effects of profitability and liquidity on r d intensity japanese and u s companies compared this study investigates the proposition that japanese companies have a greater propensity than u s companies to sustain commitment to r d in the face of fluctuating profits and liquidity the anal

direct estimation of synergy a new approach to the diversity performance debate this study examines the linkages between relatedness and synergy in the context of diversification among u s pharmaceutical firms for the period 1960 1980 rather than assume as in the entropy herfindahl and concentric indices of diversification that the levels of synergy generated by different related combinations of business units are identical we estimate synergy directly using a modified version of the concentric index in addition to estimating synergy using capital market performance of the firm as a whole we examine the effects of nondrug diversification on the innovative productivity of firms pharmaceutical divisions alone our two main findings are that production relatedness such as that between drugs and chemicals in fact did not imply synergy over the period of our study and that the patterns of synergy for different types of relatedness shifted over time with the industry life cycle

do better schools matter parental valuation of elementary education the evaluation of numerous school reforms requires an understanding of the value of better schools given the difficulty of calculating the relationship between school quality and student outcomes i turn to another method and use house prices to infer the value parents place on school quality i look within school districts at houses located on attendance district boundaries houses then differ only by the elementary school the child attends i thereby effectively remove the variation in neighborhoods taxes and school spending i find that parents are willing to pay 2 5 percent more for a 5 percent increase in test scores this finding is robust to a number of sensitivity checks

media markets and localism does local news en espanol boost hispanic voter turnout the same time the availability of these products reduces the consumption of local news not only because some consumers prefer national and global content to local information but also because local media products that lose a significant number of consumers are forced to cut qual ity and they may even cease to exist if their audience falls below a critical threshold for these reasons some scholars claim that the rise of integrated media markets undermines local civic engagement robert d putnam 2000 against this backdrop many regulatory agencies including the federal communications commission fcc of the united states seek to protect local media and promote localism for instance by limiting ownership concentration 1 however localism is desirable only if there are in fact positive spillovers from the provision of local content that can help justify the loss of private welfare that integrated media markets would provide in this paper we propose a simple test for the existence of spillovers from local news pro gramming asking if the presence of local television news affects civic behavior the ubiq uity of local news programming across all us metro areas makes it impossible to study its effects on the general population in contrast the availability of spanish language news has increased considerably in recent years providing us with an experiment to study the effect of local news on one important measure of civic engagement voter turnout in local elections in particular we use a differencing approach asking whether hispanic voter turnout is higher in relation to non hispanic turnout in metro areas with spanish language local television news our results indicate that spanish language local television news raises hispanic turnout by more than 4 percentage points local news targeted at hispanics has no effect on the participa tion of non hispanics and as one would expect a significantly smaller effect in years with a presidential race in markets with spanish language news about a quarter of hispanics turn to these programs our estimates thus imply that news in spanish caused about a fifth of spanish language news viewers to start voting interestingly hispanics with access to news in spanish do not increase the time they spend watching news content analyses of spanish language news programs in the united states find that these shows are much more likely to report on

ceo characteristics and firm r d spending over the past fifteen years a number of studies have examined the determinants of firm r d spending these studies however almost invariably focus on the role of firm or external ownership characteristics in predicting r d spending while overlooking the attributes of the top managers involved in allocating corporate resources in this study we change that focus by empirically examining how r d spending as compared to industry competitors varies at firms based on the characteristics of their ceos using a sample of publicly traded firms we find that ceo characteristics explain a significant proportion of the sample variance in firm r d spending even when corporate strategy ownership structure and other firm level attributes are controlled in terms of individual ceo characteristics we find that r d spending is greater at firms where ceos are younger have greater wealth invested in firm stock and signifacant career experience in marketing and or engineering r d in contrast to existing theory we find that the amount of a ceo s formal education had no significant association with r d spending once a ceo has attained a college degree however significant r d spending increases are found at firms where ceos have advanced science related degrees from subgroup analyses we further find that ceo effects on relative r d spending increase with longer ceo tenure implying that ceos over time may mold r d spending to suit their own preferences from these results we make implications for both research on determinants of r d spending and managerial practice

media bias and influence evidence from newspaper endorsements this paper investigates the relationship between media bias and the inuence of the media on voting in the context of newspaper endorsements werst develop a simple econometric model in which voters choose candidates under uncertainty and rely on endorsements from better informed sources newspapers are potentially biased in favor of one of the candidates and voters thus rationally ac count for the credibility of any endorsements our primary empiricalnding is that endorsements are inuential in the sense that voters are more likely to support the recommended candidate after publication of the endorsement the degree of this inuence however depends upon the credibility of the endorsement in this way endorsements for the democratic candidate from left leaning news papers are less inuential than are endorsements from neutral or right leaning or newspapers and likewise for endorsements for the republican thesendings suggest that voters do rely on the media for information during campaigns but that the extent of this reliance depends upon the degree and direction of any bias

executive incentives and the horizon problem an empirical investigation abstract this paper investigates the hypothesis that ceos in their final years of office manage discretionary investment expenditures to improve short term earnings performance we examine the behavior of r d expenditures for a sample of firms in industries that have significant ongoing r d activities the results suggest that ceos spend less on r d during their final years in office however we find the reductions in r d expenditures are mitigated through ceo stock ownership there is no evidence that the reduced r d expenditures are associated with either poor firm performance or reductions in investment expenditures that are capitalized for accounting purposes

cost benefit models for explaining consumer choice and information seeking behavior while it provides excellent descriptions of behavior existing consumer research on information seeking and processing largely fails to explain why consumers engage in various types of activities this paper presents an economic framework for measuring costs benefits of search behavior which can help to resolve these questions this work shows how such a framework can lead to testable hypotheses about information seeking and discusses how operational measures of economic incentives to search can be developed and employed

political advertising and election results we study the persuasive effects of political advertising our empirical strategy exploits fcc regulations that result in plausibly exogenous variation in the number of impressions across the borders of neighboring counties applying this approach to detailed data on television advertisement broadcasts and viewership patterns during the 2004 12 presidential campaigns our results indicate that total political advertising has almost no impact on aggregate turnout by contrast we find a positive and economically meaningful effect of advertising on candidates vote shares taken at face value our estimates imply that a one standard deviation increase in the partisan difference in advertising raises the partisan difference in vote shares by about 0 5 percentage points evidence from a regression discontinuity design suggests that advertising affects election results by altering the partisan composition of the electorate

asymmetric wholesale pricing theory and evidence asymmetric pricing or asymmetric price adjustment is the phenomenon where prices rise more readily than they fall we offer and provide empirical support for a new theory of asymmetric pricing in wholesale prices wholesale prices may adjust asymmetrically in the small but symmetrically in the large when retailers face cost of price adjustment such retailers will not adjust prices for small changes in their costs manufacturers then see a region of inelastic demand where small wholesale price changes do not translate into commensurate retail price changes the implication is asymmetrica small wholesale price increase is more profitable because manufacturers will not lose customers from higher retail prices yet a small decrease is less profitable because it will not lower retail prices hence there is no extra revenue from greater sales for larger changes this asymmetry in the behavior of wholesale price vanishes as the price adjustment cost is compensated by the increase in retailers revenue resulting from correspondingly large retail price changes we present a formal economic model of a channel with forward looking retailers and cost of price adjustment test the derived propositions on the behavior of manufacturer prices using a large supermarket scanner data set and find that the results are consistent with the predictions of our theory we then discuss the implications for asymmetric pricing channels and cost of price adjustment literatures as well as public policy

organizational debut on the public stage marketing myopia and initial public offerings successful initial public offerings ipos provide firms with access to valuable resources but also put pressure on firms to impress potential investors with evidence of their current well being and prospects for future growth to impress investors ipo firms might curtail their marketing budgets which appears to inflate current earnings and provide evidence of current well being however curtailing marketing budgets unexpectedly during an ipo may be a myopic practice in that the immediate benefits of these budget cuts are offset by their longer term adverse consequences on financial well being the extent of these adverse consequences in turn may be moderated by external firm factors including strategic alliances and key customer relationships and internal firm factors such as the strategic emphasis on value creation versus value appropriation a sample of 1 095 ipos during 2000 2011 reveals evidence of myopic marketing practices in more than 37 of the sample investors seem misled during ipos bu

a simultaneous model of consumer brand choice and negotiated price in this paper we develop a simultaneous model of consumer brand choice and negotiated price in the highly relevant marketing context of automobile transactions consumer brand choice is modeled as a multinomial probabilistic outcome and the individual consumer level transaction price is modeled to be consistent with the nash bargaining solution our simultaneous model introduces a natural way to account for price endogeneity in a microlevel choice setting when the price paid is individual specific and correlated with the idiosyncratic preference of a buyer it also accounts for the potential selectivity bias in studying the negotiated price by integrating consumer brand choice modeling we apply the proposed model to a data set of 4 795 consumer automobile purchases the empirical results show that the proposed approach not only better fits the data of consumer choice and negotiated price but it also provides additional insights into buyers and sellers behaviors in comparison with models that study only consumer choice or the negotiated price but not both simultaneously

estimating search benefits from path tracking data measurement and determinants we study consumer search behavior in a brick and mortar store environment using a unique data set obtained from radio frequency identification tags which are attached to supermarket shopping carts this technology allows us to record consumers purchases as well as the time they spent in front of the shelf when contemplating which product to buy giving us a direct measure of search effort we estimate a linear regression of price paid on search duration in which search duration is instrumented with a search cost shifter we show that this regression allows us to recover the marginal return from search in terms of price at the optimal stopping point for the average consumer our identification strategy and coefficient interpretation are valid for a broad class of search models and we are hence able to remain agnostic about the details of the search process such as search order and search protocol we estimate an average return from search of 2 10 per minute and explore heterogeneity across consumer

diversification strategy and r d intensity in multiproduct firms this study provides empirical evidence that choice of diversification strategy systematically affects r d intensity in large multiproduct firms research and development intensity in dominant busin

agency models in different stages of ceo tenure the effects of stock options and board independence on r d investment this study examines how r d investment is shaped by governance devices combining the two agency models of limited competence and managerial opportunism it suggests that governance devices exert differing effects in early vs later stages of ceo tenure early in ceo tenure r d investment is reduced by stock options and board independence whereas in later stages these effects reverse r d investment is enhanced by stock options and board independence an empirical test on a sample of u s companies provides support for the hypothesized effects for policy makers this study implies that r d investment can be enhanced by setting rules and standards of good governance that take into account ceo time in office and firm context

the temporal and spatial dimensions of price search insights from matching household survey and purchase data abstract price promotions are pervasive in grocery markets a household can respond to price promotions by effectively cherry picking through 1 spatial price search across stores and 2 temporal price search across time however extant research has analyzed these two dimensions of price search only separately and therefore underestimates both the consumer response to price promotions and the impact of promotions on retail profit in this article the authors introduce an integrated analysis of spatial and temporal price search they seek answers to three questions first what are the predictors of household decisions to perform either spatial or temporal price search second how effective are the temporal spatial and spatiotemporal price search strategies in obtaining lower prices and third what is the impact of alternative price search strategies on retailer profit the authors use a unique data collection approach that combines household surveys with observed purchase data to address these que

radio s impact on public spending if informed voters receive favorable policies then the invention of a new mass medium may affect government policies since it affects who is informed and who is not these ideas are developed in a voting model the model forms the basis for an empirical investigation of a major new deal relief program implemented in the middle of the expansion period of radio the main empirical finding is that u s counties with many radio listeners received more relief funds more funds were allocated to poor counties with high unemployment but controlling for these and other variables the effects of radio are large and highly significant

political connections and corporate environmental responsibility adopting or escaping abstract corporate environmental responsibility cer is increasingly viewed as an important business strategy by researchers investors and society as a whole while prior research has emphasized the role of social pressures firm specific factors as well as ceo characteristics in cer little attention has been paid to the impacts of political connections we propose a mechanism based framework to study how political connections affect firm s propensity to engage in cer using comprehensive environmental information disclosure data on china s listed firms augmented by unique data on political connections we find that political connections have a positive effect on cer this effect is more pronounced for state owned firms and in cities with stringent environmental regulations with respect to the channels through which political connections increase cer we further find that political connections help firms to receive government grants subsidies and tax reduction related to the environment protection and implement government environmental policies

how the electoral college influences campaigns and policy the probability of being florida this paper analyzes how us presidential candidates should allocate resources across states to maximize the probability of winning the election by developing and estimating a probabilistic voting model of political competition under the electoral college system actual campaigns act in close agreement with the model there is a 0 9 correlation between equilibrium and actual presidential campaign visits across states both in 2000 and 2004 the paper shows how presidential candidate attention is affected by the states number of electoral votes forecasted state election outcomes and forecast uncertainty it also analyzes the effects of a direct national popular vote for president

investigating household purchase timing decisions a conditional hazard function approach the purchase timing decision is an important component of the dynamics of a household s purchase behavior this decision is influenced by marketing and other variables and the modeling of this dependence has recently received attention in the literature in this paper we build on previous studies and develop a comprehensive stochastic model that incorporates the major factors influencing interpurchase times specifically we use a generalized version of cox s proportional hazard model to test among competing probability distributions for the interpurchase times while incorporating effects due to marketing variables observed household characteristics and unobserved heterogeneity across households the empirical finding from analyzing the iri coffee data suggests that the interpurchase times cannot be adequately described by probability distributions such as exponential erlang 2 or weibull the effects of unobserved heterogeneity are significant and they impact the estimates of the effects of the covariates we also find that a nonparametric procedure for estimating the effects of unobserved heterogeneity provides the best overall fit to the data and yields covariate estimates that are more consistent with prior expectations our model is validated by replicating the substantive empirical findings on an additional product category

advertising effects in presidential elections presidential elections provide both an important context in which to study advertising and a setting that mitigates the challenges of dynamics and endogeneity we use the 2000 and 2004 general elections to analyze the effect of market level advertising on county level vote shares the results indicate significant positive effects of advertising exposures both instrumental variables and fixed effects alter the ad coefficient advertising elasticities are smaller than are typical for branded goods yet significant enough to shift election outcomes for example if advertising were set to zero and all other factors held constant three states electoral votes would have changed parties in 2000 given the narrow margin of victory in 2000 this shift would have resulted in a different president

horizon problem and firm innovation the influence of ceo career horizon exploitation and exploration on breakthrough innovations abstract building on labor market evaluations and legacy conservation motivation perspectives we propose a mechanism to explain the relationship between ceo career horizons and breakthrough innovations using 10 year panel data from 681 u s firms we find that firms that have a ceo with a short career horizon tend to produce fewer breakthrough innovations we also find that the relationship between ceo career horizon and breakthrough innovation is partially mediated by r d spending and also moderated by organizational learning behavior exploration vs exploitation this study highlights how a ceo s motivation to protect success in the short term affects the firm s innovativeness

cognition capabilities and incentives assessing firm response to the fiber optic revolution this study examines how ceo cognition organizational capabilities and organizational incentives interacted to shape firm strategy during the fiber optic revolution i tested for these factors as

price search in a product market regressions using panel data on grocery purchases show lower purchase costs are significantly associated with a larger number of stores visited per week there is also evidence but somewhat weaker of diminishing gains from such search an economic model of the determinants of search suggests that prices paid quantities purchased and number of store visits are interrelated a view supported by results of estimating a proposed simultaneous equations model

performance feedback and firm risk taking the moderating effects of ceo and outside director stock options we contribute to the behavioral theory of the firm and the behavioral agency model by developing a theoretical framework that predicts the differential interaction effects of performance feedback and values of stock option grants of multiple agents on firm risk taking we explain how chief executive officers ceos versus outside directors awarded with stock option grants perceive negative or positive deviations from prior performance we argue that in a negative attainment discrepancy context high values of option grants will increase the risk aversion of ceos who already bear excessive employment and compensation risks resulting in less risk taking however it will enhance the risk taking propensity of influential outside directors who increase monitoring and support for risky projects because their risk preferences are better aligned with those of shareholders in a positive attainment discrepancy context high values of option grants will amplify risk aversion in both ceos and outside directors who

abstention in elections with asymmetric information and diverse preferences we analyze a model of a two candidate election with costless voting in which voters have asymmetric information and diverse preferences we demonstrate that a strictly positive fraction of the electorate will abstain and that nevertheless elections effectively aggregate voters private information using examples we show that more informed voters are more likely to vote than their less informed counterparts increasing the fraction of the electorate that is informed however may lead to higher levels of abstention we conclude by showing that a biased distribution of information can lead to a biased voting population but does not lead to biased outcomes

r d and ceo departure date do financial incentives make ceos more opportunistic the purpose of this article is to examine whether research and development r d expenditure is biased downward because of self serving behavior of highly incentivized managers this offers an insight into the general relationship between incentives and opportunism using instrumental variables and panel data methods for a sample of high r d spenders in the uk we examine whether r d is reduced in cases of imminent departure of the ceo results show evidence for this but only for the sample above the median in intensity of stock and options in the compensation package this suggests that opportunism is enhanced by inappropriately strong incentives the main results are robust to the inclusion of a number of corporate governance variables jel classification g30 o30

the relationship between unemployment spells and reservation wages as a test of search theory the theory of stationary job search predicts that controlling for other factors that affect the probability of leaving unemployment duration and reservation wages are likely to be positively associated the paper tests this prediction for british cross sectional data from 1982 using an estimating equation implied by search theory simultaneity is crucial in the evaluation of this prediction with single equation and instrumental variable estimates differing markedly perhaps surprisingly given the extreme paucity of both job interviews and offers in the sample the main finding is that reservation wages play a significant role in the determination of duration

who participates in r d subsidy programs the case of spanish manufacturing firms abstract empirical evidence on the effectiveness of r d subsidies to firms has produced mixed results so far one possible explanation is that firms and project selection rules may be quite heterogeneous both across agencies and across industries leading to different outcomes in terms of the induced additional private effort here we focus on the participation stage using a sample of spanish firms we test for differences across agencies and industries our results suggest that firms in the same industry face different hurdles to participate in different agencies programs that participation patterns may reflect a combination of agency goals and that patterns differ across high tech and low tech industries

economic policy uncertainty ceo characteristics and firm r d expenditure a bayesian analysis this paper applies a linear bayesian regression model to study the effects of economic policy uncertainty epu and chief executive officer ceo characteristics on firm research and development r

wine retail price dispersion in the united states searching for expensive wines similar to other markets in which deviations from jevons law of one price is the norm rather than the exception the retail wine market in the united states is characterized by large price dispersions drawing on a large sample of retail prices from wine searcher com we find an average per wine coefficient of variation of 23 percent some of this is due to differential market conditions especially state regulations our evidence suggests that dispersion also depends positively on price levels after controlling for consumer market and state heterogeneity

keeping doors open the effect of unavailability on incentives to keep options viable many of the options available to decision makers such as college majors and romantic partners can become unavailable if sufficient effort is not invested in them taking classes sending flowers the question asked in this work is whether a threat of disappearance changes the way people value such options in four experiments using door games we demonstrate that options that threaten to disappear cause decision makers to invest more effort and money in keeping these options open even when the options themselves seem to be of little interest this general tendency is shown to be resilient to information about the outcomes to increased experience and to the saliency of the cost the last experiment provides initial evidence that the mechanism underlying the tendency to keep doors open is a type of aversion to loss rather than a desire for flexibility

ownership structure investment and the corporate value an empirical analysis this paper examines the relation among ownership structure investment and corporate value focusing on whether ownership structure affects investment ordinary least squares regression results suggest that ownership structure affects investment and therefore corporate value however simultaneous regression results indicate that the endogeneity of ownership may affect these inferences suggesting that investment affects corporate value which in turn affects ownership structure the evidence shows that corporate value affects ownership structure but not vice versa these findings raise questions regarding the assumption that ownership structure is exogenously determined and bring into question the results in studies that treat ownership structure as exogenous

an empirical investigation of returns to search using data on search and choice behavior from a local automobile market we estimate monetary returns to search in terms of lower prices resulting from additional time invested in price search for our analytical framework we adapt a model developed in the job search literature to the problem of consumer search this framework is especially useful for illuminating the relationship between time spent searching the outcome of search and demand and supply side variables our results indicate that for this particular sample of buyers marginal returns to search are broadly consistent with what one might expect if consumers balance costs and benefits of search and that potential gains from additional search for lower car prices do not appear to be large for most consumers our study highlights many of the methodological difficulties involved in estimating returns to search including isolating returns to different outcomes of search and sensitivity of results to model specification and sampling error we deal with these problems by trying to isolate time spent searching for price from other uses of search time by deriving our model used in estimation from a specific conceptual framework and by extensive specification testing

campaign advertising and election outcomes quasi natural experiment evidence from gubernatorial elections in brazil whether campaign advertising influences election outcomes is an open question a paradox given the amount spent on campaigning in general and tv advertising in particular we argue that such absence of documentation is due to the focus of the empirical literature on the u s where the allocation of campaign spending and advertising is decentralized we explore a quasi natural experiment that enables us to mitigate the omitted variables and reverse causality problems caused by decentralized allocation in brazil gubernatorial elections work in a two round system in the first round candidates tv time shares are determined by their coalitions share of seats in the national parliament in the second round tv time is split equally between the first round winner and runner up using differences between rounds as a source of variation we find a large causal effect of tv advertising on election outcomes

the swing voter s curse the authors analyze two candidate elections in which some voters are uncertain about the realization of a state variable that affects the utility of all voters they demonstrate the existence of a swing voter s curse less informed indifferent voters strictly prefer to abstain rather than vote for either candidate even when voting is costless the swing voter s curse leads to the equilibrium result that a substantial fraction of the electorate will abstain even though all abstainers strictly prefer voting for one candidate over voting for another copyright 1996 by american economic association

board diversity and firm performance evidence from the u k smes this study examines the relationship between board diversity and firm performance in small and medium sized enterprises smes in the u k in particular we investigate the role of gender and age