Columbia Business School Research

Under accounting principles, the recognition of earnings is path-dependent and the path depends on risk and its resolution: under the so-called realization principle, earnings are not booked until uncertainty is resolved. In asset pricing terms, the principle means that earnings cannot be recognized until the firm can book a low-beta asset such as cash or a near-cash discounted receivable. If the risk to which this accounting responds is priced risk, the accounting indicates the expected return.

Perspective taking is a crucial leadership skill, yet Galinsky and Schweitzer contend that it becomes more difficult the higher you rise in an organization. Gaining perspective helps to motivate others, communicate more clearly, and navigate difficult or tense situations. Their article includes research they conducted with psychologists at the University of Iowa, the University of California-Los Angeles, and New York University, as well as an anecdote about President John F. Kennedy and the 1962 Cuban missile crisis.

We document that contractual disclosures by intermediaries during the sale of mortgages contained false information about the borrower's housing equity in 7–14% of loans. The rate of misrepresented loan default was 70% higher than for similar loans. These misrepresentations likely occurred late in the intermediation and exist among securities sold by all reputable intermediaries. Investors — including large institutions — holding securities with misrepresented collateral suffered severe losses due to loan defaults, price declines, and ratings downgrades.

Hedge fund activism emerged as a major force of corporate governance in the 2000s. By the mid-2000s, there were between 150 and 200 activist hedge funds in action each year, advocating for changes in 200–300 publicly listed companies in the United States. In this article, we review the evolution and major characteristics of hedge fund activism, as well as the short- and long-term impacts of the performance and governance of targeted companies.

Is the perceived value of things an absolute measurable quantity, as in economists’ notion of “cardinal utility,” or a relative assessment of the various objects being evaluated, as in economists’ notion of “ordinal utility”? We believe that the answer depends in part upon which judgment system underlies the evaluation. Specifically, we advance the proposition that due to its distant evolutionary roots, the affective system of judgment is inherently more ordinal (less cardinal) than the cognitive system.

Empirical evidence reveals that diversity — heterogeneity in race, culture, gender, etc. — has material benefits for organizations, communities, and nations. However, because diversity can also incite detrimental forms of conflict and resentment, its benefits are not always realized. Drawing on research from multiple disciplines, this article offers recommendations for how best to harness the benefits of diversity.

Sarcasm is ubiquitous in organizations. Despite its prevalence, we know surprisingly little about the cognitive experiences of sarcastic expressers and recipients or their behavioral implications. The current research proposes and tests a novel theoretical model in which both the construction and interpretation of sarcasm leads to greater creativity because they activate abstract thinking.

How stocks are traded in the United States has been totally transformed. Gone are the dealers on NASDAQ and the specialists at the NYSE. Instead, a company's stock can now be traded on up to sixty competing venues where a computer matches incoming orders. High-frequency traders (HFTs) post the majority of quotes and are the preponderant source of liquidity in the new market.

Despite the popularity of prediction, markets among economists, businesses, and policymakers have been slow to adopt them in decision-making. Most studies of prediction markets outside the lab are from public markets with large trading populations. Corporate prediction markets face additional issues, such as thinness, weak incentives, limited entry, and the potential for traders with biases or ulterior motives — raising questions about how well these markets will perform.

This study investigates the impact of early relationships on innovation at entrepreneurial firms. Prior research has largely focused on the benefits of network ties, documenting the many advantages that accrue to firms embedded in a rich network of interorganizational relationships. In contrast, we build on research emphasizing potential drawbacks to examine how competitive exposure, enabled by powerful intermediaries, can inhibit innovation.

The current research used the contexts of U.S. presidential debates and negotiations to examine whether matching the linguistic style of an opponent in a two-party exchange affects the reactions of third-party observers. Building off communication accommodation theory (CAT), interaction alignment theory (IAT), and processing fluency, we propose that language style matching (LSM) will improve subsequent third-party evaluations because matching an opponent's linguistic style reflects greater perspective taking and will make one's arguments easier to process.

This paper studies the long-term effect of hedge fund activism on the productivity of target firms using plant-level information from the U.S. Census Bureau. A typical target firm improves its production efficiency within three years after the intervention, and this improvement is pronounced in industries with low concentration. By following plants that were sold post-intervention we also find that efficient capital redeployment is an important channel via which activists create value.

We present an end-to-end text mining methodology for relation extraction of adverse drug reactions (ADRs) from medical forums on the Web. Our methodology is novel in that it combines three major characteristics: (i) an underlying concept of using a head-driven phrase structure grammar (HPSG) based parser; (ii) domain-specific relation patterns, the acquisition of which is done primarily using unsupervised methods applied to a large, unlabeled text corpus; and (iii) automated post-processing algorithms for enhancing the set of extracted relations.

The authors explore how firms can enhance consumer performance in online idea generation platforms. Most, if not all, online idea generation platforms offer all consumers identical tasks in which (1) participants are granted access to ideas from other participants and (2) ideas are classified into categories, but consumers can navigate freely across idea categories. The former is linked to stimulus ideas, and the latter may be viewed as a first step toward problem decomposition.

The premature cancer mortality rate has been declining in Canada, but there has been considerable variation in the rate of decline across cancer sites. I analyze the effect that pharmaceutical innovation had on premature cancer mortality in Canada during the period 2000-2011, by investigating whether the cancer sites that experienced more pharmaceutical innovation had larger declines in the premature mortality rate, controlling for changes in the incidence rate.

I view the research articles presented here as prototypical examples of what may be called “the new wave” in studying Asian markets and consumers. This emerging “new wave” has a different focus than research done over the last few decades. Research is shifting from an emphasis on traditional Asian culture toward a focus on consumer culture and how this consumer culture manifests itself in various Asian markets. The “new wave” research also focuses less on general concepts and more on uniquely Asian phenomena. Finally, methodologically research is shifting from “East” vs.

We document how a positive shock to investment opportunities at one plant ("treated plant") spills over to other plants within the same firm, but only if the firm is financially constrained. To provide the treated plant with resources, the firm's headquarters withdraws capital and labor from other plants, especially plants that are relatively less productive, not part of the firm's core industries, and located far away from headquarters. As a result of the resource reallocation, aggregate firm-wide productivity increases.

This article reviews the literature on teacher value-added. Although value-added models have been used to measure the contributions of numerous inputs to educational production, their application toward identifying the contributions of individual teachers has been particularly contentious. Our review covers articles on topics ranging from technical aspects of model design to the role that value-added can play in informing teacher evaluations in practice, highlighting areas of consensus and disagreement in the literature.

Past research encourages expatriates to immerse themselves in the host culture, avoiding reminders of their home culture. We counter that, for expatriates still struggling to adjust, home culture stimuli might prime a sense of relational security, emboldening them to reach out to locals and hence boost cultural adjustment. In Study 1, American exchange students in Hong Kong felt more adjusted to Hong Kong after incidental exposure to iconic American practices (vs. Chinese or neutral), an effect partially mediated by relational security and not by other exchange student concerns.

The current research examined whether cross-national variation in egalitarianism predicts talent levels and organizational performance. We propose that national variation in egalitarianism predicts country-level talent because egalitarianism influences policymaking at the institutional level and everyday social interactions at the psychological level. We compared the relative impact of institutional and psychological measures of equality using the context of international performance in the most popular worldwide sport: football (soccer).

Philosophers and psychologists have long been interested in identifying factors that influence moral judgment. The current analysis compares the literatures on moral psychology and decision-making under uncertainty to propose that utilitarian choices are driven by the same forces that lead to risky choices.

This paper integrates social norm constructs from different disciplines into an integrated model. Norms exist in the objective social environment in the form of behavioral regularities, patterns of sanctioning, and institutionalized practices and rules. They exist subjectively in perceived descriptive norms, perceived injunctive norms, and personal norms. We also distil and delineate three classic theories of why people adhere to norms: internalization, social identity, and rational choice.

Longitudinal, disease-level data are used to analyze the impact of pharmaceutical innovation on longevity (mean age at death), hospital utilization, and medical expenditure in Greece during the period 1995–2010. The estimates indicate that pharmaceutical innovation increased mean age at death by 0.87 years (10.4 months) – about 44% of the total increase in longevity – and that diseases with larger increases in the cumulative number of drugs launched one to four years earlier had smaller increases in the number of hospital days.

We test the empirical validity of a claim that has been playing a central role in debates on corporate governance — the claim that interventions by activist hedge funds have a detrimental effect on the long-term interests of companies and their shareholders. We subject this claim to a comprehensive empirical investigation, examining a long five-year window following activist interventions, and we find that the claim is not supported by the data.

The current research integrates perspectives on gendered race and person-position fit to introduce the concept of a <em>gender profile</em>. We propose that both the "gender" of a person's biological sex and the "gender" of a person's race (Asians are perceived as feminine and Blacks as masculine) help comprise an individual's gender profile — the overall femininity or masculinity associated with their demographic characteristics. We also propose that occupational positions have gender profiles.

We develop and test hypotheses regarding the role of social contagion in customer adoption of new sales channels. We examine two aspects of social contagion (local contagion and homophily) and two channels (Internet and bricks-and-mortar store). Drawing on diffusion theory, we propose a conceptual framework that identifies the factors associated with new channel adoption.

We propose an extension of standard asymmetric volatility models in the generalized autoregressive conditional heteroskedasticity (GARCH) class that admits conditional non-Gaussianities in a tractable fashion. Our "bad environment-good environment" (BEGE) model utilizes two gamma-distributed shocks and generates a conditional shock distribution with time-varying heteroskedasticity, skewness, and kurtosis. The BEGE model features nontrivial news impact curves and closed-form solutions for higher-order moments.

We study the information flows that arise among a set of agents with local knowledge and directed payoff interactions, which differ among pairs of agents. First, we study the equilibrium of a game where, before making decisions, agents can invest in pairwise active communication (speaking) and pairwise passive communication (listening). This leads to a full characterization of information and influence flows.

Organizing collective action to secure support from local communities provides a source of power for elites to protect their interests, but community structures constrain the ability of elites to use this power. Elites’ power is not static or self-perpetuating but changing and dynamic. There are situations in which elites are forced into movement-like struggles to mobilize support from their community.

The current research examines how power affects performance in pressure-filled contexts. We present low-power-threat and high-power-lift effects, whereby performance in high-stakes situations suffers or is enhanced depending on one's power; that is, the power inherent to a situational role can produce effects similar to stereotype threat and lift. Three negotiations experiments demonstrate that role-based power affects outcomes but only when the negotiation is diagnostic of ability and, therefore, pressure-filled.

Using personnel data from nine large firms in three industries (call centers, trucking, and high-tech), we empirically assess the benefit to firms of hiring through employee referrals. Compared to nonreferred applicants, referred applicants are more likely to be hired and more likely to accept offers, even though referrals and nonreferrals have similar skill characteristics. Referred workers tend to have similar productivity compared to nonreferred workers on most measures, but referred workers have lower accident rates in trucking and produce more patents in high-tech.

Eight studies explored the antecedents and consequences of whether people locate their sense of self in the brain or the heart. In Studies 1a–f, participants' self-construals consistently influenced the location of the self: The general preference for locating the self in the brain rather than the heart was enhanced among men, Americans, and participants primed with an independent self-construal, but diminished among women, Indians, and participants primed with an interdependent self-construal.