All posts by Business School

Economics

Is the Bowl Championship Series a Cartel? Some Evidence

E. Woodrow Eckard
Journal of Sports Economics, Vol. 14, No. 1, February 2013, Pages 3-22.

The cartel view of the Bowl Championship Series (BCS) implies that it creates an advantage for automatic qualifying (AQ) member schools relative to other Division IA/FBS schools in recruiting the best players and hiring other inputs. The resulting playing-field advantage should produce more wins over “outsiders.” Weaker AQ schools benefit relatively more because previously they had competed more closely with outsiders for players. The evidence generally supports the cartel view. The AQ BCS schools and conferences have significantly increased their win percentage against outsiders. Also, the weaker AQ schools have performed better against the top tier, and have shown the greatest improvement against outsiders.

Information Systems

Examining the determinants of effort among open source software volunteer developers

Chorng–Guang Wu, James H. Gerlach, Clifford E. Young
International Journal of Information and Decision Sciences, Vol 5 No. 2/2013

This study explores the relationships between open source software (OSS) volunteer developers’ motivations, commitment to the OSS community and effort spent on OSS development. The study considers multiple extrinsic and intrinsic motivations that are expected to influence developer effort, and also measures the extent to which developers commit themselves to the OSS community, which in turn is expected to cause them to exert effort on behalf of OSS projects. The model is empirically tested using a field survey of OSS volunteers. The results show that the major motivational forces driving OSS volunteer developers’ effort are helping others (intrinsic motivator), fun for coding (intrinsic motivator) and peer recognition (extrinsic motivator), while developer commitment has a direct and significant effect on their effort decisions. Findings also suggest that time availability moderates the relationship between commitment and effort.

Economics

The impact of price discrimination on consumer surplus at popular music concerts

E. Woodrow Eckard and Marlene A. Smith
Economic Letters, Vol. 118, Issue 1, January 2013, Pages 222–224

We estimate consumer surplus gains and losses from concert ticket price discrimination. Fans purchasing low-priced tickets enjoy a surplus gain of about $9.26 per ticket while high-priced ticket buyers suffer a loss of about $17.63 per ticket. We estimate consumer surplus gains and losses resulting from price discrimination. A demand-based model provides the counterfactual uniform price and tickets sold. The sample includes 45 popular music concerts in the U.S. Our results suggest an estimated net consumer surplus loss of about $1.3 million. The dollar loss to high-income fans is more than twice the gain to low-income fans.

Business Analytics

Mann–Whitney test with adjustments to pretreatment variables for missing values and observational study

Song Xi Chen, Jing Qin, and Cheng Yong Tang
Journal of the Royal Statistical Society,  Jan. 2013, Vol. 75 Issue 1, pp. 81-102

The conventional Wilcoxon or Mann–Whitney test can be invalid for comparing treatment effects in the presence of missing values or in observational studies. This is because the missingness of the outcomes or the participation in the treatments may depend on certain pretreatment variables.We propose an approach to adjust the Mann–Whitney test by correcting the potential bias via consistently estimating the conditional distributions of the outcomes given the pretreatment variables.We also propose semiparametric extensions of the adjusted Mann-Whitney test which lead to dimension reduction for high dimensional covariates. A novel bootstrap procedure is devised to approximate the null distribution of the test statistics for practical implementations. Results from simulation studies and an economics observational study data analysis are presented to demonstrate the performance of the approach proposed.

Information Systems

Dynamic Interaction in Decision Support: Effects on Perceived Diagnosticity and Confidence in Unstructured Domains

Brandon Beemer and Dawn G. Gregg
IEEE Transactions on Systems, Man, and Cybernetics: Systems, 3(1), January 2013, pp. 74-84.

The evolution of eCommerce over the past decade has resulted in a wide range of tools that enable consumers to make better decisions about the products or services that they are purchasing. One class of tools that are now widely used in a variety of eCommerce domains are mashups, which combine disparate sources of information (e.g. price, product reviews, seller reviews) to support buyer decision making. Previous academic studies examining decision support tools for eCommerce domains have focused on how these tools affect information search, consideration set size, and the impact on the quality of the decision made. This paper discusses dynamic interaction, the degree to which a user can revisit and revise their inputs and consider alternative solutions during a decision. The effects of dynamic interaction on confidence and intention was investigated in an experiment, the results of which indicated that increasing dynamic interaction increased the perceived diagnosticity (i.e., the extent to which the user believes the tool is useful to evaluate a product) of the mashup and the overall confidence in the decision. In addition, a post-hoc analysis of decision quality suggests that increased levels of dynamic interaction also improve the overall quality of the decision made.

Business Analytics

Forecasting emergency department arrivals: a tutorial for emergency department directors

Murray J Cote, Marlene A Smith, David R Eitel, Elif Akali
Hospital topics,Vol. 91, Issue 1, Pages: 9-19.

This article is a tutorial for emergency department (ED) medical directors needing to anticipate ED arrivals in support of strategic, tactical, and operational planning and activities. The authors demonstrate our regression-based forecasting models based on data obtained from a large teaching hospital’s ED. The versatility of the regression analysis is shown to readily accommodate a variety of forecasting situations. Trend regression analysis using annual ED arrival data shows the long-term growth. The monthly and daily variation in ED …
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Information Systems

Rules of crowdsourcing: Models, issues, and systems of control

Gregory D Saxton, Onook Oh, Rajiv Kishore
Information Systems Management,Vol. 30, Issue 1, Pages: 2-20.

In this article, the authors first provide a practical yet rigorous definition of crowdsourcing that incorporates “crowds,” outsourcing, and social web technologies. They then analyze 103 well-known crowdsourcing web sites using content analysis methods and the hermeneutic reading principle. Based on their analysis, they develop a “taxonomic theory” of crowdsourcing by organizing the empirical variants in nine distinct forms of crowdsourcing models. They also discuss key issues and directions, concentrating on the notion of …
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Accounting

Bankruptcy outcomes: Does the board matter?

Dahlia Robinson, Michael Robinson and Craig Sisneros
Advances in Accounting, Vol 28, Issue 2, Dec 2012, Pages 270–278

We examine the association between board composition and bankruptcy outcomes. Preliminary analyses provide no evidence that the proportion of outside directors is significantly associated with the likelihood that a Chapter 11 firm liquidates. Further analyses indicate, however, that the relation between the proportion of outside directors and bankruptcy outcomes is a function of the outside directors’ ownership. More specifically, we find that the association is positive when outside director ownership is low and negative when it is high. The overall evidence supports the notion that a one-size-fits-all approach to corporate governance is likely to result in suboptimal board structures and hinder firms’ strategies for dealing with poor performance.

Finance

onsumption Smoothing and Portfolio Rebalancing: The Effects of Adjustment Costs

Yosef Bonaparte, Russell Cooper and Guozhong Zhu
Journal of Monetary Economics, Volume 59, Issue 8, Pp. 751–768

A household’s response to income and return shocks depends on the costs of portfolio adjustment. In particular, the extent of portfolio rebalancing and consumption smoothing are influenced by the presence of non-convex portfolio adjustment costs. Suppose bonds can be adjusted costlessly while adjustments to stock accounts entail adjustment costs. Due to these portfolio adjustment costs, the household demands both stocks and bonds. A household can buffer some income fluctuations without incurring adjustment costs and engage in costly portfolio rebalancing less frequently. Using the estimated preference parameters and portfolio adjustment costs, the response to income and return shocks is nonlinear and reflects the interaction of portfolio rebalancing and consumption smoothing.

Accounting

Practitioner summary “Should PCAOB Disciplinary Proceedings Be Made Public? Evidence from Sanctions against a Big 4 Auditor”

Carol Callaway Dee,Ayalew Lulseged,and Tianming Zhang
Current Issues in Auditing, Volume 6, Issue 2, pp. 18-24

In our paper “Client Stock Market Reaction to PCAOB Sanctions against a Big 4 Auditor” (Dee et al. 2011), we examine stock price effects for clients of a Big 4 audit firm when news of sanctions imposed by the PCAOB against the audit firm was made public. These PCAOB penalties were the first against a Big 4 auditor, and they revealed information about quality-control problems at the audit firm that were not publicly known until the sanctions were announced. Our analysis of stock prices suggests that investors in clients of the penalized Big 4 firm reevaluated their perceptions of the quality of the firm’s audit work after learning of the sanctions. The negative stock price effects for the firm’s clients were consistent with investors inferring that the financial statements were of lower quality. In the paper, we conclude that investors find information about PCAOB sanctions against audit firms to be relevant in assessing audit quality and use that information in setting stock prices for audit firms’ clients. This finding has relevance for the debate on the proposed legislation in Congress (H.R. 3503), which would allow the PCAOB to disclose proceedings against auditors before the investigations are concluded. Our results suggest that, although investors may find early disclosure of this information useful, public disclosure of Board disciplinary proceedings before they are completed could unfairly harm an audit firm’s reputation if the firm is ultimately vindicated of wrongdoing.

Finance

Consumption smoothing and portfolio rebalancing: The effects of adjustment costs

Yosef Bonaparte, Russell Cooper, Guozhong Zhu
Journal of Monetary Economics,Vol. 59, Issue 8, Pages: 751-768.

A household’s response to income and return shocks depends on the costs of portfolio adjustment. In particular, the extent of portfolio rebalancing and consumption smoothing are influenced by the presence of non-convex portfolio adjustment costs. Suppose bonds can be adjusted costlessly while adjustments to stock accounts entail adjustment costs. Due to these portfolio adjustment costs, the household demands both stocks and bonds. A household can buffer some income fluctuations without incurring adjustment costs and …
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Management

Crossing the threshold: The spillover of community racial diversity and diversity climate to the workplace

Belle Rose Ragins, Jorge A. Gonzalez, Kyle Ehrhardt, and Romila Singh
Personnel Psychology,Vol. 65, Issue 4, Winter 2012, Pages 755-787

We examined the spillover of community diversity to the workplace using a sample of 2,045 professionals living in communities across the U.S. Spillover effects were examined using 2 measures of community diversity: the degree to which employees were racially or ethnically similar to others in their community and perceptions of their community’s diversity climate. Aligned with theories of group threat and racial segregation, Whites who were racially dissimilar to their communities expressed stronger intentions to leave their communities, and ultimately their workplaces, than those living in primarily White communities. However, community diversity climate offset these relationships; Whites who lived in communities that were racially dissimilar to them, but experienced the climate as inclusive, had lower moving intentions than those in communities that were experienced as racially intolerant. In contrast, for people of color, community diversity climate, rather than racial similarity to the community, predicted moving intentions. For both groups, the diversity climate in the community predicted moving intentions, which in turn predicted work turnover intentions, job search behaviors, and physical symptoms of stress at work. These findings suggest that the intention to leave one’s community, and ultimately one’s workplace, is influenced by community experiences and the community’s perceived diversity climate.
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Business Analytics, Economics

nue Gains from MultiTier Ticket Pricing: Evidence from Pop Music Concerts

E. Woodrow Eckard and Marlene A. Smith
Managerial and Decision Economics, Vol 33, Issue 7-8, Oct 2012, pages 463–473

We provide empirical estimates of the revenue benefits of multi-tier pricing at a major US pop music venue. Our unique sample includes data on the number of tickets sold at every price. Mean revenue gain from multi-tier pricing is estimated to be about $20,000 per show, a 4.2% increase over uniform pricing, although the gains were as high as 21.2% for one performer. We also provide evidence that customer segmentation by income is a likely motive of multi-tier pricing and, for the first time, that the standard assumption of zero marginal cost of additional venue attendees is valid.

Management

Leaders’ conceptions of followers: Implications for naturally occurring Pygmalion effects

Paul Whiteley, Thomas Sy, Stefanie K. Johnson
The Leadership Quarterly, Vol 23, Issue 5, Oct 2012, Pages 822–834

We investigated the relationships between leaders’ implicit followership theories (LIFTs) (conceptions of followers) and naturally occurring Pygmalion effects (leaders’ high performance expectations that improve follower performance). Results based on 151 workplace leader–follower dyads supported a model of naturally occurring Pygmalion effects. Positive LIFTs led to higher performance expectations, liking, and relationship quality from leaders, which impacted follower performance. Supervisory experience moderated the relationship between positive LIFTs and leaders’ performance expectations for their followers, such that the performance expectations of leaders with less supervisory experience were more strongly influenced by their conceptions of followers. Implications of the findings for improving follower performance are discussed. Suggestions for future research are offered: antecedents of LIFTs, negative LIFTs, Golem effects, and role reversed Pygmalion effects, among others.

Management

The Two Faces of Voluntary Disclosure: Quality Improvement and Organizational Learning from Selfreported Problems

Vinit M. Desai
British Journal of Management, Vol 23, Issue 3, Sept 2012, pages 344–360

Research suggests the promise of voluntary self-reporting, given that organizational quality can be difficult to monitor. However, I explore opposing theoretical arguments regarding its impact. On one hand, self-reported problems may motivate intensive investigation, resulting in subsequent improvement. However, self-reports may instead represent relatively superficial impression management efforts, and their value to organizational performance may be more dubious. Associated hypotheses are tested on a longitudinal panel of nursing homes. Findings suggest that self-reports generally detract from performance except when they are reinforced by other, complementary forms of experience. Contributions to organizational learning theory, institutional theory and regulatory policy are discussed.

Finance

State uncertainty in stock markets: How big is the impact on the cost of equity?

Yufeng Han
Journal of Banking & Finance, Vol 36, Issue 9, Sept 2012, Pages 2575–2592

We propose a novel Bayesian framework to incorporate uncertainty about the state of the market. Among others, one advantage of the framework is the ability to model a large collection of time-varying parameters simultaneously. When we apply the framework to estimate the cost of equity we find economically significant effects of state uncertainty. A state-independent pricing model overestimates the cost of equity by about 4% per annum for a utility firm and by as much as 3% for industries. We also observe that the expected return, volatility, risk loading, and pricing error all display state-dependent dynamics that coincide with the business cycle. More interestingly, the forecasted market and Fama–French factor risk premiums can predict the future real GDP growth rate even though the model does not use any macroeconomic variables, which suggests that the proposed Bayesian framework captures the state-dependent dynamics well.

Management

The best laid plans: Examining the conditions under which a planning intervention improves learning and reduces attrition.

Sitzmann, Traci; Johnson, Stefanie K.
Journal of Applied Psychology, Vol 97 Issue 5, Sep 2012, 967-981

Planning plays an instrumental role in prominent self-regulation theories (e.g., action regulation, control, goal setting), yet as a scientific community we know little about how people carry out their learning plans. Using an experimental field study, we implemented a repeated-measures intervention requiring trainees to create a plan for when, where, and how much time they intended to devote to training before each of 4 online modules and examined the conditions under which the planning intervention improved learning and reduced attrition. Trainees benefited from the planning intervention when it was paired with another intervention—prompting self-regulation—targeting self-regulatory processes that occur subsequent to planning (e.g., monitoring, concentration, learning strategies). Trainees’ learning performance was highest and attrition lowest when they received both interventions. The planning intervention was also advantageous for enhancing learning and reducing attrition when trainees followed through on the amount of time that they planned to devote to training. Finally, the relationship between planned study time, time on task, and learning performance was cyclical. Planned study time had a positive effect on time on task, which, in turn, had a positive effect on learning performance. However, trainees planned to devote less time to training following higher rather than lower learning performance. The current study contributes to our theoretical understanding of self-regulated learning by researching one of the most overlooked components of the process—planning—and examining the conditions under which establishing a learning plan enhances training outcomes.

Management

Go for the goal(s): Relationship between goal setting and transfer of training following leadership development

Stefanie Johnson, Lauren Garrison, Gina Hernez-Broome, John Fleenor and Judith Steed
Learning & Education, Vol. 11, No. 4

This paper examines the relationship between goal setting and transfer of training as measured on a 360-degree survey collected 3 months after a five-day leadership development program. Leaders set personal goals for behavior change during the program. For two of the three competencies measured (developing others, building and maintaining relationships), leaders who set a goal for change on a competency were perceived as having improved more on that competency than those who did not. Moreover, those who set more than one goal were perceived as having improved more across competencies than those who set only one goal.

Business Analytics

Sparse Matrix Graphical Models

Chenlei Leng and Cheng Yong Tang
Journal of the American Statistical Association. 107 1187-1200.

Matrix-variate observations are frequently encountered in many contemporary statistical problems due to a rising need to organize and analyze data with structured information. In this article, we propose a novel sparse matrix graphical model for these types of statistical problems. By penalizing, respectively, two precision matrices corresponding to the rows and columns, our method yields a sparse matrix graphical model that synthetically characterizes the underlying conditional independence structure. Our model is more parsimonious and is practically more interpretable than the conventional sparse vector-variate graphical models. Asymptotic analysis shows that our penalized likelihood estimates enjoy better convergent rates than that of the vector-variate graphical model. The finite sample performance of the proposed method is illustrated via extensive simulation studies and several real datasets analysis