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Economics

Alumni Club
10 months ago

Alumni Club

By  •  Financial Markets

If you’re a mutual fund manager, school connections with a CEO can have an excellent effect on your investments. School ties, research shows, are good for connected investors and even better for CEO salaries. But are they good for everyone else?

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Inside the Box
11 months ago

Inside the Box

By  •  Technology

Families in the developing world face medical challenges almost unheard of here: infections, childbirth, even a toothache can be fatal. While clean medical instruments can mean the difference between life and death, sterilization can be impossible in areas without electricity or other resources. So Professor Douglas Schuler and his research team figured out how to build a solar-powered sterilizer in one – very large – box.

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Toxic Brew
1 year ago

Toxic Brew

By  •  Corruption

No one anti-corruption strategy is a panacea. But just as international firms use multiple business strategies, firms should try a mix of antidotes to corruption. Considering the damage it does to foreign firms and host societies both, corruption is too toxic a brew for a healthy business to swallow.

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Intense Interest
1 year ago

Intense Interest

By  •  Bankruptcy

New research shows that interest rates have outsized effects compared to stock prices on the final negotiated value of a bankrupt company.

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Road Block
1 year ago

Road Block

By  •  Socioeconomic Status and Consumption

Middle Class: Most Americans say they expect to live middle class lives. Kamakura’s findings, however, show that since 1982 it has become harder and harder to stay in middle lane.

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A Marathon, Not A Sprint
2 years ago

A Marathon, Not A Sprint

By  •  Personal Savings

Build up those personal saving muscles, by routinely placing a chunk of your paycheck into a savings account, and jog, slowly but steadily, every day. It’s a marathon, not a sprint.

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Bursting The Bubble
2 years ago

Bursting The Bubble

By  •  Subprime Mortgages

Researchers found that competition led to a smaller increase in housing prices before the crisis and smaller decreases in housing prices during the crisis. They also show that greater competition led to higher mortgage rejection rates, with the effect being strongest for the highest-risk mortgages.

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Compliments Of The Chef
2 years ago

Compliments Of The Chef

By  •  Competition

Competition historically has been seen as a recipe for sabotage and aggression in business. But a group of big-city food truck vendors discovered that cooperation, high standards and really great dishes brought their competition a different flavor.

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Follow The Money
2 years ago

Follow The Money

By  •  Advertising

When local firms spend big on advertising, they influence media coverage. For firms with headquarters near local papers, this increased coverage boosts stock market valuations. Local media give local investors disproportionately positive but not necessarily accurate information about the value of locally headquartered firms.

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Mind the GAAP
2 years ago

Mind the GAAP

By  •  Accounting

The ongoing debate about whether accounting should be based on principles, or rules, should focus on auditors rather than on standard-setting institutions. Letting auditors themselves evaluate fair presentation, independent of GAAP, would allow them to judge accounting practice by principles rather than by checking off boxes stating rules.

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Welcome To The Party
2 years ago

Welcome To The Party

By  •  Elections

The public tends to think elected politicians don’t represent the best and brightest of all possible candidates. However, political parties often select mediocre candidates because of dueling forces known as the discouragement and competition effects. Majoritarian electoral systems may encourage parties to nominate more competent candidates.

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Crazy Like A Fox
2 years ago

Crazy Like A Fox

By  •  Negotiations

With negotiations, purely hard-nosed negotiation doesn’t work as well as alternating toughness with positivity. Negotiators faced with mood swings feel a loss of control and will make greater concessions. While, emotional approaches that win concessions in short-term negotiations may not work in the long term.

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Taking The Wall Street Walk
2 years ago

Taking The Wall Street Walk

By  •  Investing

High stock value helps create blocks, but blocks should not be created with the idea that they’ll improve a firm’s governance or performance. High liquidity actually jeopardizes the block’s continued existence, because as time passes, the blockholder becomes more likely to cash out than she is to devote time, energy and resources intervening in a company’s affairs.

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Smooth Sailing
2 years ago

Smooth Sailing

By  •  Accounting

Investors are especially sensitive to cash-flow volatility in firms that rely heavily on external financing. This suggests that cash-flow volatility can directly affect firm investment policy through the cost of capital.

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Good Fences, Good Neighbors
2 years ago

Good Fences, Good Neighbors

By  •  Global Business

Whether it’s in a cow pasture or a sovereign nation, the arrival of outsiders can kick up some dust. State-owned enterprises need to closely analyze a potential overseas investment to determine whether it’s worth climbing over the fence. 

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Experiments In Short Selling
2 years ago

Experiments In Short Selling

By  •  Rethinking SEC Rules

Curbing short sales does indeed alter stock values. When curbs on short selling are removed, the price of overvalued stocks tends to drop. Loosening those rules leads to lower prices, which in turn prompt firms to alter investment and financing choices.

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Long-Term Partners
2 years ago

Long-Term Partners

By  •  Investment Banking

Before we relied on computers and the internet to learn, we based decisions on our fellow primates’ actions, narratives and visual cues. When the decisions are big, it seems our brains are still programmed this way, choosing to chew data over a business lunch in addition to compiling, analyzing and synthesizing it in two dimensions.

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Love At First Sight Isn’t Enough
2 years ago

Love At First Sight Isn’t Enough

By  •  Business Partnerships

Successful partnerships with other companies, requires being nice, open and getting acquainted. The best modern business alliances, in other words, share traits with aristocratic marriages. Social bonds may not be the first priority for the union, but in the end they can transcend economic interests, and ultimately make the business more powerful.

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After Hours
2 years ago

After Hours

By  •  Stock Market

Analysts not only don’t rehash the corporate line — they give investors new and useful information. The new findings don’t indicate that analysts’ revisions are necessarily correct. They simply offer authentically new information. Investing is still risky business, even when the analysts do their part to inform.

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In Praise Of Know-It-Alls
2 years ago

In Praise Of Know-It-Alls

By  •  Institutional Investing

It’s been thought that as the number of informed investors rises, and competition among those investors increases, such advantage is reduced, as is the price of capital. For these firms, encouraging rivalry by widening the pool of informed investors might help reduce their cost of capital.

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The Costly Business Of Corruption
2 years ago

The Costly Business Of Corruption

By  •  Municipal Bonds

State corruption and political connections impede financial and economic development by increasing investment risk and bond interest payments and reducing access to high quality financial institutions. Specialized financial institutions allow issuers to purchase credit enhancements to remove corruption-induced risk from bond yields. Credit enhancements play an important role in alleviating the economic damage that corruption can cause.

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Keeping Up With The Joneses
4 years ago

Keeping Up With The Joneses

By  •  Recessions

Managers should understand how and why consumers buy their products and services, especially when recession looms near. However, high-priced items aren’t the only ones for which spending could plummet should the economy take a dip.

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Express Lane
4 years ago

Express Lane

By  •  Inventory Management

Curbing short sales does indeed alter stock values. When curbs on short selling are removed, the price of overvalued stocks tends to drop. Loosening those rules leads to lower prices, which in turn prompt firms to alter investment and financing choices.

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Piracy Pays
4 years ago

Piracy Pays

By  •  Cyber Security

In any industry where digital content is sold managers should consider the nature of competition before assuming that DRM restrictions are the way to go. Overturning conventional wisdom could help them profit in the presence of online piracy.

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Is There A Secret Sauce To Customer Communities?
4 years ago

Is There A Secret Sauce To Customer Communities?

By  •  Virtual Communities

If you want to boost participation in a customer community, don’t just build it. Invite them to come. But, be sure to temper your expectations regarding how participation will create immediate value for your firm.

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The New Middle
4 years ago

The New Middle

By  •  Market Segmentation

Sharper socioeconomic stratification methods that are practical and flexible can be useful in revealing untapped marketing opportunities, over time, in emerging markets.

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No Pain, No Gain
4 years ago

No Pain, No Gain

By  •  New Product Marketing

When the going gets tough, first-timer product users often walk away. Marketers need to offer training and encouragement to convince consumers to hang on for the ride.

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