel queueing system. Heterogeneous traders that submit limit orders select the exchange, i.e., the queue, in which to place their orders by trading off financial considerations against anticipated delays until their orders may fill.
In late 2007, less than 10 years into the company’s existence, Google came out swinging on the clean energy front. To a fanfare of plaudits up and down Silicon Valley and well beyond, it declared “RE<C” as its goal: make renewable energy cheaper than coal. The company invested tens of millions of dollars into R&D efforts from concentrated solar power to hydrothermal drilling. Four years later, those efforts had been scrapped.
We propose a parsimonious model of leverage and investment dynamics featuring a diffusion-jump cash-flow process, retained earnings, short-term debt, and external equity. Crucially equity issuance is costly. We show that firms' efforts to avoid incurring equity issuance costs generate empirically plausible target leverage and nonlinear leverage dynamics. Paradoxically, it is the high cost of equity issuance that causes the firm to keep leverage low, in contrast to the predictions of Modigliani-Miller and Leland tradeoff and Myers' pecking-order theories.
If you were to ask a discretionary investment fund manager to draw a Venn diagram of the set notation where digitalization meets discretionary investing, many would not show the sets as overlapping. Moreover, they believe that the investment world is bifurcated and the discretionary managers are independent of the quantitative. I would argue that not only are the two sets converging but that the quantitative managers pose an existential threat to the discretionary managers, or perhaps will ‘Pac-Man’-style consume the discretionary managers.
With its fixation on equilibrium thinking and an exclusive focus on market factors that can be precisely measured, the neoclassical orthodoxy in economics is fundamentally unequipped to deal with today's biggest problems. Change within the discipline is underway, but it cannot come fast enough.